The iPhone isn't just a standalone hardware device. It's an iPod, and like the earlier iPods, its integration with iTunes will provide it with a variety of advantages in the areas of sync, software installation, and simplicity.

Competing phones, from the Palm Treo to WinCE / Windows Mobile devices and phones from Nokia, Motorola, and other independent manufacturers all suffer from a variety of consistency problems that were outlined in Device Problems In Search of a Solution . In general, all lack:

• Consistent User Interface • Consistent Stability • Consistent Data Sync • Consistent and Fair DRM

Software for the iPhone: UI and Stability

Apple's demonstrations of the iPhone show that the company aims to deliver a user interface that makes sense for a handheld form factor.

While reflecting interface conventions of Mac OS X, including a Dock-like icon bar and Dashboard-like window controls, it does not try to shove in the entire Mac desktop.

To solve the problem of inconsistent stability, Apple has announced plans to manage software in the model of 3G iPod games, and refers to this as a "closed platform." This has resulted in a significant outcry from people concerned that Apple will sink the iPhone by killing any development community.

However, based on Apple's recent behavior, it simply doesn't logically follow that the company will lock down the iPhone in the way some analysts are imagining in their rush to present potential reasons to panic.

I Like Third Party Software

I should first point out that I'm not advocating "no new software" for the iPhone, but rather trying to explain why Apple is making the comments it is. The iPhone screams for full exploitation of all its geeky hardware potential.

However, what Apple is saying and what will ultimately happen are not necessarily the same. How some analysts are interpreting things is something that is also commonly unrelated to reality.

The trick is to compare track records and apply some logic. I'm pretty sure that Apple didn't port OS X to the iPhone’s ARM processors simply to produce a brick that can't ever be upgraded.

Several readers have commented that the stability problems on Windows PCs and on the Palm Treo are not the result of an open software model, but are rather related to problems with their underlying system software.

The solution some recommend is for Apple to kick the iPhone's door wide open, and then simply advise users concerned about stability problems to "stick to what's factory installed and everything should work."

This strategy doesn't work on the Palm, which ships with enough extraneous crap and adware to make it crashworthy on first use, nor does it work for PCs, which will happily install any root kit, adware or virus that might ask, in many cases without the user even knowing that software is being installed.

Freedom Is Not Security

Any networked computer that allows users to install any software they want is inherently insecure.

For the iPhone, Apple's options are to either create a "more secure" platform environment by using a complex set of permissions and security authorizations--as Apple has delivered in Mac OS X--or to simply manage what can be installed. That's the software security model Apple introduced on the iPod with iTunes.

Both strategies have resulted in Apple's two major platforms, Mac OS X and the iPod, offering significantly more security and stability than other mainstream competitors. Microsoft's Windows is a security nightmare for end users, and neither WinCE nor the Palm OS offer a rock solid environment for handheld devices.

Mac OS X has far fewer problems with security than Windows, but administrative users can still defeat its security model by installing bad software. The iPod goes a step further and makes it nearly impossible to install the adware, spyware, viruses, and other malware which commonly plagues Windows PCs.

The downside to that "security paradise" is the limitation of having to get all iPod software from Apple, whether it's developed internally by Apple or by third parties working with Apple.

Does that mean that Apple will hamstring the iPhone’s potential with a limited selection of expensive software? Based on Apple's track record and its existing software business practices, it is safe to say no. Here’s why:

Apple Sells Hardware With Free Software

The iPhone's core software applications, including its calendar and camera apps, are not yet even completed, but potential users are already intently interested in what other software might become available.

The most common requests I've heard for the iPhone are VNC and SSH clients (can you suggest others?). Will Apple end up charging an arm and a leg for the software apps its iPhone users demand?

Well, Apple already hosts thousands of free Dashboard Widgets, Automator Actions, and other freeware all designed to sell Macs, so it doesn't seem rational to think that the company would take some unbending stance against ever offering free software extensions through iTunes for the iPhone, in order to sell more units.

Apple recently updated software for the new 5.5G iPod, but released the majority of those new software features for free to users who bought 5G iPods a year before. All iPods are regularly updated to add support for new things, and the iPod is a fairly simple device. The potential of the iPhone simply begs for more of the same.

In its music and movies business, Apple similarly gives away songs and shows every week to introduce users to its iTunes Store. Beyond that, Apple has aggressively worked to develop a comprehensive directory of podcasts in iTunes: entirely free content . Apple makes nothing from iTune's podcasts--or its support for Internet radio feeds--and doesn't make huge revenues from iTunes media sales; it's all designed to sell iPods.

Does it seem at all reasonable to suggest that Apple will suddenly reverse everything it's done in the last five years in building the iPod and iTunes platform, and embark on an entirely unrelated business model for the iPhone, patterned after overpriced crapware vendors like Verizon Wireless?

Apple Sells Hardware with Cheap Software

Consider the remainder of Apple's software efforts. In the last five years, Apple has assembled a suite of highly regarded consumer apps in iLife. Those five apps are being sold in a package; individually, each is around $15. That's shareware prices.

If $15 were enough to support the development of significant updates of substantial applications every year, we'd be seeing other companies putting out highly regarded consumer apps for $15. Apple obviously develops iLife primarily to sell more Macs.

Apple's Pro Apps are similarly priced far below competing apps. Final Cut Pro is highly regarded, but sold for a fraction of the price of similar Avid software, forcing Avid to drop its prices dramatically. After Apple bought Shake, it dropped the price from $9900 to $499.

New apps Apple has developed from scratch, including Motion and Aperture, are similarly priced very low for pro level applications targeted at professionals. That's because Apple isn't trying to get rich selling niche software, but rather working to develop affordable new applications for its hardware so people will have compelling reasons to buy Macs instead of generic PCs.

In that same pattern, Apple has developed iPod games, involved third parties, and created a marketplace in iTunes where games are available for $5. Those games were designed to develop a test market for selling and distributing software through iTunes, not because the iPod’s click wheel is a good Pac Man controller.

The iPhone will not only use the same software distribution mechanism, but will also deliver on the same strategy for selling hardware using software.

All the stink about a "closed market" for the iPhone fails to consider any of this. It’s not informed analysis, but merely reactionary panic that does not make sense.

There's two areas of problems left for the iPhone to solve: data sync and DRM. The next article examines how the iPhone will work with iTunes to improve upon the experience of both.

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