The Search for the Killer iPhone App

Many developers are hard at work building tools for Apple's popular phone, despite what some consider limits on their ability to collaborate

by Olga Kharif

Apple

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Executives at venture capital firm Kleiner Perkins Caufield & Byers had a running bet as they announced a $100 million fund to encourage developers to build tools for Apple's (AAPL) iPhone. The wager was over how many business plans they'd receive in the first 30 days after the Mar. 6 announcement. Kleiner Perkins partner Matt Murphy won't divulge the number, but says it was exceeded within 36 hours.

So great is the interest among developers in creating a software-based tool, or application, for Apple's popular iPhone or iPod Touch that on the same day Apple announced the release of the software developer's kit, or SDK, Apple's Web site crashed. Many developers resorted to grabbing the file using BitTorrent file-sharing technology. On March 12, Apple reported that more than 100,000 developers downloaded the kit in the first four days it became available.

Nondisclosure agreement

At stake not only is a slice of funding from storied Kleiner Perkins, an early investor in such companies as Amazon (AMZN), Genentech (DNA), and Sun Microsystems (JAVA), but potential bragging rights to building the next killer app for the iPhone. Programmers are generally pleased with the kit, but many are already running up against a lack of guidance from Apple on thorny questions, as well as limits on their ability to compare notes with other developers.

Craig Hockenberry is a principal at developer Iconfactory who hopes to create a tool that would make it easier for iPhone users to use microblogging site Twitter. "They've done an absolutely fantastic job," Hockenberry says of Apple. "The problem that Apple has right now is, there's too much interest in the iPhone SDK." Several iPhone developers contacted by BusinessWeek.com say they've already sent Apple questions or reported concerns via phone or e-mail. Most don't expect to get a response back for several weeks. The company didn't respond to repeated requests for comment on this story.

Many programmers feel inhibited from turning to one another for help because of the confidentiality agreement they need to sign before downloading the free kit. Among the stipulations in the 2,700-word document: "You agree not to disclose, publish, or disseminate any confidential information to anyone other than to other registered iPhone developers" who work for the same firm. The restriction hasn't stopped some developers from using public forums to answer each other's questions—though it has given some pause. "Apple considers the SDK to be covered under an NDA [nondisclosure agreement] by developers," wrote a participant in a discussion on Apple's site who identified himself as Scott. "They don't want people discussing it."

Fat Fund

Apple is not the only company to impose NDAs on developers, notes Richard Doherty, director of consultancy Envisioneering Group. Yet the cell-phone software disseminated by Google (GOOG) contains language that appears to be less restrictive than Apple's.

Erica Sadun had hoped to publish a book on the iPhone SDK within days of the publication of the beta, or test, version. Now she's concerned she'll have to wait until June, when the kit is released officially. "Apple is not clarifying what comes under the NDA," she says. She's particularly leery of language like this: "You agree not to use Confidential Information in any way, including, without limitation, for your own or any third party's benefit without the prior written approval of an authorized representative of Apple in each instance."