Apple may have some competition when it comes to selling applications for the iPhone, as developers decide to launch their own stores to hawk unauthorized apps for the device.
The Wall Street Journal reported that a developer is planning to launch on Friday a new service called Cydia Store that could sell hundreds of iPhone applications. The apps aren't available through Apple's official store, and they require "jailbroken" iPhones. Such iPhones have software downloaded that modifies the device to run any application.
The article also mentioned another developer, Rock Your Phone, which also plans to sell unauthorized iPhone apps. But this store won't require iPhones to be modified, the article says.
Some of the applications that will be found in non-Apple app stores are ones that Apple won't carry in its own store. For example, there is one application for turning the phone into a modem for laptops and another that turns the iPhone into a camcorder. Other applications might include adult games, which are not sold in Apple's App Store.
Apple launched its App Store back in July, and it has become wildly popular. Apple said in January that 15,000 applications are available through the App Store. The list grows daily. Downloads passed the 500 million mark in just over six months.
After Apple announced the App Store, other smartphone companies started jumping on the bandwagon.
The idea behind these application stores is that giving independent developers access to the software and hardware will spur creative and innovative applications. In Apple's case, the company has provided the building blocks for developing new apps but has maintained strict control over what gets into the App Store and what does not. While Apple asserts it is trying to maintain quality and to protect the user experience, some developers have complained about the rejection of their applications. Others have complained that once in the App Store, it's difficult for their applications to be featured and discovered.
The real beauty of the App Store is its huge potential as a revenue driver for Apple, helping the company monetize the iPhone long after it's left the store shelf. Apple doesn't break out revenue from the App Store, but the company collects 30 percent commission on all apps sold through the store.
It's true that many applications are free. But there are also thousands of applications that cost 99 cents or more. Piper Jaffray estimates that Apple's App Store generated about $150 million in sales last year and projects that total sales will grow to $800 million this year, the Journal reported.
So far, Apple hasn't taken any legal action against companies preparing their own iPhone app stores. But the Journal noted that Apple appears to be preparing a legal case. Last month, the company filed a 27-page statement with the U.S. Copyright Office, making the case that modifying the software on the iPhone is illegal.
Whether this argument will hold up in court is yet to be determined. The Journal quoted a professor at University of California at Berkeley's law school who said that the developers have "a pretty good" defense under the Digital Millennium Copyright Act.
My prediction is that there will definitely be a good number of iPhone users who make the extra effort to "jailbreak" their phones and buy applications that Apple refuses to put in its own App Store. But the vast majority of iPhone users will stick with Apple's App Store. The reason: it's easy to use.
Still, if these rogue application stores gain any traction, Apple will fight. And it will likely fight hard.
Apple didn't respond to requests for comment on this story nor did it respond to requests from the Journal.