Is iPhone's Web-Only App Stance Sustainable?

The iPhone, perhaps the hottest smartphone in the history of smartphones, lacks one of the most basic functions of pretty much every other smartphone on the market: the ability to accept, load and save third-party applications. Apple's (Nasdaq: AAPL) conciliatory approach to address the situation is to allow users access to third-party applications via the built-in Safari browser.

The iPhone version of Safari doesn't support Java or Adobe's (Nasdaq: ADBE) Flash, which leaves out a couple of key technologies that help create rich applications -- though Apple has at least seemed amenable to delivering Flash support at some unspecified future date.

Still, many Web-based applications for both personal and business use, as well as a handful of games, function fine via the iPhone, and some are even being developed and marketed specifically for the iPhone.

However, is this a viable long-term method? Some third-party developers have created a mini industry around building and selling applications for smartphones -- can they turn their innovation to the iPhone? Less than three months after the iPhone launched, more questions than answers abound when it comes to third-party applications.

Is It Even a Smartphone?

When Apple CEO Steve Jobs first introduced the iPhone, he noted that most smartphones weren't really all that smart -- but is the iPhone even truly a smartphone?

"There are a number of successful multimedia phones and business devices that lack general download capability," Allyn Hall, an analyst for In-Stat, told MacNewsWorld. "That said, In-Stat defines 'smartphone' as including the ability to download third-party apps, so by our definition, iPhone is not a smartphone, but instead a multimedia and feature phone."

Consumer vs. Business User

There are a few reasons Apple has been able to get away with offering a so-called smartphone without supporting installable third-party applications, and that's all about its market.

"I think one has to be realistic and recognize that the iPhone is not targeted to the enterprise," Charles Golvin, an analyst for Forrester, told MacNewsWorld.

"There are plenty of people in businesses who would like to use their iPhone the same way they use their BlackBerry, but Apple isn't targeting that market," he explained. "If you want to access SAP (NYSE: SAP) or PeopleSoft on your iPhone, I think your cries are going to fall on relatively deaf ears in Cupertino."

Simplicity and Elegance

Because Apple has created a phone that covers the basics for consumers so well -- e-mail , Web browsing, music and video -- in such an elegant and workable way, it may in many consumers' eyes reduce the need for third-party applications. In addition to making the third-party application market smaller by delivering so many applications so well, Apple may be downright scared of allowing developer access to the iPhone.

"Apple has always been all about making things easy and simple to use for their consumers, but in order to achieve that, they exercise fanatical control over that experience," Golvin noted. "They are extremely reluctant to open things up and let people do whatever the heck they want."

As long as the Apple iPhone experience is better overall than the competition, Apple's approach is sustainable. Of course, if a third-party developer has a superb product and a relationship with Apple -- case in point is Google's (Nasdaq: GOOG) YouTube -- the third-party developer might get the privilege of a built-in app on the iPhone's home screen.

Competition Is Building

While Apple's mobile operating system is locked down, others are more open to developers.

"Symbian, which fully supports the ability for a developer to completely duplicate the Apple touch screen interface, as well as Windows Mobile and mobile Linux, necessarily have to provide complete API (application programming interface) access because they sell operating systems that need to work across a huge array of devices," Tony Rizzo, director of mobile software analysis for The 451 Group, told MacNewsWorld.

"By keeping the OS closed, Apple locks you in but also significantly simplifies its own task -- as long as it knows the iPhone works, its job there is done," he added.

Still a Tiny Screen

Even if the iPhone's Safari screen is large compared to those offered by most smartphones, and even if the innovative finger pinch and expand motions make zooming in and out easy, the iPhone's screen is still a tiny screen. Most Web applications aren't easy to use on small screens -- or they're harder to build for small screens.

With a screen limitation, can Web apps really take off for the iPhone world, enticing the best software development minds to create compelling applications?

"I do not expect an iPhone apps cottage industry," Rizzo said, noting that another big limitation is the need for connectivity for a Web app to even function.

"Most of the mobile applications that developers create provide client-side support so that users can operate in a fully disconnected mode -- for a true mobile user, that is absolutely key," he added.

It Might Not Matter

If the iPhone is truly a consumer play, and if indeed Apple has very little interest in going after the enterprise market, the company may still be successful with its Web app strategy .

"There are a lot of people who make applications for the Mac -- like widgets -- who are basically hobbyists, not hard-core developers. I think there are going to be a lot of people out there like that who will be perfectly happy with Web tools and any plug-ins for the browser that Apple is supporting because that's a model they can understand pretty easily," Golvin said.

"Look at all the widgets that are out there for the Mac that do all sorts of simple things that are fed by information from the Internet in a simple but elegant way," he added.

It's Only Been a Few Months

"Apple has time to respond, and this isn't the No. 1 issue. The lack of 3G connectivity -- rumored to be coming soon -- the battery and other issues are even more important," Hall said. "But they will need to address openness or risk limiting the market."

Still, hackers have been working hard to provide the ability to install applications -- and they've succeeded -- but the risk for most everyday consumers is a voided warranty and a broken phone, two big problems that will likely keep all but a relative handful of consumers from actually installing anything.

Room For Improvement

Apple so far has done a great job of creating applications that consumers want and need -- to the tune of more than a million iPhones sold so far -- but even consumers are ready for more built-in applications, like a true live chat app.

The iPhone currently has four open positions on the home screen where application icons would presumably fit. "These open slots on the iPhone home screen are somewhat tantalizing," Golvin said. "I'm sure Apple has ideas and is working on things that will go in there ..."