By Falguni Bhuta

Developers abuzz about Apple’s iPhone are wondering when the company will open up the software powering the slick new phone to third-party applications.

Cupertino, California-based Apple is known for tightly-closed gadgets that limit how much third-party developed software can run on them—such as the iPod. The music player runs on its own operating system and has limited outside applications. Similarly, the version of the OS X operating system that runs the iPhone will for now only run software developed by Apple, say developers.

“The biggest disappointment is that, at this time, Apple is not going to open up the platform for third-party developers,” said 451 Group analyst Raven Zachary.

Apple already promises iPhone will offer a slew of useful and innovative features, but analysts say the company would be better off opening up its operating system to third-party applications.

Apple CEO Steve Jobs at Macworld on Tuesday showed off the iPhone’s email, Safari browser, Google and Yahoo web search, and maps. Some other features are visual voicemail, which lists all your voice mail on the iPhone’s 3.5-inch widescreen display that you can check in any order that you like. It has a 4GB and 8GB storage capacity for all your music files.

The iPhone’s biggest selling point is its sleek design. However, there are several applications that currently run on smart phones such as Palm’s Treo and Research In Motion’s BlackBerry that will not be available on the iPhone.

Mr. Jobs in his keynote said Apple would like to grab 1 percent of the mobile market by 2008.

If Apple wants to attain these numbers, it will have to make sure that it opens up the platform for third-party application development, Mr. Zachary said.

“I think it will be a huge financial mistake for Apple to keep the iPhone closed to software development,” he said.

Apple representatives did not return calls for comment.

Apple has enforced similar restrictions on the iPod since 2001, when the music player was released, but Mr. Zachary said the iPhone is not the same as the iPod because it does more than just play music and videos.

UK-based software developer Bernard Leach agrees that Apple should open up the iPhone platform for outside developers, just like it has with the Macintosh computer. The number of software developers and the third-party applications created for the Macintosh is enormous.

“If Apple were to open up the iPhone to Mac developers, the potential is huge,” he says. Since the iPhone is seen more as a mobile computer, Mr. Leach thinks it’s very important to make it an open platform.

For example, it would be nice to have the iPhone enable banking software that could help users track their bank account or make payments using the advanced features of the GSM network, he says.

iPhone Linux?

Mr. Leach is one of the creators for the iPod Linux project, which helped put the open-source Linux operating system on the iPod.

However, Mr. Leach is not sure if he will work on a project to put Linux on the iPhone as it will be tremendously difficult because of the complexity of the platform.

Putting Linux on the iPhone will be an unfruitful exercise that would require a lot of work from the community, Mr. Zachary of the 451 Group says.

“The power of the iPhone is in the user experience, and installing Linux would be a major step backwards,” he said. “Any serious Linux effort for the iPhone would require a tremendous [amount] of development and design that would, in the end, fail to approach the work that Apple has already done. If Linux users want a phone platform, they should look elsewhere.”

Software Reliability

While it would be nice to have outside developers create software for the iPhone, some analysts think that the quality and reliability of the software running on the device should be kept in check.

Cell phones are held to much higher standards than PCs and are not expected to crash like PCs do, said Rob Enderle of the Enderle Group. For that, the applications running on the iPhone have to be reliable, and unless Apple certifies them, they should not be allowed to run on the device, Mr. Enderle said.

“For the first year or so, it will be wise to keep it closed to assure that the initial reliability is there,” he said.