Although most iPhone users seem satisfied with the smorgasbord of applications delivered by Apple's iPhone App Store, power users yearn for more. Copy and paste, video recording and streaming, Internet tethering, and content search are just a few features third-party developers have already delivered to users hungry enough to "jailbreak" their iPhones.

And though Apple's forthcoming 3.0 firmware update promises to deliver some power-use upgrades, jailbreaking should continue to push the iPhone's productivity envelope, especially as users increasingly demand the Holy Grail of smartphone power use: applications that run in the background.

Jailbreaking: Inside Apple's lock-down agenda

To date, the only way to satisfy yearnings for UI improvements such as copy-and-paste and to access locked-down iPhone features like video recording and streaming, Internet tethering, GPS, and content searching has been to "jailbreak" your iPhone, a process that liberates the device from Apple's tightly controlled App Store, allowing you to install powerful software from a variety of third parties. Jailbreaking also can enable you to unlock your iPhone from Apple's exclusive AT&T wireless service contract, leaving you free to use other providers' networks worldwide.

[ Read InfoWorld blogger Bill Snyder's call to free the iPhone | View InfoWorld's best business app picks that don't require jailbreaking and the 21 apps Apple doesn't want you to run on your iPhone ]

Apple's opposition to the features power users seek is no secret. Apple claims these features will unacceptably reduce battery life, slow performance, and place an undue burden on Apple's iPhone support infrastructure. Apple routinely blocks apps it doesn't like from its store, often for inscrutable reasons that some developers attribute to competitive motives rather than concern for iPhone users' productivity.

Despite its formal opposition, Apple has done little to crack down on consumers who jailbreak their phones, beyond instituting half-hearted firmware changes that jailbreak developers easily circumvent. The legal status of jailbreaking, however, is not yet settled. Apple claims it is illegal under the much maligned Digital Millennium Copyright Act (DMCA). But major movers in the technology legal arena call Apple's restrictions both harmful to innovation and an improper application of DMCA rules. Open source browser developer Mozilla joined the Electronic Frontier Foundation (EFF) in requesting an exemption to the DMCA specifically clarifying that installation of legal apps on cell phones does not infringe the phone manufacturer's copyright. Worse, iPhone users belatedly discovered that Apple can reach out and delete applications from their phones.

Developers: Jailbreaking spurs Apple innovation

Jailbreaking began with the first-generation iPhone, under the auspices of a band of volunteer programmers called the iPhone Dev Team, which created the first application installer long before Apple launched its iPhone App Store less than a year ago. That installer, named Installer, enabled users to download apps from a variety of repositories at a time when Apple limited customers to the apps it delivered with the phone. Some question whether Apple would have created its own store without the impetus of the rogue Installer.

Apple's App Store has since become a huge success, and analysts agree it is the single differentiator most responsible for continued growth in iPhone sales, enriching both Apple and third-party developers. But Apple's confusing policies on "acceptable" applications continue to rile developers who labor for months over complex apps only to have Apple reject them for nondescript reasons. Rebuffed developers like Alex Sokirynsky, whose app podcaster got bounced by Apple, tried an end run by delivering their apps via the iPhone SDK distribution channel. But Apple quickly blocked this trick.

Then last month Jay Freeman, creator of the popular open source Cydia iPhone installer ("Cydia" refers to a moth larva often considered the "worm in the apple"), announced his own Cydia Store in direct competition with Apple's store. Cydia Store collects the same 30 percent commission from developers, but has few if any restrictions to the applications developers can sell.

"Cydia Store gives users a way to get the powerful applications they want but that Apple doesn't seem to want them to have. And it lets developers reap the rewards of their work without worrying about a last-minute slap-down by Apple," says Freeman, who considers many of Apple's iPhone innovations, including Apple's App Store, to be a direct result of iPhone developer activism. "Without this pressure from developers and users, the iPhone wouldn't be what it is today."

Jailbreaking unlocks many latent iPhone capabilities

Power users aren't necessarily looking for geeky developer-type add-ons to their iPhones, just genuinely useful productivity apps and features. The single most desired feature is copy and paste, a seemingly obvious interface perk that, until iPhone OS 3.0 arrives this summer, Apple has inexplicably blocked. Users also want features that other smartphones offer but that Apple eschews: video recording, multimedia messaging, file sharing, and interface customization using skins and themes.

And it was to fill this void that Freeman opened Cydia Store with Cyntact, an app he developed to display profile pictures alongside iPhone contact listings. The second app for sale on Cydia Store, the Okori Group's Voicemail Forwarder, extended the iPhone's visual voice mail with a feature business users enjoy on other phones and covet for the iPhone: the ability to forward voice mail to e-mail. As for video recording, Freeman's Cycorder turns the iPhone into a camcorder. As with Apple's App Store, some Cydia Store apps are available for free. NetaTalk, for example, lets you mount the iPhone's disk over Wi-Fi as a file share under Mac OS X.

Some jailbreak-enabled features run afoul of Apple's relationships with business partners. For example, tethering an iPhone to a notebook or desktop computer to enable the computer to surf the Web via AT&T's EDGE and 3G networks violates AT&T's policy for iPhones. When iPhone developer NullRiver posted its NetShare app on Apple's store last summer, Apple quickly yanked it once its tethering capabilities became popular. Confusingly, AT&T offers tethering as a $15-per-month add-on for LG, Motorola, Nokia, RIM, and other handsets. But not the iPhone -- AT&T's terms for that handset specifically forbid tethering on the device.

Further impeding developers' ability to serve the kind of functionality iPhone power users want is Apple's SDK itself. The tool, and its restrictive user agreement, corrals developers into a tightly controlled sandbox that makes some applications impossible. For instance, Veency is a VNC (virtual network computing) server that runs on the iPhone, allowing you to manipulate the phone's interface directly on a computer desktop -- a boon for massive text-entry tasks. But because Apple's SDK prohibits server apps, the Cydia Store is the only source for Veency. TV-Out lets you transmit live video from the iPhone camera to a TV or DVD recorder via a standard video cable; Apple's SDK only lets you send still pictures and iPod or YouTube videos to TV. SwirlySMS sends and receives rich-content SMS, another capability restricted by the SDK. Searcher lets you scan all iPhone contents -- SMS, contacts, notes, events, bookmarks, and other files -- for any string. Apple SDK apps don't have access to global phone contents.

Background apps: The Holy Grail of power use

Jailbreak apps circumvent hardware and software restrictions that Apple says ensure a consistent, responsive user interface and optimal battery endurance. In particular, jailbroken phones can run apps in the background, a capability Apple reserves for its own apps but prohibits in third-party programs.

Freeman, however, believes a free-market approach is the best way to satisfy power users' demands for features without compromising the performance of their iPhones.

"Apple should let users, and the marketplace, decide what apps are too strenuous for the iPhone's performance and battery life," he says, pointing out the Cydia Store app FindMyi as an example. The app runs in the background and wakes up every few minutes to sense and transmit the iPhone's location to a tracking site. Users can then track their phones via GPS or cell site triangulation by subscribing to the FindMyi service for a monthly fee. The app locks the iPhone if the user reports it stolen. The app's developer claims its tracking activities are not battery-intensive and don't seriously reduce battery endurance.

Apple recently announced a 3.0 firmware upgrade for the iPhone that delivers some capabilities currently unique to jailbroken phones. Available this summer, the update sports cut and paste, Spotlight global search, the ability to forward SMS and voice mail, and MMS capabilities. These coincide with some jailbreak capabilities, but don't provide others, such as background processing, video recording and streaming, and direct video output. Ironically, some 3.0 features, such as Wi-Fi hotspot auto-login, contradict Apple's former concerns over battery life. Interestingly, Apple's beta 3.0 firmware -- made available to registered developers -- supports tethering, although there is no word from Apple on that capability making it into the final release.

The iPhone Dev Team also announced successfully jailbreaking the 3.0 firmware beta. Apple could still complicate jailbreaking when 3.0 ships, but if history is any guide, the iPhone Dev Team members will readily crack that code as well.

The bottom line on iPhone development

Although Apple's iPhone store came in like a lion, months later its success has made it difficult for app developers to stand out from the herd. The store's 25,000 apps are virtually impossible to browse in toto, especially on the iPhone's tiny screen. Apple ranks applications by popularity and features some applications on a rotating basis, but the process is not transparent, and the huge number of apps mean many will never be highlighted. Not surprisingly, Apple and third parties are seeking other revenue models.

Both Apple and Cydia have turned to advertising for additional revenue. Cydia and Apple host ads in their storefront interfaces, while developers for either store can choose to have ads injected into their applications at runtime. App developers can incorporate their own advertising, using ad aggregators like AdMob, who reported the iPhone as its No. 1 ad platform in February, accounting for half the Web traffic from all U.S. smartphones. iPhone traffic was more than double the BlackBerry's 21 percent. Nokia still leads wordwide handset advertising, with a 43 percent share vs. iPhone's 33 percent.

As conspicuous consumers, Apple's iPhone and iPod Touch audience are highly sought. But current iPhone App Store limitations make it tough for app developers to deliver the unique capabilities that could give them the visibility to tap into this market. Background applications, despite their performance and battery life concerns, are one of the best paths to innovative applications. A perfect example is AwareSpot, a cross-platform app that alerts drivers to major traffic problems that runs on virtually every smartphone except the iPhone.

Given Apple's App Store overcrowding, it seems likely that jailbroken phones and app venues like Cydia Store will continue to be popular with iPhone customers, even after the 3.0 firmware ships.

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