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Apple Places New Limits on App Developers

Apple is tightening its already firm grip on what software can run on the iPhone and its other mobile devices, as shown by its recent changes to the rules that outside programmers must follow.

Apple's iPhone 3Gs
Jack Guez | AFP | Getty Images
Apple's iPhone 3Gs

The company is locked in a battle with other cellphone makers, particularly those using Google’s Android operating system, for the latest and best applications that add functions to a phone.

The new rules, released last week, say in part that app developers may only use Apple’s programming tools. That is a problem for Adobe Systems , which announced a new package of tools on Monday that were meant to let developers create apps once and then automatically generate versions for the iPhone and other companies’ devices.

Developers will also no longer be permitted to use outside services to measure how their applications are performing. The company says it will refuse to distribute any apps in the iTunes store that violate the new agreement.

“Apple is doing everything to encourage app development, as long as it’s on their platform,” said Gene Munster, an analyst with Piper Jaffray. “The risk Apple runs is ticking off developers and causing them to want to develop on other platforms,” he said.

But until competing mobile platforms gain more traction, he said, “there’s no other place for developers to go, so Apple can call the terms however they want.”

The changes leave many start-ups and apps developers in limbo, waiting to find out whether their businesses, many of which have built a substantial clientele and taken money from venture capitalists, can still operate under the new rules.

“The truth is that right now, we don’t know a lot,” said Peter Farago, vice president of Flurry, an analytics company with offices in New York and San Francisco. “We have a list of questions.”

Flurry’s software tracks how smartphone applications are used. It has become a popular tool among developers, who have access to details like how long it takes to complete a game or to finish reading a chapter of an electronic book.

Mr. Farago said his company had asked Apple for clarification, but had not heard back.

“We think we can be compliant by doing some modifications,” he said. “We’ll do what we need to do to get that to happen.” Even so, the company is aware that it may have to rethink its business model, Mr. Farago said.

Henry Balanon, lead developer at an iPhone development company called BickBot, said he had no immediate plans to remove Flurry’s software from his applications.

“We’d have to roll our own analytics into the software, which is just a pain,” Mr. Balanon said. “But if we start getting rejections because of the analytics, we may have to reconsider.”

Industry experts like Al Hilwa, an analyst with the research firm IDC, say that Apple is tightening its grip on applications in an attempt to keep rivals at bay.

“There will be a big fistfight for developers and applications over the next few years,” he said. “This is just the early stages of the battle for mobile telephony. Apple’s financial radar is up, and they are trying to close all the holes.”

Mr. Munster, the Piper Jaffray analyst, said that the broader shift in Apple’s core revenue streams, to mobile from desktop computing, was a chief reason for the company to pressure developers. “It’s not about making money on the apps,” he said. “It’s about making money off the hardware.” Mobile devices with more apps, he said, are more attractive to buyers.

By the end of 2011, Mr. Munster said, nearly 50 percent of Apple’s total revenue will come from sales of the iPhone and iPod Touch. In 2001, 80 percent of Apple’s revenue was from its line of Mac laptops and desktop computers. That figure will slip to about 27 percent in 2011, he said.

Apple did not respond to requests for comment. But an iPhone developer named Greg Slepak sent an e-mail message to Apple’s chief executive, Steven P. Jobs, saying that the new rules were “limiting creativity.”

“We’ve been there before,” Mr. Jobs wrote in reply. “Intermediate layers between the platform and the developer ultimately produces substandard apps and hinders the progress of the platform.”

The prohibition on the use of non-Apple programming tools prompted a sharp response from an Adobe employee.

Lee Brimelow, an Adobe evangelist, wrote on his blog last week: “This is a frightening move that has no rational defense other than wanting tyrannical control over developers and more importantly, wanting to use developers as pawns in their crusade against Adobe.”

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