UPDATE: The speculation is over. Apple announced a Video iPod on October 12, 2005.

Rumors abound, Apple will soon have a surprise addition to its wildly successful iPod product line. But will they have the video content to back it up?

Apple-centric rumor web sites and technology reporters are abuzz with the idea that Apple may release a first generation iPod Video any day now. Apple is reportedly negotiating for the rights to sell downloadable music videos through its iTunes Music Store. Many believe that this is a precursor to a widely anticipated release of a multimedia capable Video iPod. However, Apple Chief Executive Steve Jobs has repeatedly denied such a product is in the works.

Despite Apple's thick veil of secrecy regarding future product announcements, many iPod-centric web sites (ours included) are making their own predictions of a based on anonymous tips and web rumors. Some sites even believe that the 4th generation iPod that Apple released in July 2004 already is a 'multimedia iPod' and just needs a firmware update when the time is right. Based on recent industry technology trends and actions taken by Apple, we predict the following items may be included in the next version of hardware/firmware for the iPod:

1) NEW A/V SOFTWARE FEATURES:
PortalPlayer, Inc., whose technology already powers the current line of iPods in addition to other devices in the portable music jukebox market, announced details of their next generation development platform in a January 2004 press release. PortalPlayer will focus on adding various audio/video enhancements directly embedded on hardware chips or as firmware. Given PortalPlayer's strong presence in the current iPod product line, expecting some of these new enhancements to be in the next incarnation of the iPod isn't too far off base:

New features announced by the PortalPlayer press release include the ability to:

• View TIF, GIF and JPG images as well as MPEG videos
• Synchronize and/or copy photos directly off a digital camera
• Record voice memos with photos much like the way many new cell phones can
• Register and interact with various photo editing applications on your computer

If Apple's new iPod focus is to add digital video features, could we see some kind of video integration with iPhoto and iMovie? In the image below, we did a simple composite of screen shots from iPhoto and iTunes. On the left you will notice the addition of the iPod in iPhoto.

Let's not forget that most iPods are sold to people using the Windows operating system. iTunes for Windows was created as a result of this trend. If Apple really does want to push digital imagery to iPod users, then is a PC-version of iPhoto coming soon? Now that Apple has switched to Intel processors, this isn't so hard to imagine.

2) COLOR LCD SCREEN:
Truly a requisite item in order for the iPod to display video or photos on its tiny screen is the addition of color. A color LCD screen would probably drain the battery faster, but not much more than what the current iPod Backlight does already. The real stress for the battery will be from handling large video files requiring the hard drive to spin more than the smaller audio files iPod owners are used to.

3) A/V HARDWARE DOCK:
The concept of a video iPod naturally conjures to mind the ability to watch full-length Hollywood movies on a 3-inch screen. As we construe from PortalPlayer's upcoming list of enhancements, the ability to watch MPEG videos on an iPod is certainly possible. The demand, however, for viewing small thumbnail-sized video clips on a portable player may not be high. Sony released a truly portable black & white TV, the Watchman, in the 1980s, but it never came close to the mass appeal of the radio/audio cassette player, the Walkman.

Ironically, the mass/sex appeal to an iPod Video may not require an LCD screen but an A/V dock with video output capabilities. This would allow a user to connect their iPod to a TV similarly like a VCR for large screen viewing. If Apple did release a A/V dock for the iPod, supposedly third-generation iPods with dock connections could utilize this new option. Such a dock would be an interesting twist for the iPod and bridge the gap between MP3 player and portable video device.

The absence of a video screen for future iPods is compatible with recent public statements made by Apple CEO Steve Jobs. Many speculate that Apple has had some sort of portable video player in development all along. But in an interview with David Pogue of The New York Times, Jobs questioned the public's appetite for a video screen capable iPod. Consumers enjoy music and video differently, and Mr. Jobs is well aware of this.

The Practicality of a Video iPod
Is a iPod Video really practical? Music, unlike videos, can be enjoyed without the audience's full attention. Such activities as jogging, walking, cooking, dancing, driving are all ideal applications. The iPod as just a music player is wildly successful. But how would the iPod fair as a video player? And what about the small screen? Other video players like the Sony PSP have a much larger screen compared to the iPod. The current way we are accustomed to consuming motion video isn't compatible with a Video iPod for two reasons.

First, the level of attention required for observing video content is more intense. Watching a video screen requires both sight and hearing in tandem. This makes activities such as those listed above incompatible with observing video on an iPod . Bottom line, you will most likely still use the audio features of your Video iPod more that the video screen.

Second, the format of existing video content is not compatible with small displays. If you have recently visited Japan or Europe, then you may have seen someone watching video on a cell phone. This video content for the most part is rebroadcasts from live TV. The United States has consistently been behind other areas of the world when it comes to cell phone technology. However in a move to push ahead from the rest of the world, many of the major broadcast and cable TV networks in this country are starting to produce special content for the smaller screens. Everyone from NBC to the Discovery Channel have some kind of mobile video content deal with a major cell phone provider.

This new portable video medium demands a total rethinking of the current video production process. Everything from studio camera angles to graphics and editing has to be customized for cell phone video delivery. For example, sending an unmodified on-air feed of CNBC would not work very well. The ticker would be too small to read. After the video is compressed and scaled down to cell phone screen size, the scrolling stock ticker would be a messy pixilated blur. In order for text graphics to appear legible it must be sized to occupy half the screen.

If Apple plans on releasing an "in screen" video iPod in the near future, the secret will be in the content. Steve Jobs, Apple's CEO, also wears the captains hat over at Pixar, the animation studio behind films such as Finding Nemo and Toy Story. Pixar often creates animation shorts for film festivals and DVD bonus materials. Perhaps they could develop video specifically tailored for the "smaller screen". Maybe a small screen animated comic strip series featuring some of the popular characters from Pixar's movies. But even with Pixar's help, Apple can't do this alone. Apple will need to enlist a fleet of content providers to produce everything from news and sports to entertainment offerings like movie trailers and music videos. Apple was successful in doing this with the music industry with the iTunes Music Store. Can they do it again with Hollywood and the television industry?

No matter what happens, Apple already has a smash hit on their hands with the iPod . The trick for Apple will be keeping the iPod fresh for consumers while fending off competitors.