Once Apple approves a piece of software from an independent developer, it provides distribution — via a new "App" store on the iPhone and iPod Touch — and takes a 30% cut of revenue. "This means that anyone, whether you're 14 years old or 40, if you're a large company with 300 employees or a guy in a garage, has access to Apple's customers," Doherty says. "You don't have to make a presentation to a series of different handset manufacturers or wireless carriers. This is unheard of in software."
Access to the iPhone App store means that "we have a way to reach millions of consumers," says Darren Vengroff, the co-founder of Pelago, which developed Whrrl, a social network application.
Whrrl takes the online review phenomenon and marries it to the iPhone. The idea is that if you're searching for a restaurant, with a few clicks you can see which ones your friends — who are also Whrrl members — recommend. Whrrl is currently available for two BlackBerry phones and the Nokia N95.
The iPhone App store will "get so much traffic," adds Paul Dawes, CEO of iControl Networks, another iPhone developer. "It's not random traffic, but consumers who are actively looking for our types of applications."
The iControl application is the aforementioned home-monitoring system, or as Dawes calls it, "next-generation home security." With iControl, a device is plugged into your home network and connects to security panels, webcams and home-automation devices, allowing the homeowner control away from home. You can keep up with the action while at work on your desktop, or with the iPhone out in the field.
The iControl monitoring system is sold via home-security companies and a monthly subscription, but the iPhone application will be available for free.
Video game company Sega, best known for the old Sonic the Hedgehog video game, wowed attendees at a March meeting for developers when it showed off the Super Monkey Ball game for the iPhone.
There's no joystick controller for the iPhone to move the characters from left to right, so developer Ethan Einhorn came up with a novel idea: Just move the phone up or down, left or right, and the characters respond to the movement.
"What's great for a company like ours is that Apple has already defined the iPhone as a place to acquire and enjoy entertainment," Sega's Einhorn says. "Video games are the next natural step."
Earlier this year, legendary Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers (which had a role in funding Google, Amazon and AOL) started what it calls the "iFund," a $100 million pot looking to invest in iPhone application start-ups.
Kleiner Perkins invested in both iControl and Pelago, and is actively looking at 50 other start-ups, partner Matt Murphy says.
"We received about 2,000 proposals so far, and that's more than a factor of 20 of what we would have received from the general mobile sector," Murphy says. "What Apple has done is brought a lot of entrepreneurs off the sidelines. They feel 'open mobile' is here."
Historically, if you had an idea you wanted to sell to the mobile industry, you had to pay a visit to Sprint, T-Mobile, AT&T and Verizon. All have huge customer bases, but their phones work on different wireless systems. This requires a programmer to construct the program in different ways.