Analyst: iPhone Coding a Mixed Bag

| Apple Stock Watch

Appleis announcement that third-party development for the iPhone would be limited to Web 2.0 applications left some developers and investors disappointed. Piper Jaffrayis Gene Munster spoke with several developers at the World Wide Developers Conference on Monday and found that although programming for the iPhone will for now be more limited, it will offer a higher level of security.

Mr. Munster commented "Of the 9 developers we spoke with at the conference, all 9 indicated that the web-based method Apple will use for iPhone applications is less complex, but more secure, than allowing developers to deploy their own built-in iPhone applications."

The developers also told Mr. Munster that preventing coders from writing and installing complete applications that run outside of the Safari Web browser will help avoid network instability and promote iPhone reliability.

On the down side, developers noted that iPhone Web 2.0 applications will require an Internet connection to run, limiting when they can be used. Applications will also be less complex than if they were stand-alone, and they will likely be more difficult to find than applications that are installed on an iPhone.

Mr. Munster added "In the end, however, the iPhone comes with all the essential features built-in, giving the average user few reasons to run third-party applications anyway."

Investors and some developers donit share Mr. Munsteris positive outlook. Appleis stock price has been slowly dropping ever since the Monday morning keynote by CEO Steve Jobs wrapped up. Many developers were hoping for a complete iPhone software development kit, and saw Web 2.0 support as a weak substitute.

From Mr. Munsteris perspective, however, the disappointment will likely be short lived. The iPhone will be released on June 29, Mac OS X 10.5 ships in October, new MacBook Pro models shipped last week, and even more new products will be announced throughout the year.

Mr. Munster is maintaining his "Outperform" rating and US$160 target price for Appleis stock. Apple is currently trading in the pre-market at $119.50, down 0.69 (0.57%).

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