Analysis: iPhone SDK release offers big potential for users, developers

If you think the iPhone is popular now, just wait

Today's iPhone software development kit (SDK) announcement by Apple Inc. — long anticipated and long overdue — is big news for iPhone (and iPod Touch) users. Sure, there's a hitch: Just like last year, when Apple unveiled the iPhone in January and then made would-be buyers wait six months to get their hands on it, everyone will have to wait until June for all the promised applications and advances to arrive.

But it will be well worth the wait.

When the one-year anniversary of iPhone 1.0 rolls around this summer, iPhone fans will get what is essentially Version 2.0 of their favorite smart phone. The added features and apps expected then — some of which were showcased by Apple today — will transform the iPhone far beyond what it has been so far.

Here's a look at just what that will be like.

First, the upgrade to iPhone 2.0 — I'm calling it that, not Apple — means you can forget about those beloved hacked applications you now use. Without an SDK, developers for months now have had to cobble together all kinds of workarounds to get innovative programs running on the iPhone. (I'm talking about software like VNSea, the eBook reader, iRadio and that cool Guitar application.) That will change with the coming 2.0 upgrade, which will open new doors for developers, even as it kills access to the iPhone through the needed by those hacks. So start agitating now to get developers to port your favorite jailbroken applications to the new App Store, Apple's planned distribution system for iPhone applications. Hopefully, they'll hear your pleas and make those heretofore hacked apps available at a reasonable price.

The App Store, which will allow iPhone owners to buy and download programs directly to their phones, should put a slew of jazzy new applications at users' fingertips, further expanding the phone's uses and reach. Who hasn't wanted to send instant messages to friends directly from the iPhone without having to go through a complicated Web-based IM system? And who hasn't toyed with the prospect of Slingbox on an iPhone or iPod Touch? With the SDK, those possibilities suddenly become much more plausible. In fact, Apple showed off an AOL chat program during Thursday's announcement, along with games that can be controlled using the iPhone's accelerometer. (That's what flips photos and Web pages when the phone is rotated from the vertical to the horizontal.)

As welcome as those prospects are, the SDK unveiling wasn't even the big news of the day — though I'll have more to say about that and what it means for developers in a minute. The big news was the inclusion of support for Exchange, something that could be a game-changer when it comes to corporate IT acceptance of the iPhone. What do I mean? No more tortured work-arounds trying to figure out how to get company e-mail safely and securely on your iPhone.

Until now, wary IT administrators have been able to fend off users demanding corporate iPhones by citing Gartner Inc. reports that the device doesn't mesh with the enterprise and lacks the safety features that enterprise users require.

As the iPhone turns one year old this summer, IT administrators may have a much harder time telling users that it no longer meets corporate security policies or doesn't work properly with their Exchange Messaging system. In fact, Microsoft Exchange business users will be able to take full advantage of the iPhone's ActiveSync functions, including push e-mail, push calendars, push contacts and global address lists. They're all there.

In his presentation, Apple marketing head Phil Schiller alluded to the fact that ActiveSync interacts directly through the Exchange server instead of relying on middleware like the Blackberry Enterprise Servers. The more time hops needed for e-mail to travel, the more problems that can crop up — something that's been happening way too often with Blackberries recently. Microsoft has been trying to beat the Blackberry with this strategy for a while but is losing the client-side battle with a more clunky Windows Mobile 6.

It isn't just Exchange enterprise functionality that the iPhone will soon offer business users. The market-share-leading Cisco IPsec VPN (remember the "iPhone" name trademark dispute resolution) is also supported. IT administrators will soon be able to enforce security policies and device configurations and even do a remote wipe of iPhones — something many IT folks demanded if they were going to even consider rolling out iPhones in the workplace.

In a question-and-answer session during the SDK presentation, Apple CEO Steve Jobs was asked if he feels Research In Motion might be worried that the iPhone will soon have a lot of the capabilities available on the Blackberry. He demurred; I won't. There should be significant concern in the RIM camp.

Jobs went on to spell out how well the iPhone is doing, noting that in the first eight months it's been on the market, it has garnered 28% of the smart phone market in the U.S. While RIM is still in the lead with 41%, its main customer base is almost exclusively corporate users — the very customers Apple is trying to woo with these coming updates. Apple could make up that 13% gap in no time flat.

The iPhone won't stop at messaging when it comes to business applications. Salespeople and users in the medical profession will also have reasons to head for an Apple Store. At the SDk announcement, one of the apps shown off was a automation tool that, once it's in place on the iPhone, will allow users to easily see how they're performing against their sales goals. It's ironic that Salesforce, which is known for its software-as-a-service and Web apps, still sees the advantage of native applications on the iPhone platform. The application looked great and might be even better than the full desktop client because users can call customers by just clicking on a name in the database.

Another app demonstrated at the Apple event came from Epocrates, a medical software maker, and it might be the sleeper hit of the bunch. I am sure just about every iPod-loving doctor and nurse in every hospital in the U.S. is calling their IT people right now asking when they can get iPhones. From the demo, it looked like Eporactes' third-party app will be a boon for doctors needing quick drug-related information when interacting with patients.

It's a given that a lot of companies will be porting mobile versions of their software to the iPhone. But so will a lot of smaller, independent developers. Apple has ambitious plans for third-party development on the platform — even for developers who have been making unofficial jailbroken applications. In fact, they now have even more incentive to port their applications over using the legitimate SDK. Apple is offering a $100 million iFund in conjunction with Kleiner Perkins Caufield & Byers to help iPhone application start-ups.

Even without the iFund, Apple's development environment offers plenty of incentives. With its new App Store, Apple will handle the humdrum part of software sales like credit card processing, hosting and marketing, while giving a developer 70% of the take. That is potentially significant if you figure the economies of scale of the platform.

Let's say you're a small developer and you build an application — maybe it's something that turns your iPhone into an e-fax machine — that sells for $10. If your little app attracts just one-tenth of 1% of the 10 million iPhone owners that Apple expects to have by year's end, you've got 10,000 customers. You're bringing in $7 for each sale, or $70,000 — and that's not even including all those potential iPod Touch customers. That's what I call motivation!

With that potential, by summer there could be hundreds, if not thousands, of applications ready for the iPhone.

That's a far cry from where Apple was just last summer: At the time, it had a hot new piece of hardware on its hands that did a few things very well: phone, e-mail, Web browsing, iTunes playback — even YouTube videos and Google maps. Now, fast-forward to June 2008. Those original applications and the functions they offer are about to be swamped by a tsunami of new apps for both business and pleasure that will take the iPhone to new heights. Add in 3G broadband wireless capabilities — expected by the end of the year — and the only direction for Apple, its iPhone, the users and now developers, is up.

Seth Weintraub is a global IT management consultant specializing in the technology needs of creative organizations, including The Paris Times, Omnicom and WPP Group. He has set up and managed cross-platform networks on four continents and is an expert in Active Directory-Open Directory PC-Macintosh integration.

Copyright © 2008 IDG Communications, Inc.

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