Sunday, March 9, 2008

Apple unveils iPhone grand plan

Steve Jobs and two of his top lieutenants spent just over an hour last week outlining their plans to allow software makers to create programs custom-built to run on the iPhone, Apple's innovative mobile handset.

The move could mark the beginning of a new phase in the development of mobile software, as programmers build programs that are not limited by the physical constraints - such as fixed buttons and small screens - that plague many other mobile handsets.

The iPhone's break-through touch screen means that Apple's mobile handset is a virtual blank slate, and the ability to write mobile software free from the usual constraints is likely to have software geeks salivating.

"You've got the ultimate in flexibility in user interface," says Van Baker, an analyst at Gartner.

"That, combined with a big, high resolution screen, makes it an intriguing platform in the mobile space."

John Doerr, a partner at Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm, underscored the excitement around the iPhone's potential to emerge as a powerful new software platform on Thursday.

Taking the stage at Apple's headquarters immediately after Mr Jobs's presentation, Mr Doerr announced a new $100m venture capital fund dedicated to backing companies that are building software for use on the iPhone.

Mr Doerr said Apple's software plans could lead the iPhone to emerge as the "third great platform" for software makers after the personal computer and the worldwide web.

"In your pocket, you have something that's broadband and connected all the time.

"It knows who you are and where you are. That's a big deal. It's bigger than the personal computer," he told the cheering crowd.

In spite of such excitement, Apple will need to overcome several challenges if it is to succeed in its bid to shake up the mobile software market.

First, Apple needs to follow through on plans to make the iPhone more competitive against the BlackBerry and other smart phones in winning business customers.

Apple devoted a large portion of its presentation on Thursday to describing its plans to make the iPhone compatible with Microsoft Exchange, one of the leading business "push" e-mail services. It also plans to roll out a host of new security features designed to appeal to corporate IT departments. Once these features are in place, Apple can work with its mobile partners, which include AT&T in the US and Orange, Vodafone and TMobile in Europe, to woo big corporate customers.

"Apple has to work successfully with AT&T to penetrate the enterprise market, because they don't have an enterprise sales force," says Mr Baker at Gartner.

"If they don't get the installed base, business application developers aren't going to be interested."

Apple must also ensure that it maintains good relationships with the developers who will create new iPhone applications.

Mr Jobs last week said that Apple planned to take a 30 per cent cut of third-party applications sold through iTunes or through its new iPhone "Apps Store".

While developers will be able to set their own price, those two channels will remain the exclusive methods of distribution for iPhone applications.

This is a situation that could lead to friction if developers eventually come to feel they are not getting a fair deal.

Apple plans to screen applications before they are made available to iPhone users. That will allow Apple to ban pornographic or otherwise objectionable applications from being installed on customers' phones.

Apple may need to devote considerable resources to ensuring that this process works smoothly.

It also needs to devote time to make sure that the screening process does not lead to unacceptable delays in rolling out new software or software updates.

On top of this, Apple will need to take security precautions.

Mr Jobs on Thursday acknowledged that allowing outside developers to install applications on the iPhone would create new security risks for Apple customers.

"This is a big concern," he said. "It's a dangerous world out there."

Mr Jobs said Apple had tried to strike a balance between the need for security and the desire to make it as easy as possible for developers to distribute their wares to their iPhone customers.

"Developers have to register with us," Mr Jobs said. "They get an e-certificate that tells us who they are, so if they write a malicious app, we can take them down and tell their parents."

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