Apple Puts iPhone in Position To Compete as Video Platform

June 8, 2009 – With new advancements coming to the iPhone later this month, the popular smartphone is on a path to become a competitor – albeit in miniature – to cable, satellite and telco providers. And everyone else too.

At the Worldwide Developers Conference in San Francisco in early June Apple said the newest version will transform the iPhone into a full-fledged media portal and place it in the crosshairs of traditional service providers as well as big online video portals like YouTube and Hulu. The iPhone 3G S, slated for rollout June 17, lets users record and edit videos and download for rent or purchase TV shows and movies directly on the device itself.

That’s a change from previous iPhones, which required users to download shows to their computers and then synch to their mobile devices through iTunes. What’s more, the new phone also supports live streaming of TV networks. Some developers showcased live video feeds from networks like CNN at the conference.

These developments further the position of the iPhone in the advanced cell phone market, but they also elevate the device to a broader consumer play. The ability to easily buy longer-form videos and to potentially watch TV networks on the iPhone could lure some consumers away from traditional service providers.

“It’s becoming competitive for people to use it for media consumption because once people get used to buying stuff on their iPhones they get used to it for other things too,” said Alex Lindsay, an Apple expert and the host of the Web show “MacBreak Weekly.”

But don’t expect consumers to ditch their cable en masse. After all, the iPhone screen is smaller, the phone is expensive and consumers will still have to pay to download shows. Also, it was not immediately clear which TV networks would strike deals to stream their programming live.

The iPhone’s open platform could become another venue for traditional providers’ online projects, such as Comcast’s Fancast or even time Warner’s TV Everywhere, speculated Andy Beach, author of “Real World Video Compression” and an Apple expert.

Plus, if the Internet has taught us anything it’s that consumers are gravitating to a multitude of devices rather than just one. So while the newest iPhone has more bells and whistles for video viewing, those new tools are likely to appeal to people who would already have dumped traditional service providers for new media sources, Beach said.

Even so, the new iPhone should not be underestimated, said Lindsay. “The iPhone is becoming a standard,” Lindsay said. “What’s happening is it’s becoming the interface to people’s equipment. They will use it for GPS, to control their guitar amps, for watching TV shows. The hardest thing to do for people developing products is to create an interface that works well. Apple gives developers a way to do that, and the iPhone is getting used for more and more things.”

The souped-up iPhone may steal some thunder from consumer electronics makers. Video creators can now shoot and edit with the iPhone, and that could hurt Cisco-owned Flip, the popular handheld video camera. Tim Street, executive provider with production shop Ape Digital, said he’s been considering upgrading his Flip camera and now may switch to the new iPhone since it will have shooting capabilities.

Users can then upload those videos directly to YouTube.

The new phone also includes support for 3G networks. The new phones start at $199. Apple has sold more than 40 million iPhones and iPod Touches.