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The Search for the Killer iPhone App

Many developers are hard at work building tools for Apple's popular phone, despite what some consider limits on their ability to collaborate

Executives at venture capital firm Kleiner Perkins Caufield & Byers had a running bet as they announced a $100 million fund to encourage developers to build tools for Apple's (AAPL) iPhone. The wager was over how many business plans they'd receive in the first 30 days after the Mar. 6 announcement. Kleiner Perkins partner Matt Murphy won't divulge the number, but says it was exceeded within 36 hours.

So great is the interest among developers in creating a software-based tool, or application, for Apple's popular iPhone or iPod Touch that on the same day Apple announced the release of the software developer's kit, or SDK, Apple's Web site crashed. Many developers resorted to grabbing the file using BitTorrent file-sharing technology. On March 12, Apple reported that more than 100,000 developers downloaded the kit in the first four days it became available.

Nondisclosure agreement

At stake not only is a slice of funding from storied Kleiner Perkins, an early investor in such companies as Amazon (AMZN), Genentech (DNA), and Sun Microsystems (JAVA), but potential bragging rights to building the next killer app for the iPhone. Programmers are generally pleased with the kit, but many are already running up against a lack of guidance from Apple on thorny questions, as well as limits on their ability to compare notes with other developers.

Craig Hockenberry is a principal at developer Iconfactory who hopes to create a tool that would make it easier for iPhone users to use microblogging site Twitter. "They've done an absolutely fantastic job," Hockenberry says of Apple. "The problem that Apple has right now is, there's too much interest in the iPhone SDK." Several iPhone developers contacted by say they've already sent Apple questions or reported concerns via phone or e-mail. Most don't expect to get a response back for several weeks. The company didn't respond to repeated requests for comment on this story.

Many programmers feel inhibited from turning to one another for help because of the confidentiality agreement they need to sign before downloading the free kit. Among the stipulations in the 2,700-word document: "You agree not to disclose, publish, or disseminate any confidential information to anyone other than to other registered iPhone developers" who work for the same firm. The restriction hasn't stopped some developers from using public forums to answer each other's questions—though it has given some pause. "Apple considers the SDK to be covered under an NDA [nondisclosure agreement] by developers," wrote a participant in a discussion on Apple's site who identified himself as Scott. "They don't want people discussing it."

Fat Fund

Apple is not the only company to impose NDAs on developers, notes Richard Doherty, director of consultancy Envisioneering Group. Yet the cell-phone software disseminated by Google (GOOG) contains language that appears to be less restrictive than Apple's.

Erica Sadun had hoped to publish a book on the iPhone SDK within days of the publication of the beta, or test, version. Now she's concerned she'll have to wait until June, when the kit is released officially. "Apple is not clarifying what comes under the NDA," she says. She's particularly leery of language like this: "You agree not to use Confidential Information in any way, including, without limitation, for your own or any third party's benefit without the prior written approval of an authorized representative of Apple in each instance."

Meantime, programmers are muddling through. Chris Sloop is chief technology officer at WeatherBug, which provides weather updates to cell-phone users. He wants to know whether the iPhone will eventually be able to run several applications simultaneously, something developers using the kit aren't allowed to do today. That would enable WeatherBug, for example, to send an inclement weather alert while also providing alternate travel routes.

When Sloop and others like him come up with their cool new features, they may find a ready reception at Kleiner Perkins, which views the iPhone as more than just another cell-phone software platform competing with Nokia-led Symbian, Microsoft's (MSFT) Windows Mobile, and various flavors of mobile Linux. "Amazon, eBay, Netscape, Google—we'd like to find the peer group of those companies on the mobile Internet," says Murphy, who says his fund could swell to more than $100 million. "A lot of the pillars, foundational applications for the mobile Internet, will grow up on the iPhone." Doherty believes that rivals Nokia (NOK) and Google might start similar funds, encouraging application innovation for their cell phones and software.

Plenty of Ideas

Indeed, several developers are pressing ahead, seemingly undeterred by disclosure restrictions. "We are really trying to think big thoughts about what's the right advertising solution for the iPhone," says John SanGiovanni, founder of Seattle-based Zumobi, a Microsoft spin-off that lets advertisers publish mobile widgets offering snippets of content as well as ads. Today's mobile ads tend to consist of boring text messages or unattractive banners; SanGiovanni wants to make mobile advertising more interactive. After all, the new kit lets programmers tie their software to iPhone hardware, such as its accelerometer, a feature that could, potentially, gift the iPhone with capabilities of Nintendo's Wii: Users might be able to "play" through ads by waving their phones around.

Another startup, Jajah, plans to take advantage of the access Apple provides to the iPhone's microphone, speakers, and a Wi-Fi wireless broadband connection to build a highly capable Web-calling application. The application would allow frequent travelers to place calls via airport and coffee shop Wi-Fi and avoid expensive international roaming, which has left many an iPhone owner with a hefty wireless bill. This software would also allow users to look up phone numbers, e-mail addresses, and schedules of contacts from a corporate Microsoft Exchange address book. "If things like this are available, companies will give employees a choice of an iPhone vs. the BlackBerry," says Frederik Hermann, director of global marketing at Jajah.

And even those awaiting guidance, Hockenberry says, are confident Apple will lend a hand eventually.

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