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Rumor has it that Apple is releasing an iPhone in early 2007. It is also an iPod with video.

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The story below is over a year old, the iPhone is no longer a rumour, it is a fact, there will be a iphone I think sometime this year, Mobilewhack V2 blog is dedicated soley to reporting on everything iPhone.

Rumours that Apple is making their own phone (dubbed by the pundits the "iPhone") are flying around the net, backed up by reports that they're showing prototypes around to their partners. These rumours are probably true -- for one simple reason -- the iPod.

With micro hard drives like the one in the iPod mini making their way into phones, Apple's fantastic product -- which has single-handedly turned the company into a darling on Wall Street -- will soon be as obsolete as a QWERTY keyboard in South Korea. Given the choice between carrying two devices or just one, consumers will choose one, and it won't be the iPod.

So Apple has to make an iPhone to keep up with the convergence friendly. Imagine it as an iPod with a radio inside. That's the basic picture but there will be so much more. Here's a look at the options the company can consider adding into their first foray into the phone-making market.

1. Calling plan. It's unlikely Apple would let just any yahoo operator sell their phones. Apple's all about total integration, and the calling plan will be a part of that. Apple will design the plans, and they'll twist the arms of the carriers to make them simple to understand and attractive to Apple's users. Cellular operators are infamous for being bureaucratic and difficult to deal with, but Apple's already shown they can handle that -- look at what they did with the recording industry.


2. UWB. In order to work with all of the your iApps on the computer, you phone needs to be able to talk to it. Bluetooth just isn't fast enough, we need more speed! I'm going to go out on a limb and suggest that Apple will jump the curve and once again drive delivery of a new technology to consumers by incorporating Ultra WideBand. UWB can achieve firewire-like speeds at close range, making it an ideal replacement for bluetooth, firewire, and USB cables.

3. iPhoto integration. This one is a gimme. iPhone will have a camera, and a good one at that -- no skimping on such an important detail from Apple. They're serious about imaging, and iPhoto is already a strong selling point for Macs because it's so easy to use.

4. iChat integration. Mobile presence is coming, and it's coming strong and fast. With the iPhone, you'll be able to sync your IM contacts with the Mac and be online when you're on the move. You might be able to transfer chats from PC to mobile.

Integrating the phone into iChat AV would be a technical challenge but a big bonus as well -- especially if the iPhone comes with a forward-facing camera for video chat (common now in Japan).

5. iMovie integration. The latest megapixel+ camera phones can take impressive quality MPEG4 videos. What better way to enhance the utility of that by enabling you to seamlessly transfer and edit the films in iMovie?

6. Industrial design. I'm not going to predict what kinds of materials and design Apple will put into their phone -- based on the iPod, Mini, and latest iMac designs, it should be interesting. Major questions come in on whether it will be a flip phone - I think yes, and what kind of data entry it will have.

Pen interfaces have sex appeal but are not very popular in the global market. Nokia just phased out their pen-based Series 90 phones, although they plan to bring the pen back someday. Palms are found almost exclusively in the US, and Apple's last pen device, the Newton, still has some bad memories associated with it.

T9 keypads on the plus side can be operated with one hand, and are popular in Europe and Asia. But the US market hasn't really grokked the idea that you can type effectively with only 9 buttons. So even though the standard keypad makes the most sense ergonomically- it's small and convenient- Apple remains a very US-centric company. It's a tough call, but I think they'll go T9. Or pull a rabbit out of the hat with some fantastic new input method.

7. The rest. The phone will have all of the obvious details, like Java games, colour screen, calendar, etc.

So where's Apple going to get all of this technology from? It's not like they've ever made a phone before. But they never made an MP3 player before the iPod. Instead of inventing it all in house, they bought companies that had the necessary technology (including the interface!) and moved their newly acquired staff into a secret Cupertino location. They can buy a good radio interface from Samsung or any number of quality up-and-coming Asian makers. They can buy a Java VM from Sun or IBM. For Apple, it's how the pieces snap together that make them such great products.

Timewise, iPhone could be out within a year or a month. All of the technology I've covered exists now. Margins in the phone business are totally different from Pods and PCs, but you can bet that Apple will get a good deal because of what their star power will do for whatever carrier they grace their first offering on. They'll cut a surprising deal and could well change the way that handset makers and operators interact (much the way iTunes Music Store changed the online music business and forced the industry and other companies, like Microsoft, to respond).