Compressing And Decompressing
While 1 Mbps may seem adequate to transmit a stereo signal to a pair of headphones, other information particular to the Bluetooth standard must also share the bandwidth. Signal encryption, error-correction protocols and device authentication codes all have to be broadcast and received alongside any user specified data. That doesn't leave a lot of room to send the latest Britney song in Hi Fi Stereo through the air, but it can be done.
Several manufacturers have begun adding advanced compression capabilities - referred to as the advanced audio distribution profile (AD2P) - to the latest Bluetooth chips, allowing them to work with each other to carry high quality, split signal sound. Like two friends sharing a .zip file over email, the file is shrunk in the Bluetooth transmitter, sent, and then decompressed in the headphones. The separate signals are then sent to the left and right channels. This is obviously a bit more complex than the procedure used to send relatively low quality voice signals between a phone and an earpiece.
The i-Phono has hinges which allow it to be collapsed for travel.