(Source: Apple)

The new FriendBook app may become a hot new social network  (Source: Friendbook)
Apple's new playground opens its gates

After months of work, Apple's App Store for the iPhone/iPod Touch is complete.  For all the criticism for carrier exclusivity, Apple made one key reversal of stance, when after initially trying to clamp down on them, it decided to embrace third-party developers.  As the months passed its enthusiasm grew, as it released software development kits.

Now with the arrival of the new 3G iPhone, which goes on sale Friday, Apple has formed the applications market into a second pillar of its phone business.  Customers of the iPhone -- old and new -- will greet this new venture gladly; gone are the days of a scant few handpicked Apple apps.  Now anyone with a good idea and a bit of software savvy can make their own application.

The store opens Thursday and will offer 500 software applications.  Games, educational programs, mobile commerce, and business productivity are just some of the plethora of software.  Twenty-five percent of the applications are free, including AOL's AIM.  And of the remaining applications, 90 percent are $9.99 or less, making them an easy impulse buy.  With the iPhone looking to one-up usurping rivals like Verizon's Voyager or the various HTC smartphones, the applications store Apple hopes will give the iPhone an edge.

The store has support from major players -- Facebook, MySpace, AOL, eBay, Major League Baseball, Sega and Bank of America among others.  Facebook and MySpace have a new competitor though -- Friendbook (pictured).  This new iPhone-specific social network may become a top new social network.

To download applications, you can simply directly access the store and download on your iPhone/iPod Touch.  Additionally, it is also relatively simple to install applications through iTunes; just update your iTunes to the latest version -- 7.7 -- download the software, and sync it to your iPhone.  In addition to the Apps functionality, the new iTunes version features the Nike+iPod functionality, long rumored, which allows you to track your runs using your iPod and special Nike brand shoes.

Steve Jobs, Apple CEO and founder, is more than pleased with the store.  He states, "The reaction we have gotten so far has been really strong.  The quality and the sophistication of the applications you can write for the iPhone is in a different class."

Having learned his lesson from the failure of Apple computers in the 1990s, which was thanks in part to poor software support, Jobs was determined not to make the same mistake.  Now the new applications store promises to provide fast, easy instant access to software perhaps akin to Valve's software distribution network on the personal computer, but never before on this scale on mobile phones.

The store is projected to generate as much as $1.2B USD in yearly business by 2009.  It will also help to fuel iPhone sales.  While Apple certainly looks poised for success, don't think Apple is profiting much at the expense of its hardworking independent developers.  Apple gives developers a generous 70 percent of sales.  Mr. Jobs insists that the goal is not to make much profit, but rather merely to "sell more iPhones."

The 30/70 profit split was derived from the video games industry, according to Mr. Jobs.  This seems logical as a third of the applications for the iPhone are in fact video games.

The store, however, is being met by a wary eye from some developers.  Some are concerned that their applications -- say web browsers or music services -- might be disallowed by Apple as they would compete with Apple staples such as iTunes.  Thus far, Apple has been rather liberal in its allowances, unlike many phone companies, but this may change.  Mywaves, an ad-sponsored free mobile video service which would compete with iTunes video already has received a bit of a cold shoulder.  Mr. Jobs acknowledged this, but indicated that talks would continue.

Also, while Apple's distribution may be more streamlined than its competitors, its competitors still have more developers and more software despite being more restrictive.  Palm says it has 30,000 software developers writing for its products, while Microsoft boasts that its Windows Mobile OS has 18,000 applications, available on 160 carriers worldwide.

Despite this adversity, the iPhone App store seems likely to succeed, perhaps thanks to Apple's marketing mystique.  Says Gene Munster, a senior research analyst at Piper Jaffray, "Everybody wants to build an iPhone app.  It’s pretty rare you hear things like this. The enthusiasm is surprising."

How serious is the new store?  Matt Murphy, a partner in a fund set up by Kleiner Perkins Caufield & Byers is directing a $100M USD fund to invest in iPhone developer startups.  Of 2,000 ideas submitted, his firm is seriously considering backing 100 of them.

Some of the applications it supports are rather exotic.  The iControl Networks proposal will allow homeowners to turn off their lights and alarms and watch security cameras -- all from their iPhone, remotely.

With the variety of options and strong interest and investment capitol the App Store seems poised to make a unique splash in the phone and music player industries.  It marks a new chapter for Apple's style of developer interactions.  And it marks perhaps one of the strongest features of the already popular iPhone, yet.

"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch

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