Apple as the new wireless carrier

John Shinal · July 24, 2008 · Short URL:

VCs say iPhone app store more benevolent, but still a gatekeeper

iPhone storeMobile application developers have for years been looking for ways to go around wireless carrier decks and get their apps to users without being at the mercy of the providers' rules.

Apple's iPhone application store, which was launched with the new 3G version of the device this month, holds that promise for many.

Already, more than 700 developers have gotten their programs into the store, which gives them a chance to get onto the millions of iPhones flying off the shelves.

That type of ramp has been impossible in the past due to the carrier's slow speed and gatekeeper role.

And Apple is keeping a 30% cut of any revenue an application generates, compared to 40% or 50% that is the norm for giants like AT&T and Verizon.

Yet although it's kinder to developers, Apple is nevertheless keeping control of its platform by choosing which apps get in the store out of thousands that have applied to, and by choosing which ones get featured.

Rupert Young of ATT says Apple is "cutting side deals beyond the core 30%" with developers who want  to be featured," which is why the most-popular ones are featured ones.

That's not a big deal, since it's in everyone's interest -- Apple's, developers' and consumers' -- to uncover the apps that people most want.

In a way, the iPhone apps store is a halfway step between the old, closed world of the carriers and the truly open one promised by Google's Android platform.

For now, that will make it the most popular among developers.

But with the first Android phones expected late this year, Apple may need to refine its process to be thought of as something other than an improved version of the carrier's closed systems.

"The app store is a walled garden. We hope it's a more benevolent one," said Richard Wong, a VC with Accel Partners.




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