SAN FRANCISCO -- Apple ( AAPL) belatedly bowed to consumer demands by welcoming independent computer programmers to develop applications for the iPhone. On Wednesday, Chief Executive Steve Jobs posted a note on the company's Web site saying that a software developer's kit, or SDK, would be available in February. "Let me just say it: We want native third party applications on the iPhone, and we plan to have an SDK in developers' hands in February," wrote Jobs in his post. The move signals another attempt by Apple to ensure that mainstream consumers become iPhone users when their cell-phone contracts expire. It follows Apple's decision in September to cut the price of the 8-gigabyte version to $399, which Jobs said was aimed at spurring holiday sales. Allowing developers to make iPhone applications also underscores the limits of Apple's ability to use the iPhone's cachet to bend the cell-phone market to its will. The company extracted an unprecedented concession from AT&T ( T), which agreed to share a portion of the revenue from its iPhone service contracts in exchange for the exclusive right to carry the device. Apple initially thumbed its nose at developers by letting them offer applications only through its Safari Web browser, rather in downloadable format. This contrasts with Nokia ( NOK) and Research In Motion ( RIMM), which actively encourage programmers to create games and other applications that will help sell phones.
The more popular the phone, the more third-party developers clamor for access. Research In Motion, for example, has more than 550 developers in its BlackBerry developers network, up from 240 last year, according to the company. Nokia, the largest cell-phone maker, says it has about 400. The lack of third-party applications hasn't yet held back iPhone sales. In early September, Apple said it had sold its 1 millionth iPhone. According to some analysts, the pace of sales accelerated after the price cut. But judging by the rash of iPhone hacking programs that proliferated on the Internet, consumers clearly want to run additional applications on the iPhone. Many have grown accustomed to having an ever-increasing array of applications on their phones, such as games, currency conversion calculators and stock market updates. "The cell-phone market is like the PC market in that software and applications drive sales, not hardware alone," says Jack Gold, a telecom market analyst with J. Gold Associates. "Apple cannot possibly build all the applications that people want. By opening up the iPhone, they're going to bring in a whole group of folks that will make this device more relevant to more people." Apple's about-face suggests that Jobs and his team are getting the point. "We are excited about creating a vibrant third party developer community around the iPhone and enabling hundreds of new applications for our users," wrote Jobs in his Web site post.
Jobs also said that the February release for the SDK will give the company time to address security issues that were the initial pretext for limiting developers' access to the iPhone. "There have been serious viruses on other mobile phones already, including some that silently spread from phone to phone over the cell network," Jobs wrote. Because the iPhone has become such a high-profile device, Jobs said it is a particularly attractive target for viruses, privacy attacks and other malicious applications. Developers and analysts, however, dismissed that claim as a red herring to give Apple a reason to retain complete control over its own device. Apple is still placing some limits on what iPhone applications it will permit, but "fundamentally they're taking the right course," says Jack Gold. "They really had no option. At end of day, people want apps on their phone."