Blog Post

Why Apple’s FaceTime Is a Huge Opportunity

iPhone FaceTime CamerasEven before Steve Jobs announced the fourth generation of the iPhone, people had confirmed the phone would ship with two cameras: a standard one on the back for taking pictures and a second one on the front for something more novel: mobile video chat. As Apple dissenters are more than eager to tell you, a front-facing camera is nothing new; phones in Europe and Asia have been doing it for years and the EVO 4G from HTC shipped months before the iPhone 4 with one. However, Apple (s aapl) did include something with every iPhone 4 they shipped that set it apart from other devices with front-facing cameras: FaceTime.

FaceTime is Apple’s software and protocol for video chatting between devices. There’s no setting the phone up by creating a username or logging in; you can just try to start a video conversation with someone, and if the person has an iPhone 4 and is on Wi-Fi, it will work. There’s nothing fancy about the software; it’s just a straightforward video conversation, but that’s all it needs to be. It does what it needs to perfectly.

There was a lot of excitement about this feature when the phone came out, and Apple has marketed it heavily. However, there’s been noticeable cynicism about the staying power of FaceTime as an actual form of communication from many of people in the technology space. The most common reasons given are that people don’t want to video chat most of the time, the need to be in a WiFi-enabled area to use FaceTime, and not everyone has an iPhone 4 to FaceTime with. However, most signs point to Apple addressing these issues. FaceTime represents a huge opportunity for Apple to finally democratize the video conversation like we’ve all seen in countless science fiction films. The keys will be ubiquity and simplicity.

Apple already has the simplicity with the iPhone 4’s version of FaceTime, and they seem to be poised to get the ubiquity.

Apple is holding a press event Sept. 1, and most people will tell you this is their yearly iPod event, where they refresh their iPod products, and it’s almost a given that Apple will announce a new version of the iPod touch at this event with a front facing camera that will be FaceTime-capable. The iPod touch will likely work with an email address instead of a phone number, but hopefully Apple will try to keep the simplicity of the product intact.

This move would allow anyone who doesn’t want to be locked into a two-year exclusivity deal with AT&T (s t) (or get a new smartphone) to use FaceTime. It would also put FaceTime in the hands of millions of consumers by creating a device that will likely start at a sub-$200 price point, destroying one of the biggest disadvantages of FaceTime: the limited population of users.

Another big argument is the fact that FaceTime currently needs Wi-Fi to work, although this will hopefully be fixed in the coming months, as noted by Steve Jobs during the unveiling of the iPhone 4.

Consider being able to buy your Mom or someone who doesn’t want a data plan an iPod touch and having a simple, elegant solution to video chatting, with no set-up, no “why is my microphone not working” or “I can’t see you,” blending easy software with simple hardware. This will probably be the biggest catalyst for FaceTime in becoming a viable form of communication.

If I believed more people have FaceTime, I’d be inclined to try it more often, instead of wasting my time trying to FaceTime with friends and asking the questions, “Do you have an iPhone 4?” and “Are on Wi-Fi?” When Apple releases this iPod touch and enables 3G FaceTime, I won’t have to worry about those questions, and I’ll likely use FaceTime a lot more.

Apple is also uniquely placed because it can integrate FaceTime functionality into many more of their products. iChat is a likely next step when Apple’s next version of OS X is shipped, and would allow for phone-to-computer video chat. Another place for the functionality would be on the rumored iTV. If you could hook up a webcam to the device, then do some sort of group video chat integrated with televisions shows, there could be some really interesting possibilities. A developer could create a video-chat-based discussion during a show, or a a video-based game. Admittedly, it does sound farfetched given FaceTime’s current state, but it would be wrong to assume these types of interactions can’t be commonplace in a few years.

This isn’t to say that video chats are going to completely supplant voice conversations. There are definitely times I don’t want to be seen by the person on the other line, but there are also times I wish I could easily video chat with a friend anywhere I am. I want to show them a cool new couch I bought or an awesome street performance. I want to be able to see their reaction live, and I want them to be able to see me. This, also, isn’t to say that FaceTime will be the end-all-be-all version of video chat, but it seems to be taking the lead compared to its competitors, notably Fring and Skype.

Video chat has been something that people have been waiting for years to be easy and simple. Apple has done it before with iChat’s video chat capabilities; iChat easy, high quality and stable. Millions of people use it, and at least anecdotally, many of my friends bought Macs instead of PCs to simply have the ability to chat with friends using iChat. Skype added similar functionality and is now growing in popularity. FaceTime could likely go the same way as iChat and be supplanted by Skype, but either way, it seems to be making important steps in the right direction. Apple has the opportunity to incorporate FaceTime into all of their upcoming product lines and spur the innovation that seems long overdue to finally make the video chat a ubiquitous form of communication.

Related GigaOM Pro Content(sub req’d): Report: The Consumer Video Chat Market through 2015

22 Responses to “Why Apple’s FaceTime Is a Huge Opportunity”

  1. James Carlson

    For me facetime is a godsend. I have a nine-year old son in Mexico, where he lives with his mother. They have an internet connection, but it is none too great. I have tried Skype and iChat … they both work poorly. Lousy video and usually bad audio as well. Also, my son is hearing-impaired, so good audio quality is a sine qua non. Facetime has the needed audio quality, and the video quality is good -far better than either skype or ichat. Finally, there is the problem of notification. A facetime call will ring on both mac and ipod or iphone, so we don’t have to set up the call.

    Since I gave him an ipod a few weeks ago, we use facetime several times a day. And wifi only is the way to go for us, since it cuts down on costs. I am spending less now doing video chats than I was before making phone calls.

    For a parent whose child is far away, this is just wonderful.

  2. Norman Hart

    The problem is I think no one really cares about your new couch or the street performance. If I receive a facetime call I have to drop everything and give you my undivided attention. With a voice call I can multitask. So while youre showing me some two bit bucket drummer in seattle Im here trying to get my toes licked. Snap a pic and text it to me , we’ll both be better off.

  3. Apple is certainly heading in the right direction by introducing dual cameras on the iTouch and iPhone 4, but despite their large user base they still do not rule the personal computer or smartphone world (~90% of the world’s computers are Windows-based and a strong majority of smartphones utilize other platforms). The basic fact that FaceTime only works between iPhone 4s on strictly Wi-Fi networks is enough to provide a significant hurdle for FaceTime to over come. FaceTime is severely limited by its inability to perform cross platform (multiple OS) video calls on various networks. Right from the start my company Damaka addressed this cross platform issue; we not only incorporated cross platform functionality, but provide advanced features like application sharing and Sweepingâ„¢ (network & device handoffs of live sessions) over any mobile device (Android, iPhone, iPad, Windows Mobile, Symbian, BlackBerry) on any network. So although FaceTime is on the right track, there are currently more comprehensive solutions available.

  4. Skype has almost 600 million users. Skype has video chat. If users don’t already have a camera, a basic one is $10-$20. Yet, very few I know use video chat. I use it once when I connect with someone after a long time and then just use audio calls after that. It’s more laid back, I can do other stuff during the conversation and not be dressed for it.

    I must admit I don’t have a single friend or have heard of one who bought a Mac for iChat. So we must have different kind of friends.

    The point is… video chat is old, has been very affordable and many already have access to it. Putting it on a new device isn’t going to change that beyond the novelty phase. There will be some special uses by being able to show around with it etc, but that’s about it. Less is more. Not having to show yourself is a feature, not a limitation – since calls often don’t have preparation time like live meetings do.

    • An answer is that iChat is considered to be a system application for OS X, like and iCal. They don’t normally issue feature updates for these apps. I’d say that with the next release of OS X, 10.7, you should expect a FaceTime update to iChat.

  5. Ali,

    I tend to agree with Tomas regarding the ease of use and the novelty of FaceTime (=it isn’t).
    And the fact that FaceTime is an Apple-only service is going to hurt it badly: in the same way that you don’t think if the person you are calling to has an iPhone, why should you think it when you want to video call him?
    Video calling needs to be as robust as voice calling – it needs to be in the underlying communication infrastructure, as without it, it will stay siloed.


    • What you say is true, but you cannot (absolutely cannot) begin implementing what you are suggesting without starting from somewhere.

      There is no agreed upon way to video chat via phones at this moment and what Apple is doing is putting in momentum the groundwork necessary to eventually make it such that FaceTime protocol becomes as standard as voice phone calls.

      • Thib,
        While you are correct, there are multiple standards for video calling services which are quite successful and supported.
        Apple’s way of doing FaceTime is a proprietary one even though they do use “open standards” in this case.
        FaceTime protocol can’t become as standard as voice phone calls – it is a mix of their own internal push notification server, XMPP, SIP and some additional proprietary signaling – instead of simply using pure SIP or H.323. Furthermore, standards require collaboration and work in specific standardization organizations – the ITU, IETF, IMTC and the likes. I don’t see Apple collaborating in any of them for the purpose of FaceTime.
        While they might mark the beginning of video calling, I don’t expect them to win this game of service.


      • Sérgio Carvalho

        Untrue. All third generation cell phone protocols support video calling. Us Europeans have had video calls available for about five years now. Standard across all phones, easy to use, with many deployed phones having front-facing cameras. In fact, all that Ali Shah promises for the near future from Apple is old news this side of the pond.

        The result? Other than the occasional use, the feature is just not practical for everyday usage. Almost nobody uses it.

    • What will distinguish Apple’s promotion of video calling compared to previous efforts will be their ability to get tens of millions of compatible handsets and devices in circulation quickly. No one–not even in Europe–has managed that feat yet. Also, if I’m not mistaken, Apple has committed to submitting FT to IETF (as pointed out, several of its components are already IETF standards).

  6. Get your facts correct:

    The EVO 4G shipped in June 4, 2010. This iPhone 4 shipped June 24, 2010. That’s less than 3 weeks, not MONTHS.

    “…the EVO 4G from HTC shipped months before the iPhone 4…”

  7. Tomas McGuinness

    Whilst it’s true that European phones have had front facing cameras for years, they have also had video calling for the same number of years. It is as easy to use as FaceTime and doesn’t require WiFi. However, people just don’t use it. Mobile phones, as we Europeans call them, are precisely that. Mobile. You just cannot have a video conference whilst in the car or walking the dog.

  8. I’m just not seeing that Wi-Fi only as being a barrier for FaceTime. Almost everywhere I go whether it’s a social outing or running an errand, these places have Wi-Fi available for free. It’s become the norm any more.

    I really think (and deep down hope) that companies like AT&T and Verizon have “screwed the pooch” so to speak. With high cost and limited usage that that AT&T and Verizon have, devices like the iTouch and upcoming Android tablets will surely become more popular and will be at the expense of the previously mentioned companies.