Apple introduces subscription model for iPhone

Apple has unveiled new software for the iPhone that will give its network of developers new ways to make money on the device, allowing them to sell monthly subscriptions to their products.

iPhone 3.0, launched on Tuesday, includes 100 new features, including some long-awaited updates such as copy-and-paste of text and picture messaging.

Industry analysts said subscription-based applications would be an important revenue-generator for Apple and developers. Currently all purchases on the iPhone or iPod Touch are via the App Store or Apple's mobile version of iTunes.

A subscription-based model means users could be asked to pay for new levels of a game or to purchase additional content without leaving the application. Some have suggested it could provide a model for newspaper subscription as an iPhone app.

Developers of iPhone applications which are currently free of charge will not be able to later charge within their program, “free apps remain free", said Scott Forstall, an Apple software senior vice president.

An early version of the software is available to application developers now and will be available to consumers this summer. Users of the iPhone will be able to download the software upgrade free of charge, while iPod touch customers will be charged $9.95.

The updated software kit for developers will have more than 1,000 new programming functions, including peer-to-peer capability, an interface allowing applications to communicate with iPhone accessories such as docking stations, as well as access to the phone’s music library.

Analysts said that while most the of software updates were long expected, improvements to the developers kit could help increase revenue made from applications.

Van Baker, an analyst with Gartner, said the message of the launch was clearly targeted at the developer community. He expects the new development kit to enable third-party vendors to create better and more expensive applications. “This is a pretty significant release ... it will certainly help to drive commerce,” Mr Baker said.