With the release of the iPhone4 it is worth noting how Apple managed to change the mobile software marketplace.
A bit of history:
In the annals of business, there are negotiations of such import that they become legend.
One example is the Boca Raton meeting between Microsoft and IBM on September 30, 1980:
"Bill Gates, Bob O'Rear, and Steve Ballmer meet with IBM in Boca Raton, Florida, to deliver a report to IBM. They propose that Microsoft be put in charge of the entire software development process for IBM's new microcomputer, including providing the main operating system to run on the computer. Bill Gates insists on maintaining rights to the DOS, receiving royalty payments rather than a lump sum."
This meeting was portrayed quite well in this clip from the 1999 film "The Pirates of Silicon Valley."
Maintaining rights to DOS is what set Microsoft on the path to dominance and made Bill Gate's fortune.
Now back to Apple.
Apple launched the iPhone in the summer of 2007. Prior to the launch, mobile content (ringtones, wallpapers, apps) were under the control of the operators. Anyone who complains about the iPhone App Store should ask developers what it was like to get an app "on deck" at AT&T, Sprint, or Verizon in 2005.
So Apple, already having launched iTunes, naturally gets the rights to sell music on the new iPhone. But what about the apps?
Well, this was Apple's "Boca Raton" moment. So what Jobs does is launch the device with Web Apps only, as a strategy to get AT&T and the rest to cede control of the platform to Apple. Nothing to worry about Mr. Operator, honest:
"Developers and users alike are going to be very surprised and pleased at how great these applications look and work on iPhone," said Steve Jobs, Apple's CEO. "Our innovative approach, using Web 2.0-based standards, lets developers create amazing new applications while keeping the iPhone secure and reliable." - Steve Jobs, June 11th, 2007.
Of course Apple has to be able to update the iPhone's operating system and core apps (mail etc.) and that is done, naturally, via iTunes. AT&T goes along with this, seeing that Apple already was dominating MP3 players. Precedence set with an earlier (failed) Motorola phone (ROKR*) that also featured iTunes. I mean how big could this new phone be given the failure of Moto iTunes phone?
I would have loved to been at that meeting.
So Steve pulls a Gates and wrests control of content away from the carriers. A year later, native apps and the App Store appear and by then the iPhone is too important for AT&T to really object. Hence the App Store and for all the complaints about approvals ad-nauseum, the first time a 'open' market for software exists on a mobile device. 200k apps and billions of downloads later, the historical importance of this is clear.
*(Word to Moto, you do NOT allow a failure of your device when Steve Jobs is showing it to the world. As you now know very clearly.)