The success of camera-equipped cell phones has caught many industry analysts by surprise. Could video cell phones be next?

If you're getting someone a digital camera/cell phone as a present this holiday season, or if you've received one yourself, you're not alone. Camera-equipped cell phones, according to marketing research firm IDC and many others, are likely to outsell digital still cameras this year and may even surpass all cameras, film and digital, by the end of next year. What's more, they are on a pace to outsell DVD players, the previous most rapidly adopted consumer electronics product. Those are some remarkable numbers for a product that might seem a novelty.

Cell phones with cameras (like these from Sanyo) are selling at a pace to outdistance DVD players, the previous most rapidly adopted consumer electronics product.

The very swift success of camera-equipped cell phones has caught many industry analysts by surprise. Although I'm aware of cell phone makers experimenting with embedded cameras as long as five years ago, I've seen predictions suggesting it would be another three to four years before sales would reach anything like the current level. After all, though these phones have been available for more than a couple of years in the Far East and Europe, Americans have never been particularly anxious to adopt new technology for its own sake.

Yet perhaps there was a hint of change in the success of digital still cameras. Digital cameras have historically been far more expensive than film cameras for roughly equivalent image quality. Admittedly, that differential has decreased over the last few years, but there's still something like a 50% to 100% price premium for going digital.

Similarly, early cameras are poor in terms of quality. Today's best camera phones are no better than the earliest, overpriced digital cameras of the mid-1990s, rarely capturing images any larger than VGA (640×480) resolution. With onboard memory of just a couple of megabytes, camera phones are hardly practical for storing images. Some cell phone manufacturers now have prototype units with CCD resolutions as high as 1.3 megapixels, but a cell phone is never going to be the place to find a high-quality lens.

However, there are a number of reasons why digital still cameras have done so well and camera phones share many of their key characteristics. The obvious draw is the immediate feedback of an LCD for picture review. The ability to see shots helps ensure quality pictures, while the chance to delete on-the-fly means not spending money to develop outtakes (although, you could print a lot of outtakes with the money you'd save buying a film camera). There's also the potential for moving pictures onto a computer for image editing and electronic distribution in email and on webpages. But then, how many people really have their own webpages?

What the success of the new camera phones hammers home is that digital cameras are most often just a technological means to an end. It's not specifically about emailing or about designing photographic webpages, but about communicating and sharing life's moments. It's about sharing ideas, laughs, common experiences, and common understanding in a very direct and simple way. Image quality is, ultimately, a whole lot less important than the ability to share recognizable images, as long as the quality is “good enough.”

There will always be a place for quality standalone cameras. But, as digital still cameras have proven, “good enough” quality — especially for digital distribution — isn't tough to achieve with today's base level technology. Portability and convenience, especially when combined with instant personal communication, have proven a major draw.

Of course, it doesn't hurt camera phone sales that there is money on the table — money enough for the cellular carriers to give away camera phones almost for free, or at least as an almost-free accessory. For cellular carriers, the ability to send images means both an added feature and more use of the bandwidth that they have to sell and, thus, more revenue. Just as you can typically find a free phone deal if you commit to a term contract, cellular carriers seem just as happy to give users the ability to send image files at the click of a button.

Nokia's 3650 phone, like many of the newer phones, features a camera for video capture and playback in addition to still shots. Nokia is currently testing a 3G cell network in Europe.

Video phones are an idea with a longer history of unrealized potential than consumer HDTV. It goes all the way back to the 1970s, when AT&T, still a monopoly, was exploring technology that would use more of its telecommunications bandwidth. Yet, the recent upswing in videoconferencing and video appliance products suggests that visual communication is finally starting to become a reality. Adding video capabilities to cell phones already equipped with imaging CCDs and LCD screens is an obvious next step. In fact, it's already a reality in the Far East and parts of Europe, where companies like Packet Video and Emblaze Systems are working with cellular companies to establish a reliable infrastructure for streamed video.

A major part of that infrastructure is the increased bandwidth of third-generation (3G) cellular networks that are several months, if not years, from becoming a reality in this country. However, for many of the same money reasons that are currently bolstering camera phones, there's little question that domestic 3G technology will happen. It's already in process. And video services are likely to be a part of the mix. After all, the potential for-a-fee video features a carrier could offer and the resulting extra billable minutes directly translate into more revenue. What's more, the fact that there's a billing model already in place could make mobile streaming video a better business opportunity than streaming video on the Internet.

So let's assume all that happens on schedule: that cellular carriers work out all of the infrastructure issues, and 3G networks and video phones begin to show up in this country within a couple of years. What kind of video are we talking about on those tiny little screens?

It really could be anything from video messaging to watching TV shows or even movies while waiting in an airport lobby. And given the personal nature of cell phones, as well as the direct access a cellular carrier has to a customer and the billing system already in place, it's easy to envision carriers and content owners creating very personal video packages.

Customers could choose from a menu of on-demand programming. Sports enthusiasts may be able to purchase access to game highlights or sports news, if not pay-per-view access to entire games. (Listening to regional sports was one of the major drivers of early Internet radio, and Major League Baseball has just reported that its subscription-based games-on-demand Internet service is the largest of its kind in the country and will be expanded in 2004.)

Financial service sectors could subscribe to up-to-the minute business announcements from CNBC, Bloomberg, or some other financial broadcast service (much like subscription services already in place over the Internet). There might also be localized news or places-to-go information for travelers. With a set base fee, maybe something like $2.99 or $4.95 depending on the content, plus the added billable minutes, there's a possible revenue stream for both content owners and carriers.

What about creating video? Of course, video cell phones have little direct professional value, but if you've watched CNN lately you've probably seen a live news report from Iraq or Afghanistan via “videophone.” Now, the BBC has developed a way to deliver a video cell phone stream to air and has just started using this footage in broadcasts.

However, as those camera phones are teaching us, the appeal of mobile video will likely begin with very personal communications, people sending images to one other to enhance spoken words. In Japan that already means teens and college friends, often couples, sending visual messages. But any traveling parent could easily imagine the appeal in seeing a child's face at bedtime. Maybe it's simply saying hello from Disneyland, or participating in a video-conference or business meeting.

Former longtime Speaker of the U.S. House Tip O'Neill used to say, “All politics is local.” Quite a comment for a virtual career Washington politician. However, O'Neill understood that politics begin with local voters and end with solving the problems of local citizens.

These silly little camera phones taking the consumer electronics world by storm and the video cell phones that will follow may or may not have any real professional appeal. But if nothing else, they remind us that all communication is personal, and that goes for video as well.

The most successful video work we do — whether it's a movie aimed at the hearts of millions, a wedding video aimed at dozens, or a distance learning training lesson for one student — is most effective when it's communicating to one person at a time. Not a bad reminder for this time of year. Happy holidays.