(added 7/23/2007)
" Mike, I tried about seven different settings in Quicktime to encode the movie file I referenced in my original e-mail. (first report below using Handbrake and QT Pro) I tried using the Export "Movie to Quicktime Movie", where you can (try to) fine tune the settings. (You cannot customize the settings when export "Movie to iPhone"). I adjusted bit rate, compression type, video size in various ways and could not get a movie that looked good. The quality was awful.

I broke down and bought VisualHub as suggested by another reader (below), and Visual Hub, as far as I am concerned, is the way to go for iPhone movies.
For comparison purposes, I used the original reference file from my first report to you (706.5 MB file, 159 kbps bit rate, 811 kpbs total bit rate, H.264 codec, AAC Stereo, 854 x 466 dimensions). Remember that this results is from using the standard AppleTV preset in Handbrake except that I adjusted bit rate to Constant Quality of 50%.

Using your other reader's suggested settings in VisualHub (H.264 turned on, 750 kbps bit rate, two pass, ffmpeg decoding turned on), I got the following result:
765 MB mp4 file, 127 kbps bit rate, 878 kbps total bit rate, H.264 video, AAC stereo, 480 x 272 dimensions.

Reducing the bit rate to 500 kbps (as your other reader does for anime) and one pass gave me the following result:
545.8 MB mp4 file, 127 kbps bit rate, 625 kbps total bit rate, H.264 video, AAC stereo, 480 x 272 dimensions.

I am pleased that the first file is only 59 MB larger than the original. I could live with that. But I am very happy that reducing the bit rate and using only one pass gets a two hour movie to a half-a-gigabyte!
The real questions: How do they look? To test, I opened both files up side-by-side in Quicktime and watched the same scene side-by-side (on a glossy MacBook screen). I then loaded both into my iPhone and watched the same scene again.
The movie is Spiderman BTW, and the scene is an intense action and visual effect scene. The 765 MB file looks excellent. The smaller 545 MB file looks very good. I notice subtle differences in the clarity. Faces are not quite as sharp and backgrounds look a little less clear in the smaller file. But, I had to really look and watch the scenes a couple of times, stopping and starting, to really notice these differences. I can live with that quality difference for the smaller file size.

In the end, I was resistant to VisualHub because I have QT Pro and felt like I should be able to get the results I wanted with it. But, if you have readers who are concerned with getting smaller file sizes, but still maintaining decent quality for their iPhone videos, VisualHub did the job and was much easier to fine-tune to get the desired results.
Thanks, AJT"

(added 7/20/2007)
" Best video conversion utility for iPhoning your video - VisualHub
If you have a ton of re-encoding or transcoding to do, the only decent tool for the job is VisualHub. Its cheap ($23), and it works drag-n-drop simple, and has batch functionality.

I had tons of videos in divx format (okay okay.. it was every single episode of Top Gear ever), and using VisualHub, i was able to convert them in a single night (on my Mac Pro) for my iPhone.

Unfortunately for me, i had recently completed a massive DVD and Top Gear encoding effort optimized for quality for AppleTV. Useless for the iPhone. I had used Handbrake in h.264 mode for my DVDs (what great software!) and VisualHub to convert the Top Gear DivX files to h.264.. It took a lot of trips to my MacPro slamming in DVDs one at a time - but i have about 60 movies at the push of a button now via AppleTV.

Here's the problem... How do you automate encoding the same 60+ movies and 100-ish TV shows for iPhone?

VisualHub is the best way because it will let you batch process the files to re-encode them for the iPhone from the high-quality h.264 files.

Purists will swear this is a stupid idea because of the copy-of-a- copy methodology i'm using. I say let them be pure. Putting in DVD after DVD to re-encode is fine if you have the time or a small inventory of DVDs. I spend enough time tweaking ProRes 422 files from HDV doing work, i don't have the inclination to do the same thing for "pleasure".

To prove i wasn't crazy, I tested 3 movies - Cars, Spirited Away, and Snatch. First i re-encoded them with VisualHub from the AppleTV- optimzed h.264 files. I then did the same movies with Handbrake with the same target settings as i used to in VisualHub - and i couldn't tell the difference.

Here's the technical specifics of what i do - feel free to tweak as you see fit:
In VisualHub, I use the iPhone setting, and select the H.264 button, but i also pre-define the encoding bitrate in the "Advanced Settings" drawer. 500kbps bitrate for anime files and 750kbps for everything else. This seems to work the best for me, and strikes a good balance between quality and size for the small screen.

The *most* important thing to remember when doing this is to be SURE to select "Force FFMPEG Decoding" in the Advanced Settings drawer... there is a bug in thew QuickTime decoder that will make this process take 20 times longer (or more) to get the re-encode done. FFMPEG doesn't have this bug. I also set the "Force 2-pass", but that's because i'm a long-time DVD maker, and you can't just use a single pass when encoding. Your milage may vary.

Using these settings, i have 250 songs, 12 episodes of Top Gear (12 hours), and 4 movies on my iPhone using this method. That's about 18-19 hours of video. The quality is good enough that every person who sees my phone drops their jaws in awe.

Bear in mind that VisualHub will re-encode ANYTHING you have - DIVX, XviD, Sorenson, most WMV files - you name it. So you can throw in a ton of files, set them off, and be ready by morning with fresh h.264 files.

I don't work for VisualHub, i'm just a video pro that travels a lot and has completely fallen in love with watching TV and movies on my iPhone in the airplane. (well, except for the whole "i can't use my Shure headphones part... but i'm sure Griffin will have the adaptor ready soon). Its a great product, and that's all i need to tell everyone i know about something great.
-anonymous
ps: i will GLADLY buy Top Gear Season DVDs just as soon as they start selling them - so far, my emails to BBC have gone unanswered. "

(from 7/19/2007 news)
"Below is the excerpt from a post I put on the Apple Support forums for the iPhone. I have been experimenting with ripping a DVD using Handbrake (http://handbrake.m0k.org/) as well as converting the ripped file using iTunes and Quicktime Pro. The results are interesting. It seems that it is better to use Quicktime to convert a video for iPhone than iTunes' "Convert Selection to iPod" (in the Advanced menu). The original ripped DVD, which was ripped using Handbrake's standard AppleTV setting (except for an adjustment to a constant quality of 50%), will NOT copy to the iPhone (iTunes says it cannot be played on the iPhone and refuses to copy the file)

The best option appears to be to convert using Quicktime where the file size is only slightly larger than the original file size, but with the same quality. The results when ripping a DVD directly using the iPod setting in Handbrake are not good. Though you get a really small file size, the quality of the video is "blocky".

Anyway, here is the post I put on Apple forums. (Original thread is here, titled " iPhone movie file size larger than "regular" movie file").
I did an experiment in converting a movie to a format playable by iPhone and the results are interesting:

Movie length is 2:01:06.

1) DVD direct to AppleTV mp4 format:
706.5 MB file, 159 kbps bit rate, 811 kpbs total bit rate, H.264 codec, AAC Stereo, 854 x 466 dimensions

I would mention what software I used to do this, but my last post to mention it in this thread got removed, so you'll have to figure that out on your own.

The observable quality of the movie is excellent in my opinion.

2) mp4 file in #1 above converted to iPod using iTunes:
1.39 GB file, 128 kpbs bit rate, 1631 kpbs total bit rate, H.264 codec, AAC Stereo, 640 x 349 dimension.

Again, the quality is excellent, but at 1.39 GB, not really usable for an iPhone (but perhaps a Video iPod with all of that extra space!).

3) DVD direct to iPod format:
378.1 MB file, 127 kbps bit rate, 432 kbps total bit rate, MPEG-4 codec, AAC stereo, 720 x 400 dimensions.

Result is a nice small file size, but a video that is low resolution and very "blocky".

4) File from #1 exported using "Video for iPhone" in Quicktime Pro (7.2). NOTE: result is an .m4v file. All other are .mp4.
820.9 MB file, 128 kpbs bit rate, 943 kpbs total bit rate, H.264 codec, AAC stereo, 480 x 262 dimensions

Quality is excellent with a file size only 114 MB larger than the file in #1 (which remember will allegedly not play on the iPhone since iTunes won't even copy it over).

It would be nice if QuickTime let you fine tune the expoert settings. Perhaps then you could get a smaller file size, but still maintain quality to make it worthwhile.
Thanks, AJT"

See above for AJT's later report on using VisualHub. A reader also sent a link to a blog post on DVD & Video to iPhone: Your Options with Handbrake, MPEG Streamclip & Turbo H.264.
(If you missed it, there's a previous article here with Encoding Speed Tests w/Elgato Turbo.264 Hardware Encoder using G4, G5 and Intel-based Macs.)