Mr. Gary Lee

When the Apple iPhone first came out, Steve Jobs was adamant on keeping modified operating system a secret to the public. Call it paranoia from his dealings with Microsoft or maybe just call it maintaing the status quo as OSX is still a operating system made exclusively for Apple Computers. In any case, Jobs was not letting just anyone have the ability to create a piece of software that Jobs first claimed might take down the whole west coast AT&T network.

That is when the hackers got to work and started coming out with web-based hacks such as Jailbreak that allow users to use different carriers other than AT&T and use 3rd party apps such as my favorites - NES Emulator & Tap Tap Revolution! Once word started to get around through sites like TUAW.com and MacNN.com that it was easier than ever to hack your iPhone, people started purchasing iPhones at a record setting pace. One stat showed that 1 out of every 4 iPhones purchased were purchased with the intent of hacking.

Apple quickly tried to put out this potential disaster, as they have a very lucrative profit sharing deal with AT&T. Some estimates I have heard are around 40% of revenues generated from users over their 2 year deal and then a percentage of their lifelong contract if they stay with AT&T. Apple would be losing out on the market they so dearly wanted to be part of. The third leg of their media empire was starting to become shaky.

So, what does Jobs do?

He gives a big F-U to the hackers by saying that he will be releasing the SDK (Software Development Kit) in March of 2008 so that all programmers will be available to develop for the iPhone. For those of you who don’t know, the SDK is like the blueprints for the iPhone operating system. Once the uber-smart programmers learn it, they’ll be able to make programs that take full advantage of the iPhone’s capabilities.

Now, why do you think Jobs finally decided to open up the iPhone? Was it because he knew he was fighting a losing battle? or did he finally figure a way out to monetize the demand for 3rd party apps on the iPhone. I think he finally realized that this isn’t like the personal computer where he needs to hide the secrets of the operating system in order to maintain his market share in the hardware market. Jobs has finally realized that there is only one iPhone and that unlike the computer, can be a truly big money making machine if he plays his cards right. So, follow me here:

Jobs introduces iPhone.

Hackers get to work.

Jobs notices demand for 3rd Party Apps

Jobs opens up wireless purchasing of itune music.

Jobs opens up iPhone with SDK

Programmers start to build Must-Have Apps

Apple sell more iPhones

iPhones sell more iTunes Music

Now, here comes the genius part. The part where Jobs will be regulated to God status if he is able to make it work. Jobs will set up a deal with programmers similar to ones artists signs with recording companies. He will sell iPhone apps on iTunes for $0.99 and programmers will make a percentage off each sale. Imagine buying an iPhone Airport App that tells you the current status of your flight for $0.99. Imagine how many people would buy that app, then imagine how much that programmer would probably make instead of asking for a paypal donation. The potential for this is so much greater than the ringtones fiasco Jobs tried launching a few months ago.

The quality of apps and iPhone usage would go through the roof and both parties will win because Jobs will be able to make more money in hardware, software and iTunes products and programmers will be able to make more money than if they tried to promote and sell the programs themselves.

Current Apple Stock is at $163.95. I would suggest buying some stock soon!

Editorial