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Friday, March 7, 2008

Apple is Encouraging iPhone Programmers

Apple’s chief executive, Steven P. Jobs, left, and the venture capitalist John Doerr at Apple headquarters in Cupertino, Calif.

High-flying venture capitalist firm Kleiner Perkins Caufield & Byers placed a $100 million bet on Apple's iPhone on Thursday by creating the iFund.

KPCB partner Matt Murphy will manage that gamble, by heading up a team that will invest in game-changing applications for the mobile Internet. His group will include KCPB co-founder John Doerr and Sun Microsystems co-founder Bill Joy, along with high-ranking advisers from Apple.

in an Interview - talked to Murphy late Thursday about his new charge and the significance of the iFund. Following is a brief excerpt of the interview, but the entire Q&A will be posted here Friday.

Steven P. Jobs, Apple’s chief executive, is hoping to expand the iPhone’s appeal by luring software developers to create programs for it.
John Doerr, the venture capitalist, is adding an incentive: his firm is putting up $100 million to invest in the work of those programmers.

At an event Thursday at Apple headquarters, Mr. Jobs announced a low-cost software development kit that outside programmers can use to create programs for the iPhone, much as they now write the vast majority of the programs created for the Macintosh. Until now, iPhones have officially been able to run only the limited assortment of applications that Apple includes. (Some buyers have modified the phones to add unauthorized software.)

“We’re very excited about this,” said Mr. Jobs, who also announced that the company was adding features to make the iPhone more appealing to business users. “We think a lot of people, after understanding where we are going, are going to want to become an iPhone developer.”

Sharing the stage with Mr. Jobs, Mr. Doerr announced that his firm, Kleiner Perkins Caufield & Byers, had established a $100 million venture capital fund for iPhone entrepreneurs. Called the iFund, it is the largest fund the company has created for a specific technology.

“The potential for iPhone is huge,” Mr. Doerr said.

Matt Murphy, the Kleiner partner overseeing the fund, said he expected the fund to last two to three years, after which the company might decide to add more capital.

Mr. Jobs said Apple would offer a developer kit for $99 that would allow programmers to create everything from games to business programs. On Thursday, Sega and AOL demonstrated applications they created for the iPhone using the kit.

The programs that are created will then be available to iPhone users exclusively through a new service on all iPhones called the Apps Store, an aspect of the plan that may discourage some developers. Apple will keep 30 percent of the sale price.

Mr. Jobs said that Apple would offer only those programs that it approves, rejecting pornography, for example, and programs that might not provide adequate security for users.

He argued that developers would benefit from Apple’s being the sole distributor because only Apple could give third-party programs such wide exposure to customers. All iPhone users will be able to browse the available programs directly from their devices. Customers will also benefit, he said, from Apple’s weeding out of malicious programs.

“We can track the developers and we can tell their parents,” Mr. Jobs said, joking about the demographic profile of many Apple entrepreneurs.

In an attempt to lure corporate customers, Apple executives also announced that the iPhone would be able to work directly with Microsoft’s Exchange software, allowing it to interact closely with corporate networks and e-mail systems in much the way that BlackBerry devices do. Apple said Genentech and Nike were among the companies that were already taking advantage of this feature.

The new business abilities will be added to the iPhone in June and will come to existing owners in a free upgrade. The software will include extensive security features, like the ability to lock and erase the system remotely in the event of loss or theft.

“The majority of the objections I.T. managers have had about the iPhone have been addressed today,” said Van L. Baker, an analyst with Gartner Inc., referring to corporate information technology managers. “It’s a very valid and robust device, and for that reason it’s a viable platform for the enterprise in competition with the BlackBerry and others.”

But attracting a huge following among corporations is something Apple has not been able to achieve with the Macintosh, and it remains to be seen whether the iPhone will take sales from the BlackBerry, the popular business communicator sold by Research in Motion of Waterloo, Ontario.

“It’s a better device and platform that does more things than the BlackBerry,” Mr. Murphy said. If people have been questioning whether the iPhone is a business tool, the integration with Exchange “takes the issue off the table,” he said.

The iPhone is already the second most popular smartphone after the BlackBerry, with a 28 percent share of the market, but its inability to communicate with corporate computer systems running Microsoft Exchange has hindered its growth in that market.

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