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iPhone: Developers Burned, Investors Leery

Fraser Speirs, former iPhone developer, had his application rejected by Apple on grounds that it might compete with iTunes. Unfortunately for Speirs and every other developer out there, you have no way of knowing if an app will be allowed by Apple until the last step in the development process, unless the app already exists in the Store. This raises the risk for investing in an iPhone app tremendously, meaning few businesses will make the investment, especially if their application is cutting edge. How would you like to invest $200K in an iPhone development project to have it turned back by a fickle screener?

But, I mean, who could have seen this coming in a completely closed and proprietary development environment?

Rule #3 of business – never have your business completely dependent on another business. A well-diversified, well-capitalized business might be able to take this risk, but the majority won’t. Android and Maemo are waiting.