Other App Stores Look for Slice of Apple

At least three new online software "stores" are set to challenge Apple's (AAPL) App Store for iPhones and iPod touch devices. Today's Wall Street Journal reports that these new sites want a piece of the $750 million to $1 billion iPhone software download business.

The main contender, so far, goes online today and is called Cydia developer's Web site: http://www.saurik.com/id/1). It is a program that allows users to "customize" their iPhones with downloadable software programs not available from Apple's tightly controlled App Store. It is the brainchild of 27-year- old computer science student Jay "Saurik" Freeman, who invented Cydia to serve as an open-source distribution center for developers to post their new software ideas.

Using Cydia, you can get programs from independent software developers. And just like Apple's App Store, Cydia lists new software titles and lets you know when there are updates available for Cydia titles you've already downloaded.

You should know that you do must unlock/modify, or "jailbreak" your iPhone to allow Cydia to do its thing. It's also important to note that Cydia software titles, like SwirlingSMS, iRealSMS, a bunch of application-launchers and even a video-recording program are banned from Apple's store because they don't conform to Apple's super-strict usage rules.

Cydia seems to be doing quite well, thank you. According to ArsTechnica.com, Cydia has something like 350,000 users and growing -- so far.

But Cydia is not the only choice. There are two other app marketplaces planned to make their debut in the near future. One, called Rock Your Phone, will target iPhones that haven't been "broken," and another store will specialize in marketing adult games.

Apple has yet to say whether it plans to take legal action against anyone who opens their own app stores. Cydia's Freeman is taking no chances though. He's contacted a lawyer for help -- if it ever goes that far.

Google ( GOOG), Nokia ( NOK), BlackBerry ( RIMM) and Microsoft ( MSFT) have all announced application stores for their mobile/cellular products. So far, there's no indication that developers will come up with alternative stores for those platforms.

Gary Krakow is TheStreet.com's senior technology correspondent.

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