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TheStreet Open House

Tech Rumor of the Day: Apple Videophone

Stocks in this article: AAPLEBAY

Updated from 12:11 p.m. EDT

Skype's imminent availability at Apple's (AAPL) App store has set off speculation that long-awaited video conferencing capabilities are just ahead for iPhone users.

To date, the iPhone has lagged the pack in the camera race. The current iPhone features a meager 2-megapixel camera and no video capture. Research In Motion's (RIMM) BlackBerry Curve and Storm have 3.2-megapixel cameras, as does Deutsche Telekom's (DT) T-Mobile Google (GOOG) Android G1 phone.

Speculation about some of the key features on the new iPhone has included a first-ever video camera, and the possibility of two cameras, one on the front and one on the back. Now, with Skype ready to start offering its iPhone software Tuesday, there's anticipation that a front camera would let users do a Skype-powered video chat on the iPhone.

It's a juicy rumor, fueled in large part by the rising expectations ahead of the CTIA wireless industry show starting Wednesday.

But brace for a letdown.

Video and wireless continue to be among the hottest convergence points in technology. This intersection, however, has often been the scene of a few major duds and disappointments -- e.g. Verizon's (VZ) VCast video clip service, mobile TV, etc.

Skype, the Internet calling unit of eBay (EBAY), along with Time Warner's (TWX) AOL and Google's Chat service, has taken broadband connections and allowed millions of users with Web cams make video calls to other service users for free.

Not only is the price right, the novelty of seeing the person you're calling has helped Luxembourg-based Skype take its popular phone service into the booming video segment.

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