Daniel Eran Dilger in San Francisco
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Jailbreak stores plot to plunder iPhone app revenue

200903091556

Prince McLean, AppleInsider
At least three groups are working to syphon cash from Apple’s river of revenue between iPhone users and third party developers. Accomplishing that will require inducing more jailbreaking of iPhones, ensuring contention from Apple itself.

Jailbreak stores plot to plunder iPhone app revenue
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Following its existing iTunes game plan, Apple originally set up the iPhone App Store primarily to create a rich software library to attract the attention of potential phone shoppers rather than to make money on the software itself. The company proposed charging developers much less (a 30% cut rather than the more typical 40% to 70% of other online software stores) and handling all their promotion, updates, and sales transactions in the hope that an attractive market for mobile software would induce development.

The resulting success of the App Store has been a surprise even to Apple’s executives. Mobile software downloads for the iPod touch and iPhone have been growing at a rate at least double that of the launch of iPod music sales, which had been a blockbuster event in itself.

On its six month path to the first half billion software downloads, Apple struggled to keep up with application requests from interested developers and wrestled with policy issues over the rejection of certain software titles based on content offensiveness, user privacy issues, and interference with the company’s own goals, such as an attempt to build a copy/paste system using undocumented APIs.

Jailbreak wars

Those restrictions have resulted in a very successful App Store full of mainstream content without much that could offend anyone or result in spyware problems or piles of shoddy software that might significantly ding the iPhone’s image. But it also results in complaints from groups that want to sell porn, or to access features that are not yet open to development. That includes video recording, Bluetooth features, and anything that wants to talk to external hardware peripherals through the Dock Connector.

Getting around Apple’s restrictions means jailbreaking the iPhone, a step that bypasses its code signing security system to allow the device to run any software. That step complicates system software updates for Apple and opens the device to the spyware and adware business models familiar to Windows users that Apple worked hard to prevent from taking root in its new platform.

Apple has challenged attempts by the EFF to open up an exemption in the DMCA that would make it much harder for the company to stop the copyright infringement of its firmware and possibly even result in widespread iPhone software piracy that could topple the success of the App Store entirely, just as casual file trading gutted the music business.

Jailbreak stores

At the same time, some developers who got started on the iPhone prior to the release of its official Software Development Kit have sought to find funding sources for continuing their efforts. To most users, the jailbreak scene is now obsolete. However, there are still some types of apps that can’t be delivered using Apple’s official tools and store. Those developers can only give their tools away; they naturally want to sell their work, too.

Jay Freeman, the creator of Cydia, graphical wrapper for APT (Advanced Packaging Tool, a freeware software download tool for Debian Linux), wants to sell unofficial software in parallel with Apple’s App Store for the same 30% cut, but without security code signing and without the quality control and content restrictions Apple imposes.

That would allow Freeman to sell his Cycorder video recording app, something Apple won’t carry in the App Store because it accesses hardware features outside of the official APIs. It would also enable Freeman to earn a cut on sales of titles like PdaNET, a tethering app that would enable users to hog 3G mobile bandwidth to get a network connection on their laptop, a violation of Apple’s service agreement with AT&T and forbidden under Apple’s “no networking hogging” clause in its third party developer contract.

A Wall Street Journal article also cited two other attempts to similarly market unofficial software, one called Rock Your Phone, similar to Cydia, and another hoping to specialize in adult games. The key issue in each of these stores is Apple’s right to run its own platform.

Who owns the iPhone platform?

“The overworking goal is to provide choice,” Freeman told the Wall Street Journal. “It’s understandable that [Apple] wants to control things, but it has been very limiting for developers and users.”

Also writing on the subject of unofficial app sellers, InformationWeek complained that “developers continue to have applications rejected for things like ridiculing public figures, censorship that wouldn’t be tolerated in print or other traditional media.”

However, Apple isn’t censoring speech by limiting what software it chooses to sell in its store or on its platform, any more than it is censoring speech by not stocking porn mags and political tracts in its retail outlets. Anyone can publish their opinion on the web, which is fully available, unfiltered, in the iPhone’s web browser. The real issue is whether Apple has the right to build a platform it manages and secures as a competitive alternative to the unmanaged, unsecured mobile software platforms that already exist.

How Apple lost its Mac platform

In the early 80s, Apple gave up control over the emerging Mac platform to third party developers. The first step was that third party developers demanded that Apple not build its own office apps for the Mac as it had for the Lisa, thus providing them with greater opportunities for selling Mac software.

Apple’s closest third party software partner, Microsoft, then took Apple’s unique ideas (for a standardized graphical environment that was far more usable than its Xerox predecessors) and tied them to the existing IBM DOS PC monopoly, choking off Apple’s hardware sales.

Microsoft then shelved support for its Office apps on the Mac in the early 90s, leaving Mac users without access to modern productivity software, despite the fact that Office had originated on the Mac as an Apple-allowed success story to appease third party developers rather than offering its own Mac office apps as it had for the Lisa.

Third party developers then got Apple to officially sanction their practice of patching the Mac’s low level system software, which resulted in System 7′s “Extension conflicts,” which caused instability and crashing as well as throwing up complications to Apple’s own ability to advance its software platform.

Successful platforms require leadership

Apple’s failure to lead the classic Mac platform destroyed it within a decade. Palm similarly destroyed its Palm OS mobile platform by failing to aggressively incite developers to move with it, and instead simply bogged down and became irrelevant instead.

With Mac OS X, Apple accommodates new features as carrots to induce developers to stay current on its latest releases. It maintains a rapid pace of development and keeps users excited, ensuring that developers have an healthy audience to sell their products to.

Microsoft’s Windows did the same thing in the 90s, pushing developers to adopt new features that would tie them closer to the platform. Microsoft’s huge audience of users kept developers coming even as the company devoured them as competitors as it expanded its Office suite and moved into new markets from media playback to development tools to browsers to server products.

Jailbreak stores no threat?

Meanwhile, analyst Charlie Wolf for Needham and Company has issued an investor note stating that the risk of jailbreak vendors “cutting into Apple’s software sales” as suggested by the Wall Street Journal “misses the point on two counts.”

“First, the rogue stores will be limited to selling applications the iTunes App Store won’t sell,” Wolf argued, “largely offensive apps, not any of the 25,000 the Store has approved and is selling. So the App Store should experience no loss of revenues from the sale of rejected applications by competing stores.

”Second, as the story notes but fails to emphasize, the only purpose of the iTunes App Store is to lock iPhone owners to the iPhone and hopefully sell more iPhones to application-centric customers. As such, Apple manages the App Store as a breakeven operation.“ Wolf also wrote that ”Third-party application stores could actually benefit Apple to the extent that they attract and lock in additional customers to the iPhone.“

As noted in its comments on the EFF case, Apple doesn’t necessarily see things that way, viewing jailbreaking as a threat to the iPhone’s security model and an expensive support issue that generates millions of crash reports the company has to wade through. Additionally, because ”rogue stores“ are not seeking to build a platform but rather just to make a quick profit, they have no real interest in preventing software piracy. One of the main features of jailbreaking is that cracked phones no longer respect FairPlay DRM, enabling them to run stolen programs from any App Store developer rather than supporting the platform with micropayments of a dollar or two.

That threat to Apple’s wild success in selling mobile software among so many failed previous attempts raises the stakes significantly, ensuring that the company will fight to keep jailbreaking out of the commercial mainstream. There’s no doubt that iPhone 3.0, due for release this summer, will play a major role in that effort to make the App Store too attractive for competition.

18 comments

1 august { 03.09.09 at 7:41 pm }

Jay Freeman has said that he’s (also) is doing the store to help EFF’s case. http://twitter.com/saurik/status/1290361291

And he says it will support DRM. http://twitter.com/saurik/status/1292790739 Although, not in the greatest of ways.

2 nick { 03.09.09 at 8:18 pm }

Hello:

After purchasing 370 Apple ITunes purchases, I was tried of swapping out the applications from the ( screen limit 9 x 16) so I broke down and jail broke my Phone, to install a single application. I’m still tied to my Provider, no plans to Yellowbrick. I email Apple the request to raise the limit for 16GB Iphone last Sept. 2008. Hoping Apple is listening about this improve functionality.

Much enjoy read your site.

Nick

[Wow Nick, you'll have to start carrying multiple iPhones just to have all those apps available! - Dan]

3 darwiniandude { 03.09.09 at 9:20 pm }

Nick: Agreed. I have ~ 350 apps, a great deal of which are purchased, and the constant shuffling/deleting choosing process caused me to once again jailbreak the phone. Apple need to fix this. Cydia is great for the video recorder, turn by turn voice prompting GPS (works very well) but I reject the idea of paid apps on Cydia as this will provoke Apple to close the jailbreak loop holes. If an individual Cydia dev wants to make a demo that unlocks via a key when you PayPal him money, that’s fine by me; I bought Labyrinth for the 1st gen iPhone this way. But is Cydia becomes an organized AppStore alternative Apple will (possibly quite rightly) kill it.

4 Nathan { 03.09.09 at 10:44 pm }

“the only purpose of the iTunes App Store is to lock iPhone owners to the iPhone and hopefully sell more iPhones to application-centric customers”

Is this guy saying: if you buy an iPhone you are “locked-in” to using your iPhone? and then saying the appStore locks users who like using applications on their iPhone. Is this guy an idiot? Does he not understand the concept of the free market? It’s like he thinks I have to use my iPhone because I bought it, and that I only use apps from the appstore because I like and buy apps on the appstore. His teological arguments are giving me a headache.

”Third-party application stores could actually benefit Apple to the extent that they attract and lock in additional customers to the iPhone.“

I don’t believe he knows the meaning of “lock-in”. How are apps, designed to run on the iPhone, locking in a customer who chose to buy an iPhone?

As for Jailbreaking, I dont care if someone buys an electronic device and does whatever they want to it. However, if that hack ruins my cell reception or hurts my chances in getting some legitimate Apple support, then they have crossed the line. The jailbreakers cry for freedom, but scoff at the idea that they could be harming other users, very hypocritical.

Developers think they have the free-market right to have any app accepted for the appStore. They forget that it is Apple’s free-market right to pick and choose which app to allow on the appStore. Apple believes refusing certain kinds of apps will make them more money. An Apple with more money means a company with greater ideas for the future.

5 jfatz { 03.09.09 at 11:16 pm }

“…the only purpose of [Nintendo DS games] is to lock [Nintendo DS] owners to the [Nintendo DS] and hopefully sell more [Nintendo portables] to [game]-centric customers…”

OH NO, HE HAS FIGURED THE TRICK OUT! RUN, NINTENDO, RUUUUUUN!

6 daGUY { 03.10.09 at 12:47 am }

@Nathan: I think what Wolf means by “lock in” is that the App Store provides incentive for sticking with the iPhone platform. If you buy a lot of iPhone applications, then when it comes time to get a new phone, you’re more likely to replace it with another iPhone since you’ve invested in the platform. You can’t bring your iPhone apps over to another device.

Of course, you can make the same argument about pretty much anything (like any game console, for instance).

7 gus2000 { 03.10.09 at 1:08 am }

I’m curious what the iPhone SDK says about the legality of distributing apps outside of the Apple ecosystem. I hope it gives Apple carte blanche to “borrow” the jailbreaker’s ideas! They would have some nerve suing Apple for copyright infringement, or for locking them out with a future firmware.

I think there’s always gonna be hackers but 99% of users want it to “just work”.

8 michal_from_poland { 03.10.09 at 11:33 am }

Would you like an AppStore ON YOUR MAC?

What if you could only install those programs on your Mac, which Apple “approved”. No “security” software, no pirated software and if Apple deems it so, no access to an external harddrive, which is not manufactured by Apple…? That would be obscene.

And what if I wanted to install Linux on my Mac, but apple “patched the security loopholes”, which allowed me to do that?

[Your comment isn't a minority opinion, but I disagree that the future of non-secure mobile software will be different than its failed past. Also, putting a cracked version of Apple's software on your iPhone is not anything like putting Linux on it. Apple doesn't care if you put free OS software on your Mac, iPod or iPhone.
Also, if a DRMed Mac software store could deliver better compatibility and automated software updates with lower prices, as iTunes has for music, videos, and mobile software, the market would embrace it warmly. Imagine if Office cost $20 instead of $200, and games were $20 rather than $60. Developers could make far more in the long run selling x 10 as many copies legally, and more developers would write Mac software.

The fantasy world where people create great consumer software for free, or where piracy isn't a problem, is only a fantasy. -Dan]

A Mac is my computer, I can do with it what I want. An iPod touch is also my computer, but I’m not allowed to use it as I like. An iPhone is no different, except for the contract you sign with your cell operator, it’s also just a computer.

Third party, OPEN APP STORES FTW!

People who want security can still use the official “safe” AppStore, nothing stands in their way. COMPETITION is usually A GOOD THING.

9 John E { 03.10.09 at 12:46 pm }

exactly right gus. but the 1% of iPhone geeks that go through the trouble to hack it make 99 times as much noise about their suffering.

that said, of course there are common sense improvements needed. like being able to easily organize groups of apps for iPhone pages within iTunes first just like playlists. and being able to search for apps in the Store via tags of all kinds. Apple would be crazy stubborn not to roll these out this year.

10 sharp_jiang { 03.11.09 at 12:18 pm }

nice article..
Following its existing iTunes game plan, Apple originally set up the iPhone App Store primarily to create a rich software library to attract the attention of potential phone shoppers rather than to make money on the software itself.

11 airmanchairman { 03.11.09 at 6:24 pm }

As I predicted in the frantic and insult-filled prelude to the SDK and the App Store, a lot of apps independently developed before its kick-off and outside the official library have eventually found their way into the “walled garden”. As I predicted, elegance, functionality and coolness would be the determining factors in their acceptance, since this is the Apple way.

I’ve had the chance to see a jailbroken iPhone 3G in action, with various wallpapers, more app icon rows and columns , and some very desirable apps like GPS turn-by-turn voice commands, Qik and Cycorder video recording, tethering, SSL etc.

My overriding impression was that clutter, security issues and a lack of elegant presentation overshadow the desirability of the extra functions available on the “underground” platform.

As Apple continues its software, firmware and even hardware evolution of its hand-held platform (iPhone/3G and iPod Touch so far) I have no doubt that video recording and conferencing, voice commands for turn-by-turn GPS navigation, cut-and-paste with editable spreadsheets, documents and presentations will arrive in due course, and that some of these “outlaw apps” will be instrumental in implementing these features. They will need to clean up their presentation, user interfaces and memory usage, however.

I personally am patient to await these developments, as Apple’s unique presentation and design philosophy, with its emphasis on a sweet combination of simplicity elegance and cool, is the main reason that I buy Apple devices.

There is an abundance of choice on the more established mobile device platforms for those users who require all the latest, greatest functionality yesterday…

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13 RickRussellTX { 03.31.09 at 9:19 pm }

“Jay Freeman… wants to sell unofficial software… but without security code signing…”

This is utter misinformation. Debian’s apt is one of the most highly respected software distribution tools in the IT industry and fully supports signing of software packages. Indeed, most apt implementations will not allow you to download or install unsigned packages without explicitly bypassing clear security warnings. A dozen enterprise-class Linux distributions use apt, or some GUI wrapper on top of apt, for software maintenance. As a whole, they do a much better job of staying up to date with critical security patches than either Apple or Microsoft with their respective operating systems.

Software distributed via Cydia is digitally signed, just not by Apple. Users have the ability to review the digital signature information in detail before downloading the software.

Granted, it’s just a phone, so reviewing the software distribution process is probably too much to ask of the average person. But nobody is forcing users to install Cydia.

In addition, Mr. Freeman has no real hope of enforcing a pricing model. Even if he demands a 30% cut of Cydia “retail store” price, developers can simply offer the software for free on Cydia, then demand a payment via an outside channel to unlock features. Several excellent software packages in the Cydia repository use this mechanism.

[Hi Rick - It doesn't matter if apt "fully supports signing of software packages" if signatures can be self-signed by anyone and non-signed software is also available. That's like saying it has all the security of a car with the doors locked, yet all the ventilation of a car with the windows down. Some things can't be mixed together without canceling themselves out.

Cydia does not manage security for uses as the App Store does; instead, it makes limited security possible for users who are knowledgeable enough to understand how everything works. That's not good enough for a consumer device, nor is it good enough for a mobile phone with access to the user's highly sensitive data (including their GPS location, call records, contacts, mail, and so on), particularly because most users don't even realize that this information is so highly sensitive, nor how easy it would be to lose it to theft, accident (malware), or have it modified without their knowing by software pretending to be legitimate, and even self-signed with pseudo-security.

Additionally, as you point out, Cydia has no way to enforce "proper" behavior, so even if it took off, it would only serve as a dirty alley for finding ugly nagware demanding too much money for a unique but low demand (and frequently stiffed) product. That would be whore-able, but to each his own. I prefer to know what I'm getting into bed with. - Dan ]

14 Joel { 04.01.09 at 2:58 am }

“That’s like saying it has all the security of a car with the doors locked, yet all the ventilation of a car with the windows down.”

I suspect you haven’t spent much time looking into the Apt Package Managment Tool. If you had you might realise that it – to extend to car analogy – has warning saying your windows are open…

I know you feel you have to knock Linux, but if you spent time looking into these things you might realise its a very good model for the Mac App Store that you mention earlier…

15 RickRussellTX { 04.01.09 at 3:52 am }

Dan, have you used Cydia? Do you know what’s involved to install software using a new public key, or adding a non-official software repository? There are several explicit steps required, it’s not like you can blunder over it by accident.

Of course, Jay Freeman could go crazy tomorrow and schedule an update that scrambles everything. That’s part of the Web of Trust. The difference, I guess, is that Jay is asking us to trust him, while Apple is forcing us to trust them (or more accurately, their code review process).

And I’m not sure why you defend Apple’s record on this point. Aside from releasing apps that violate their own standards (only to pull them off later), the App store has plenty of applications that barely work. I’ve downloaded (and *paid for*) a couple of apps that iTunes refused to copy to my iPhone 3G or iPod Touch 2G claiming they are “not compatible”, and similarly I’ve had applications that run, but function nothing like the description, or they launch and freeze the phone forcing me to power down, etc.

If somebody were to release a harmless looking app with obfuscated code that shipped the user’s personal data to a remote location N days after installation (where N is some number longer than Apple’s code review process), I am not at all convinced Apple would catch it. The experience of App Store developers so far is that the folks doing the code review are not exactly the bright sparks of the computer science world.

Linux & Mozilla & OpenBSD & FreeBSD & even Darwin have shown us for 10 years that open source improves security. Yet we keep jumping on every overhyped, ballyhooed, proprietary bandwagon as if it is *finally going to solve* the malware problem once and for all.

Well, I sincerely hope the App Store doesn’t let an iPhone equivalent of Blaster or Nimda get through the net. But we’ll never know, will we? That’s the beauty of the closed process!

16 darwiniandude { 04.01.09 at 4:11 am }

“Well, I sincerely hope the App Store doesn’t let an iPhone equivalent of Blaster or Nimda get through the net. But we’ll never know, will we? That’s the beauty of the closed process!”

That’s why Apple has the oft-criticised ‘remote kill switch’ in place; an App in the wild can be remotely disabled. Sure, it could have done some harm in the mean time, but will be kept from the majority of users.

This is stuff I’d hate on a desktop, but is required in the mobile market.

I ran my 1st gen iPhone jailbroken obviously, and my 3G has been jailbroken and put back to normal many times. The lure of the jailbroken apps brings me there, and I purchased Labyrinth for my 1st gen before the AppStore existed. But I’d never buy a jailbroken app these days, no point especially with what 3.0 has in store. Regardless of anything, and how good the Aptget system is on a linux box (or macports/darwinports/fink on OS X) a jailbroken iPhone, for me, is much less stable than a non jailbroken one.

The copy paste ‘clippy’ mostly works well, but screws up with many apps (eg WiFi discover when scrolling through large PDF’s, bookmark, come back and you can’t scroll) and battery life goes down.

I’m against AppStore style control for desktops, but I think most people would have to admit that it’s better than the alternatives for a mobile phone.

I hope Palm / Nokia / Blackberry / Microsoft etc get their act together and give Apple some competition, because they have no hope anyway (The boat has left… iPhone 3.0 is like the Windows 95 of that era, nothing else stands a chance for awhile to come) IMO, but Apple needs the competition.

17 The EFF’s Oddly Informed War Apple’s iPhone Apps — RoughlyDrafted Magazine { 06.03.09 at 8:46 pm }

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18 Wired’s David Kravets assails Apple over the EFF’s DMCA iPhone case — RoughlyDrafted Magazine { 07.29.09 at 5:02 pm }

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