Is The Rush To Develop iPhone Apps Creating A Bubble?

Mobile entrepreneur David Bluhm has built several successful mobile companies–including mForma and Medio Systems — thanks in part to very clear business plans, The longer-term mission of his latest venture, Zero260, isn’t quite so clear, though. This week, at CTIA, Zero260 launched three basic photo-sharing apps for the iPhone — PhotoFeedd, TravelFeedd and CarFeedd. As for the next step, the CEO, said: “We aren’t deciding on anything specific. We might do something completely different…We can go down a broad set of paths.”

Call it iPhone blindness. The frenzy over the hit device is encouraging everyone, from entrepreneurs to large media companies and advertisers, to pile into the app business. And it’s not only the iPhone — Microsoft (NSDQ: MSFT), Research In Motion, Nokia (NYSE: NOK) and Google (NSDQ: GOOG) now all have their own app stores, each of which will surely spawn its own set of entrepreneurs. But can all of these app builders and marketers make money? The prevailing thought is no. Currently, the business is in an experimental phase, but eventually there will be a shake-out as some struggle to make money on the platform. As it stands today, it’s appearing like the big brands will be the ones that succeed, while the smaller companies — the people with limited budgets and cachet among consumers — will struggle.

For all the euphoria over the iPhone, Apple (NSDQ: AAPL) has sold only 17 million of the devices worldwide, a sliver of the overall market. Mark Lowenstein, a consultant at Mobile Ecosystem, recently said at a conference that a successful iPhone application is one that’s been downloaded by at least 20 percent of users — but that’s still only 1 percent of the global mobile population. Further caution came from Bango (AIM: BGO), an analytics company, which said that according to its data, the iPhone is the 24th most-popular handset for browsing and buying mobile content on the mobile web — and that companies are targeting it at the expense of the mass market.

John Burry, CEO of Mobui, an iPhone-app developer that works with large media brands like Viacom (NYSE: VIA) and Nickelodeon, says: “The iPhone is the new black. You have to have it in your wardrobe…(But) winning the lottery is not a good business plan. A lot of people, who are trying to strike it big in the app store look at that guy who made $700,000 by coding from his couch. Can that be sustained over two years? It’s a hits-driven model. It takes a lot of capital. It


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