Features April 22, 2010, 5:00PM EST

Apple's Endless Expanding App Universe

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Apple claims these policy changes aren't meant to hurt competitors, just help consumers. Jobs argues that avoiding Flash and refusing to let outside ad networks gather user data are moves that protect his customers. Yet Apple's omnipotence—and the lack of an obvious structural monopoly à la Windows that would invite regulation—leaves the Apple universe subject to the whims of its creators.

Jobs proudly notes that Apple sells no porn-related apps through the App Store. Yet political cartoonist Mark Fiore had his app rejected last December based on a clause against apps that "ridicule" public figures. The case became a cause célèbre after Fiore won a Pulitzer Prize on Apr. 12. Two days later, Fiore got what he says was a sheepish call from an Apple staffer, and on Apr. 20 his app showed up on the App Store. "But how many people are doing good satire out there and getting rejected?" says Fiore. "The only reason they're talking to me is because I'm in the middle of my 15 minutes of fame."

Despite his misgivings, Fiore resubmitted his application. Such is the lure of Apple's market power. Developers, many of them tiny startups, can write a single version of their app and reach the roughly 100 million Apple customers. On other platforms, they would need to create dozens of versions to work properly on dozens of less popular devices, each with different screen sizes and keyboards. Currently, 60 devices work with Google's Android software, and dozens more are in the works, says analyst Kevin Restivo of IDC. That makes Google's perceived advantage—a bounty of Android hardware—a weakness in the eyes of many developers. "So far we've decided it would take more time to port an app to another platform than it would be to just write a new app for the iPhone," says Avatron's Howell. Avatron's app, designed to transmit work files wirelessly between a PC and Apple's devices, has brought in $1.5 million in revenue since its 2008 release. That's enough for Howell to pay his seven employees a Silicon Valley living wage. On the other hand, he says, "I haven't heard about any Android success stories." Google spokesman Anthony House says, "We don't track the success of individual Android developers, but we're extremely happy with the breadth and quality of the apps available in Android Market."

For all the restrictions, most developers feel that obeisance to the laws of the Apple cosmos is worth it. For years, San Francisco's Zinio has made digitized copies of 2,400 magazines available on its Web site. Once iPad owners began busily playing with slick, touch-controlled versions of such publications as The New York Times and USA Today, it was a natural next step to get Zinio's iPad app. By Apr. 11, Zinio's reader temporarily spiked to become the fourth most popular free iPad app. That led to a 300% increase in revenue from the pre-iPad era. And making the app, says Richard Maggiotto, Zinio's CEO, was easy. "The back-end stuff the developer sees is as well done as the products the consumer sees," he says.

That may be Apple's greatest advantage. In order to develop products just as he wants them, Jobs has shown a willingness to do more than his rivals. PC makers such as Dell (DELL) and Hewlett-Packard (HPQ) are powered by Intel (INTC) and run Windows by Microsoft; neither has shown interest in the costly job of building unique operating systems or designing its own chips. Apple does both. Microsoft and Google have only recently decided to design their own mobile devices, and in most cases they're purchasing "white label" hardware from other manufacturers and branding it as their own. The iPad's 10-hour battery life is a result of Apple's ability to have its chip, software, and industrial designers work together to limit unneeded power use.

All this eases the tech-buying public down the path toward Apple; iPhone's smartphone market share is currently 25.4%, according to comScore. And as long as the company exerts a gravitational pull on consumers—and manages to balance the rewards to developers with pushing them around—the apps will just keep coming. "How willing you are to expose yourself to that relationship is directly related to how much revenue you can make," says DoApps CEO Beaver. "You'll take a lot, if you're making a lot of money."

Burrows is a senior writer for Bloomberg BusinessWeek, based in San Francisco.