June 11 (Bloomberg) -- Apple Inc. built a version of its Safari browser that works with Microsoft Corp.'s Windows and said the Web software will be the pathway for outside developers to write applications for its iPhone handset.

Chief Executive Officer Steve Jobs stopped short of letting outsiders build programs into the device. Apple won't provide a kit for writing specialized programs for the phone and instead wants developers to create Web-based software iPhone users can access through Safari. The shares fell 3.5 percent.

The move marks a compromise between Jobs, who wanted to keep control over the new device, and code writers who wanted to craft programs that expand the phone's features as they tap a booming business. Jobs expects to sell 10 million iPhones in 2008 to capture a 1 percent share of the mobile-phone market.

``This is a new hardware platform and one thing you don't want to do is have developers throw a lot of programs on it that may interfere with what it's supposed to do, which first of all is let you make phone calls,'' said Mike McGuire, an analyst with Gartner Inc. in San Jose, California. Apple's approach, he said, is ``safer for developers, Apple and for users.''

Jobs said the decision allows Cupertino, California-based Apple to maintain the security of the iPhone, the company's first mobile-phone, and yet still provides developers an opportunity to write new software for the device.

Apple said it will ship the combination iPod media player and phone on June 29 in the U.S. at 6 p.m. in all time zones.

``We think we have a very sweet story for you,'' Jobs, dressed in his trademark black turtleneck and jeans, told a record gathering of more than 5,000 attendees at Apple's annual developers' conference in San Francisco today.

Look Alike

Apple shares fell $4.30 to $120.19 at 4 p.m. in Nasdaq Stock Market trading. The iPhone helped propel Apple's market value above $100 billion last month for the first time in the company's 31-year history. The shares reached a record high of $127.61 last week.

Jobs, 52, at first said he wouldn't allow any access for developers and then hinted May 30 he had changed his mind, saying at a conference he would ``find a way'' to let them add programs while keeping the iPhone secure.

Apple today said developers will be able to create ``applications which look and behave just like the applications built into the iPhone.'' Developers have never had the ability to create the emerging generation of interactive, Web-based programs for mobile devices before, said Philip Schiller, Apple's worldwide product marketing chief.

``What we've shown today is the ability to do something new that's not really been possible on cell phones,'' Schiller said in an interview. ``A lot of this will become clearer for people once they see examples of the applications that can be created.''

Real Proof

Jobs also used today's conference to promote Safari and said the browser has a 4.9 percent of the browser market behind Microsoft's Internet Explorer and Firefox. To help broaden adoption, Jobs said the company is releasing its first-ever version of Safari for Microsoft's rival Windows operating system.

Apple says it has 950,000 developers, who have written more than 12,000 programs that use its Mac OS X personal-computer operating system. Sales of the PC have accelerated in the past two years, after Jobs delivered faster models with Intel Corp. chips and sleeker designs.

``They're trying to make it easier for developers to create applications for the iPhone using basic Web development tools'' instead of tools specifically created by Apple for the iPhone, said Gene Munster, a Piper Jaffray & Co. analyst. ``The concept is good, but the real proof will be in what kind of applications developers can create.''

BlackBerry

Apple will sell two models of the phone, a 4-gigabyte version for $499 and an 8-gigabyte model for $599, with help from AT&T Inc., the largest U.S. mobile phone service. The iPhone has a touch-screen display instead of a physical keyboard and lets users surf the Web and access e-mail from services including Yahoo! Inc. and Google Inc.

The iPhone will compete with so-called smart phones such as Research In Motion Ltd.'s BlackBerry, which sells for as little as $200 with a two-year AT&T service contract. The BlackBerry offers Web access and can also link to corporate e-mail systems, a feature the iPhone lacks, said Rob Enderle, president of the Enderle Group research firm in San Jose, California.

``If you open it up to third-party developers, then it can go beyond just being a music and video phone and become a true smart phone,'' Enderle said of the iPhone.

The company in April reported that second-quarter profit soared 88 percent and sales beat analysts' estimates after demand for Macs and iPods surpassed expectations.

Separately, Electronic Arts Inc. said today it will offer four of its most popular games for the Mac in coming months, including Harry Potter and the Order of the Phoenix.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: June 11, 2007 18:55 EDT