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New Focus for Apple iPhone: Exclusive

Stocks in this article: AAPL SNE OVTI GOOG MSFT RIMM

CUPERTINO, Calif. ( TheStreet) -- Apple (AAPL) is upgrading its camera for a revamped, presumably 4G version of the iPhone in 2011.

It's heart-stopping, to be sure. While Apple has yet to introduce the 2010 iPhone, the company has started to make supplier selections for next year's version. And at least one big change with the fifth iteration of the iPhone will be the camera.

Hello Sony (SNE), goodbye OmniVision (OVTI). Apple has picked Sony's 8-megapixel camera chip for the 2011 iPhone, according to supply and manufacturing sources, said Rodman Renshaw analyst Ashok Kumar.

If true, it's good news for iPhone fans looking for more photo shooting power on their phones. But the move would displace OmniVision, Apple's current camera supplier to the iPhone.

Neither Apple nor OmniVision were immediately available for comment.

OmniVision is expected to supply a 5-megapixel camera for the upcoming version of the iPhone due out this summer, said Kumar.

An OmniVision camera chip

Apple has not had a strong track record in cameras. The most recent iPhone 3GS features a 3.2 megapixel camera at a time when rivals Research In Motion (RIMM), Google (GOOG) Android-powered HTC phones and even Microsoft's (MSFT) new Kin phones feature 5-megapixel offerings.

Last year, Apple was expected to introduce a camera on the iPod Touch, but the launch was scrapped due to unspecified issues with the camera module, according to reports at the time.

Since last year, OmniVision has been Apple's exclusive camera chip supplier to the iPhone, a relationship that has helped double OmniVision's share price over the past year.

There has been a great deal of speculation around Apple's 2011 iPhone. The timing of the phone launch comes after AT&T's three-year exclusive sales contract ends. It will also coincide with Verizon's national debut of its fourth-generation or 4G wireless network. To industry watchers, a 4G Verizon iPhone would be seen as a formidable entry in the smartphone race.

Swapping key components like cameras suggest that Apple is overhauling the guts of the iPhone and quite possibly the design, which is now three years old.

--Written by Scott Moritz in New York.

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