Apple Hopes Online Store Augments Updated iPhone

The Associated Press
Published: July 10, 2008

Amid the hype around Apple Inc.’s new iPhone going on sale Friday, the company is launching an online software store that will peddle games, pedometers, tip calculators and language translators that will let buyers turn Apple’s gadget into an electronic Swiss Army knife and, potentially, drive up iPhone sales.

“We live in a post-modern world of fragmented preferences,” said Shiv Bakhshi, an analyst with IDC. “The more applications out there, the more people will find the iPhone useful.”

The store is another way that Apple is changing the mobile market since the iPhone debuted in June 2007.

Apple, in order to control its customers’ experience, will be the only retailer of software programs for the iPhone through its App Store. The approach breaks from tradition, said Rob Enderle, principal analyst at the Enderle Group.

The updated iPhone 3G is the Cupertino, Calif., company’s biggest push yet to expand its share in the cell-phone market and turn the iPhone into a mass-market product. And that could be helped by the launch of the App Store, which should open its virtual doors as early as Thursday to accommodate early iPhone buyers around the world.

But there’s a risk in opening the iPhone to a plethora of outside programs, Enderle said. For example, he said, will the iPhone be able to handle various programs that zap its power? And, he added, will the programs hurt the iPhone’s reliability and performance?

For current iPhone owners, the App Store will appear as an icon on their phone screen as part of a free software update. (Owners of the iPod Touch can pay $9.99 to update their software). By clicking on the icon, a customer will see categories such as “lifestyle,” ‘’entertainment” and “productivity.” Apple demonstrated some of the programs at conference in June, such as a virtual musical keyboard activated by touching the screen.

Others expected include medical references, an eBay auction tracker and a home automation remote controller. If a customer wants to make a purchase, the program is wirelessly downloaded to the iPhone and credit cards are billed.

CareerBuilder.com, the job search company, has developed a program for the iPhone called “Jobs,” allowing an iPhone user to access CareerBuilder’s database on the go, with results given by the user’s location.

“We think job searching can be an impulse thing,” said Marcelino Alvarez, an executive interactive producer at Wieden+Kennedy, an advertising agency that worked with CareerBuilder. A user on vacation in Honolulu, for example, could check out job openings in Hawaii.

Lexcycle, of Portland, Ore., created a product called “Stanza” that lets a user read electronic books for free, mostly classics.

Apple initially resisted allowing outside developers to have access to the iPhone’s core programming information. But since March, more than 200,000 developers have downloaded the developer kit. Some have paid $99 to register as an official iPhone developer and go through a certification process to make it into the App Store. The developer sets the price, Apple processes the sales and keeps 30 percent of the revenue.

Luc Vandal, a software developer in Montreal, is selling two programs at the App Store: “Linguo,” a $2.99 application that translates sentences into 17 languages; and “Steps,” which, for $1.99, turns the iPhone into a pedometer by using the device’s motion sensor.

“There’s only one place that millions of users can get iPhone applications,” he said. “I would be surprised if it’s not a good success.”