iPhone is an open, multi-service network

With the announcement of the iPhone Software Development Kit (SDK) which allows software developers to write native applications for the iPhone, Apple has also changed another set of rules for the game.

Apple is creating a special area in the iTunes Store for iPhone software applications. Software developers pay a small one time fee to have their software placed in the Apple store, and Apple takes on the responsibility for distributing, downloading, and installing the software, including certifying it is virus-free. Apple also takes on the responsibility for collecting the money for the software, processing credit card charges, bad debts, and all the associated headaches associated with running an online storefront.

In return for all that Apple support, the developer agrees to share revenue with Apple, on a 70/30 basis, with the developer getting 70% of the sales price.

This will unleash tremendous innovation and there will be, in the coming months and years, a flood of new software and services available for the iPhone because Apple has designed not just a piece of hardware, but an entire shared system that makes market entry for small, innovative businesses very low cost--Apple only gets paid once there is revenue flowing. Apple's approach makes it easy to try out new applications and services at low risk. It is identical to the open, multi-service networks being built in places like Danville, Virginia. In both cases, a shared system lowers the cost of offering products and services.

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