Will AT&T Sell iPhone Apps, Or Will They Be Sold On iTunes?


With Apple’s (NSDQ: AAPL) impending release of the iPhone software development kit, Wired reports today that Apple will probably turn iTunes into a software store, where consumers can buy apps for their iPhone or iPod Touch.

The story says that it makes a lot of sense to distribute software this way since Apple has already created a successful community. However, it also brings up several questions on how it might work. For one, the story said developers may be uncomfortable with the arrangement because it will mean Apple will have all but total control over both the hardware and the distribution channel. But it never asked the obvious — if customers purchase software direct from iTunes, will AT&T (NYSE: T) be left completely out of the revenue loop? Today, a lot of the applications or other content are distributed on handsets, allowing the operator to take a cut of the profits. If Apple creates a marketplace online, would that bypass AT&T?

If this indeed becomes the case, Apple won’t be the first to sell applications online without the carrier’s permission. Today, owners of smartphones can go to various Web sites and pay for downloads without ever involving the carrier. But if Apple controls the entire distribution, maybe AT&T can arrange a cut of the revenues?

There’s no update on when the SDK will be released, other than it’s expected later this month.

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