Microsoft and Apple may be rivals, but that doesn't stop Microsoft from being very excited about developing possible applications for the iPhone, according to recent reports.  

Soon after the release of Apple's third party software developer kit (SDK) for the iPhone, Microsoft set an entire team of engineers to work analyzing it.  Tom Gibbons, corporate vice president of Microsoft’s Specialized Devices and Applications Group, states, "It’s really important for us to understand what we can bring to the iPhone.  To the extent that Mac Office customers have functionality that they need in that environment, we’re actually in the process of trying to understand that now."

The move is not an entirely new one either.  Microsoft has long maintained a group of engineers tasked with porting Microsoft software to Apple's operating systems.  Microsoft's Mac Business Unit is based in Mountain View, Calif., cozily close to Apple's headquarters, which is just miles away.  The Mac Business Unit has been extremely successful in marketing the Microsoft Office Suite to Mac users.  Though Microsoft refuses to release figures on the unit, one of its most lucrative, Fortune magazine estimates that it did around $350M USD in business last year, and may have made as much as $200M USD in profit.

Microsoft has taken a strange sense of pride in being the best Apple developer other than Apple.  Microsoft's extensive experience with OS X and its inside knowledge of the Microsoft Exchange protocols the iPhone is adopting for business email means that Microsoft should be primed to deliver some powerful iPhone applications.

Gibbons states, "We do have experience with that environment, and that gives us confidence to be able to do something.  The key question is, what is the value that we need to bring? We’re still getting comfortable with the SDK, right? It’s just come out. So we had a guess as to what feasibility would be like, now we’ll really get our head wrapped around that."

Microsoft's voice recognition unit TellMe, a recent acquisition, is also eyeing the iPhone.  TellMe's primary focus is in developing for the Windows Mobile operating system.  While the situation may be slightly ironic, it is pure business and general manager Mike McCue says that as long as the iPhone SDK supports voice recording and location based technology, TellMe will be all over it.  McCue states, "If the SDK supports these things we’re absolutely going to get a version out there as soon as we can, get TellMe out there on the iPhone."

In June, Apple will release an update which will allow third-party SDK-based software.  Until then Microsoft will be busy coding, coming up with new products for the iPhone.  Business certainly makes strange bedfellows.