Apple Reignites the Browser Wars

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That's the way Salesforce.com (CRM) sees things. Adam Gross, vice-president of developer marketing at Salesforce, says the software maker plans to create an iPhone version of the company's lead management software for sales reps. Apple's approach could make it simpler to extend the software for the iPhone compared with other mobile devices. "It's going to be a lot easier to create apps for the iPhone than for other mobile platforms," says Gross. Salesforce sells a version of its software for Research In Motion's (RIMM) BlackBerry, and the programming can be complex. "Writing applications for mobile devices is not trivial. It's been difficult relative to desktop software. That's what's interesting about the iPhone announcement," he says.

iPhone Add-Ons

Software prowess is also powering Apple's stock price, Goldman Sachs (GS) analyst David Bailey wrote in a June 11 research note: "Software remains Apple's biggest competitive advantage. It enables the company to move into new markets…and take a leadership position versus entrenched incumbents that often seem to treat software as an afterthought." Bailey said the iPhone launch should boost the price of Apple shares, which fell $4.30, or 3.45%, June 11, to close at $120.19. And the company's ability to apply its software research-and-development spending across Macs, iPhones, and Apple TV products, means Apple's earnings will likely outgrow its revenues. Goldman raised its price target for Apple during the next year to $135, from $120.

Apple still must prove that embedding Safari in the iPhone, then letting developers create programs for it that enlist technologies from the Web, will create enough incentive for outside companies to embrace the product. Naturally, Jobs sees this approach as "an awesome way to write apps for iPhone." In a demonstration, an Apple executive showed a database of sales contacts built using Safari that displayed iPhone's graphical hallmarks and touch-screen capability, and leveraged its ability to make calls, write e-mails, or view Google Maps.

The announcement begins to answer some software companies' concerns over how—and whether—Apple would let them build iPhone products. Jobs has forecast Apple will sell 10 million iPhones by the end of 2008, and the product could add $10 billion in revenue to Apple's top line within a few years, according to analysts (see BusinessWeek.com, 6/7/07, "How Big Will the iPhone Be?").

Some analysts are predicting an iPhone-sparked sales tear starting in 2009 (see BusinessWeek.com, 6/7/07, "A Look Inside Gene Munster's Crystal Ball"). In his speech at Apple's Worldwide Developers Conference, Jobs put Safari at the center of the discussion. "You've got everything you need, if you know how to write apps using modern Web standards, to write apps for the iPhone today," he said. "We've come up with a very sweet solution."

All Eyes on iPhone

Apple stopped short of opening up the iPhone's native code to developers, leaving unanswered questions about the performance of third-party software on the phone. Apple has said providing unfettered access to the iPhone's operating system would compromise its software quality and security. "The good news is at least they recognize that developer applications are necessary for the iPhone," says Kawasaki. "Vis-à-vis developing iPhone apps with Safari: to be determined."

What's still unclear is how readily third-party software will be able to connect to the iPhone's basic functions, like storing data on the phone for offline use, and playing multimedia files. "As a developer, how much of the iPhone am I going to be able to take advantage of?" says Salesforce.com's Gross. "Will I have access to the guts of the phone to be able to do sophisticated things?"

And at least one longtime Apple partner isn't pleased by the company's decision to make Safari the hub for iPhone development. Adobe Systems (ADBE) issued a statement on June 11 saying that Apple should have chosen Adobe's ubiquitous Flash software delivering music, video, and other content over the Web. "Apple hasn't disclosed any level of detail on the technology iPhone will support," Adobe says. "It would make sense for them to use Flash on their phone given their desire to have a great mobile experience for their users."

It's that kind of chafing that Apple will need to avoid as it tries to bring members of its Mac ecosystem into the fold for the iPhone and other new products. If its plan gains adherents, it could intensify competition for Web browsers. And that could give Jobs yet another weapon to use against Microsoft, as both companies try to extend their influence beyond the desktop.

Ricadela is a writer with BusinessWeek.com in Silicon Valley. With Arik Hesseldahl in New York.