So what’s causing the so called avalanche of phablets? ABI agrees with something I wrote in early 2011, when I suggested that the improved media experience on a larger display would increase demand for bigger phones and called for a 4-inch iPhone. Here’s how ABI explains it:

“In short, people are watching a greater number of videos, reading more digital content (be it newspaper subscriptions or general Internet browsing), and playing more games on their smartphones. A larger screen enhances these user experiences, making the small increase in device dimensions worthwhile.

Obviously, I agree with ABI’s commentary there, but I take issue with their definition of what constitutes a phablet. The firm is including any smartphone that has a display size between 4.6- and 6.5-inches. That means the Samsung Galaxy S III would be counted as well as a number of other current smartphones.

I’d place the bottom limit at or above 5-inches for this market because at that point, it’s nearly mandatory for all to use the device with two hands. My Galaxy Note 2 is good example. Regardless of the definition debate, I’m now keen to see if another related early prediction I made will come to fruition.

Last year I said that small tablets would actually replace smartphones. Clearly, the lines between such devices are beginning to blend even more. And you can’t easily fit a small tablet in your pocket the way you can a smartphone. But once we move voice functionality to LTE networks and add that capability to tablets, I think we’ll see a migration to relying more on a 7-inch or so slate instead of a smaller smartphone. Either that or the phablet is the outcome of my vision, although I want no credit for the silly name.

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I’m not a fan of the term ABI is using, but there is some recent precedent for the research firm’s sales estimates, which also include a tenfold rise in shipments this year from last. Samsung’s Galaxy Note is probably the best-known example of such a device, due to its 5.3-inch display. By the end of March, the company sold 5 million Galaxy Note handsets in just five months, with the bulk of those sales overseas. AT&T began to sell the Note with LTE support in mid February, and my review showed a capable Android device that’s large but still pocketable.

Regardless of what we call these devices or exactly what the range of screen sizes should be for them, I think ABI is on to something here. With rich media consumption on the rise on mobile devices — particularly as we get faster 4G networks and more Wi-Fi networks to supplement them — a larger display is desirable. The same can be said for Web browsing, which is one of the most popular activities on a mobile: Why scroll and zoom when a larger display minimizes such efforts?

Provided these handsets are still pocketable, consumers will adopt them because they combine the portability of a smartphone with the more immersive experience found in a tablet. That’s not to say 10-inch slate sales will fall; these fit a totally different use case for most, as they are less portable and are better suited for casual computing or consumption in a given location. A recent Viacom study, for example, found that 74 percent of tablet use is in the home.

As far as the definition of a “phablet,” I think ABI is spot-on with the screen size. Why? This gets back to the key question I suggested people ask themselves with regards to the Galaxy Note’s size: Are you a one-handed or two-handed smartphone user? Screens this large will require many to use two hands for typing and navigation, much like a tablet. I have always been a two-handed smartphone user, so the Note and my 4.65-inch Galaxy Nexus work perfectly for me. But if you’re set on one-handed smartphone use, these aren’t the devices for you, as I illustrate here:

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As Liz found out during the inauguration, integrating Facebook with a video feed is a way to enhance the viewing experience. Turns out she’s not alone in wanting to socialize while watching TV. A new study from ABI Research found that 36 percent of those people who use social media on a regular basis would like to access their networks on the TV screen.

From the ABI press release:

When asked which types of application they would be most interested in for social TV, the answers were somewhat dependent on age. Younger consumers were more interested in engaging with their friends through chat and messaging, while middle-aged respondents were more likely to be interested in more passive social networking behavior such as checking status updates. The most popular potential application for those over 50 who expressed interest in TV social networking was being able to see what their friends were watching on TV.

This is the part of the post where I eat a little crow. I used to think that anything less than having people physically in the room with you was pointless and hollow. But since the inauguration, I’m starting to come around. Sharing a running commentary with friends or like-minded fans could actually make watching shows like Lost a lot more fun. (One trick will be getting the font size on the screen big enough to read from far away without it looking ridiculous.)

Elsewhere in researchville, The Diffusion Group (TDG) reports on how we order and pay for video service is likely to change. Right now, consuming video on three screens (TV, PC and mobile) requires three separate contracts at three separate rates. According to TDG, what operators need to do is repackage these separate services into one more-consumer-friendly, all-encompassing video package.

I spoke with Michael Greeson, president of TDG, who said that this video package wouldn’t distinguish between video for your television, online video and mobile video. Instead, it would offer the same video service you get for the TV in your living room and include the same channels on your PC and mobile phone.

Greeson doesn’t think this shift will happen overnight, and large operators like Verizon and AT&T, who have all of these capabilities under one roof already will benefit most from this strategy. TDG’s survey found that one-fourth of U.S. adult broadband users (roughly 35 million people) would be inclined to sign up for such a video service for a price somewhere between $65 and $105 per month.

While having an all-in-one bill would certainly streamline my accounting, it would also give operators more control over my content. Even as Netflix’s streaming service is catching on with audiences, Time Warner Cable is throwing up roadblocks by expanding metered access. It wouldn’t be hard to imagine a scenario where a TDG video package prioritizes the operator’s video on all platforms at the expense of others, such as independent video producers.

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Online video in this particular case has a pretty wide definition in that it includes any video that’s delivered via an Internet connection (excluding IPTV services). So Netflix streaming, Apple video, Hulu, etc.

This coming online video viewer boom will be a result of the growth in all forms of content (premium and UGC) and devices that plug into your TV and as such, becoming capable of delivering all this content, a trend we’ve seen pick up steam over the past year (have you seen how sweet YouTube’s HD streams look on an HD TV?). Netflix embodies both elements of this report’s finding, offering streaming movies on a wide range of boxes — from the standalone Roku, to the TiVo, to Blu-ray DVD players, to the Xbox game console.

I spoke with Michael Wolf, who covers the digital home space for ABI, and he had some further predictions. “I feel strongly that these new boxes are not going to be the big winners,” he said. “There will be smaller hits — Apple TV, Roku — but consumers are going to want to use existing boxes.”

“There’s a traffic jam in the living room,” Wolf went on to say, and he believes consumers won’t want more than three devices under their TV. He thinks they’ll keep their cable or satellite box, some kind of DVD player and a game console. “Beyond that, ” said Wolf, “it’s hard to get a consumer to say ‘I’m going to invest in a new box.’”

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ITunes Numbers Still Tiny for NBC; TV by the Numbers says at most, iTunes downloads are less than one percent of viewing if you add them to the TV viewing numbers. (TV by the Numbers)

Unhappy People Watch More TV; new study says that people who are “not happy” watch 30 percent more TV hours per day than their “very happy” counterparts. (Reuters)

Neuros Reveals Next-Gen Box; unlike other PC-based media extenders, Neuros gets web video to your TV via the cloud. (Zatz Not Funny)

Heroes Launches Friend or Foe Online; extends the ongoing NBC saga onto the web to let fans interact more deeply with the show. (emailed release)

Global Market for Set-Top Boxes to Peak in 2012; market will grow for the next few years, topping out at 110 million shipments, decline after that due in part to transition to all-digital broadcasting. (ABI Research)

Pixsy Adds 5 Video Syndication Partners; private-label video search service to be used by eZanga, GenieKnows.com, IceRocket, EgoTVOnline and GossipGirls. (emailed release)

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Gartner’s estimate would amount to a 64 percent increase over 2007, and $4.5 billion in worldwide IPTV revenue in 2008, a 94 percent increase from 2007. And that’s withstanding, Gartner notes, increasing competition from YouTube, Joost, MySpace, Facebook, NeuLion, Apple TV, iPlayer, Hulu, Amazon Video on Demand, Vudu, Netflix, and Blockbuster.

Back to ABI, where analyst Michael Wolf, who sometimes writes for us, says increasing broadband speeds, Hollywood participation, and democratized production tools are all to blame for the rise of broadband video. Nearly half of respondents under 25, and 53 percent of respondents 25-29 said they watch long-form TV shows or movies online at least once a month. Somewhat predictably, three quarters of respondents over 65 have never watched TV or movies online.

ABI’s numbers are actually quite low compared to what we’ve heard. comScore said this month that 75 percent of the total U.S. Internet audience viewed online video in July.

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Perhaps the most interesting part of the announcement is the insistence by both companies that OEMs who sign up to put the widget channel (Intel’s name for the product) on their box must offer the consumer access to all of the widgets in the gallery. The gallery, which will be managed by Yahoo, will offer services by any company that uses the widget platform. Conceptually, it’s hard to get one’s mind around the concept of having a service provider set-top box that offers a whole host of widgets to stream third-party web services, but conceivably that’s a scenario that could be realized.

While the two companies are clearly very different in terms of product and style, both are aiming to extend their strengths in the PC web into the TV domain. For Intel, the move is part of a broader push into the consumer electronics space, a market which they believe today is largely built around processors with limited application overhead and little or no connectivity to the Internet. Yahoo, for its part, is looking to replicate the success it has had taking its brand onto the handset, where Yahoo widgets and the Go portal client software have been successful.

This announcement was part of a trio of initiatives announced by Erik Kim, senior VP and general manager of Intel’s Digital Home group. Kim announced a new chip, the CE3100 (known up to now as Canmore), an Intel Architecture-based chip targeted at embedded systems, such as an Internet connected Blu-ray player. He also announced a support network of various middleware and driver developers to create software that will jump-start Intel’s efforts to develop Internet-connected CE boxes. Intel hopes these efforts will, in turn, help it elbow its way into other connected entertainment devices (the first generation of which use primarily MIPS-based processors from Sigma Designs and Broadcom).

For Yahoo, it’s a coming out of sorts for its Connected TV group, which is part of the larger Connected Life group, responsible for the success of Yahoo Go and its widget platform. The company believes the living room is the next great opportunity in the web space, one which has thus far seen a lack of any open approach to get content on the TV. They’re right in that regard, given that most of the current crop of Internet streaming boxes are largely limited to one or two web services as part of a walled-garden offering

ABI Research sees this as a continuing trend to push HTML and web services engines into consumer electronics products. Intel and Yahoo follow commercial browser vendors Opera and ACCESS, who have targeted the CE space, while Adobe is also eyeing the living room web with its Flash and AIR runtime through its Open Screen Project. We are seeing recent momentum for Java stacks in CE devices and set-tops through Blu-ray and Tru2way.

All of these software platforms incorporate the ability to deliver web content onto a TV screen. With this announcement, Intel and Yahoo hope we move the living room web from a closed, walled-garden market to one more like the PC web.

Mike Wolf is the Director of Digital Home Research for ABI Research and writes about Internet Video and other topics. He also blogs occasionally between report deadlines on Internet TV and other topics here.

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