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