By Prince McLean

Published: 04:00 PM EST

A report detailing handheld gaming adoption by mobile phone users says that downloads of mobile games are up 17% over last year, and that iPhone users are nearly ten times as likely to have downloaded games compared to other mobile phone users.

ComScore's report, cited by InformationWeek, said that just 3.8% of mobile subscribers have downloaded a game to their mobile phone, compared to 32.4% of iPhone users.

The figures aren't much of a surprise given the poor models for mobile phone software stores set up by Apple's rivals, in contrast to the very easy to use iPhone App Store integrated into iTunes and installed directly on the iPhone and the iPod touch for over-the-air mobile application shopping.

Apple's iPhone App Store uses nearly invisible DRM to protect developer's software from being widely pirated, in exchange for store pricing suggestions that result in most titles being $10 or less, with many available for free. That encourages buyers to make purchases and to regularly return for more, which guarantees a steady stream of revenue to keep developers busy thinking up new projects to compete for attention (and dollars) in the Apps Store.

Pathetic competitors in mobile software

In contrast, other mobile software markets have languished. One of the strongest initial mobile software platforms was run by Palm, but it supplied no mechanisms for protecting apps from widespread piracy, imposed no suggested limits on software sales prices, offered no control over quality or content as Apple does, and expected developers to manage merchandizing and retailing themselves. The result was a platform with lots of apps that were either free (but often of low quality) or too expensive to gain traction.

Alternatively, some service providers such as Verizon Wireless have sought to set up rental software markets where users pay a few dollars per month to gain access to a specific game. The monthly rental fees are often nearly as much as full iPhone titles, yet Verizon's selection of Qualcomm BREW games, like similar offerings built using Sun's Java ME or Adobe's Flash Lite, are so extremely basic as to struggle to capture users' attention.

As an example of what you get compared to what you pay for, here's Texas Hold'em for Palm ($20, below left), for Verizon BREW ($8.50, below middle) and for the original iPod ($5, below right).



The iPhone version of Texas Hold'em costs the same $5, but plays in both portrait mode with video of animated characters (below left), or in landscape in a table view (below right). You can swap between game styles by tilting the device. It also supports multiplayer gameplay.



Apple's iPhone apps are built using Cocoa Touch, a full application development platform that shares much in common with the company's Mac OS X development platform. Combined with the sophisticated iPhone hardware platform, with hardware accelerated 3D graphics and a decently powerful CPU, Apple's App Store games even give dedicated handheld gaming devices a run for their money.

The graphics below contrast Sega's Super Monkey Ball on the game-centric, sidetalkin' NGage ($20, top left), a dumbed-down mini-game version for the Nokia N95 ($10, top right), with the iPhone version ($10, middle) and the same title on the Sony PlayStation Portable ($40, bottom).



Economy throws brick through window of opportunity

Another portions of Apple's success has simply been fortunate timing. The company managed to release the iPhone and gain a highly satisfied installed base of millions before the economy tanked.

That makes Apple's head start over Google's Android software marketplace, Microsoft's planned SkyMarket, and other mobile software stores in the works from Palm and T-Mobile even more significant, as it will be far more difficult for those competitors to build competitive new retail markets during the downturn, particularly with Apple already sucking up all the attention and already in a position to offer developers immediate and real revenues with minimal risk right now.

Hardware software integration

Over the past half decade, it has for various reasons proven difficult enough for Microsoft, Sony, and others to sell music and movie downloads in competition with Apple's iTunes. The company's strong lead in mobile app sales is also tied into the brand recognition of the iPhone as a smartphone and the software compatible iPod touch as a phone-free media player and web browser.

That integrated hardware-software punch isn't really being replicated anywhere else apart from RIM's Blackberry and Palm's new webOS Pre. The Blackberry maker has found that it's far harder to deliver a touch screen phone and consumer-friendly software platform at a competitive, profitable price than it was to build glorified pagers for business users who were largely insensitive to hardware costs and software licensing fees. RIM has resorted to selling the Storm below cost and buffeted by a torrential downpour of criticism over its unfinished, buggy software, all just to stake an entry position in the smartphone game.

Palm, meanwhile, is hoping to copy Apple as closely as possible (given the limited revenues it has) and is literally betting the company on its new Pre phone due towards the end of the year. Apple took a significant risk with the iPhone, but it had several other strong businesses to fall back upon, including the Mac, the iPod, software, and digital media sales. Palm faces an all or nothing gamble as the skelaton market of PDAs crumbles to dust and its aging Treo smartphones fade into the sunset.

As a company, Palm is still coasting on multiple injections of investment from Elevation Partners, which pumped $325 million into Palm for a 25% share of the company last summer, and then followed up in December with another $100 million. Its other phone sales are down significantly and its retail store operations are falling apart.

Apple's iPhone platform was announced alongside the $100 million Kleiner Perkins iFund to induce new software development, but the sales of apps themselves, which has already reached a half billion downloads, is creating the most tangible inducement for new development, a force that has grabbed the attention of mobile programmers globally.