Apple's announcement of an iPhone Software Development Kit will empower developers to plug gaps in the iPhone's functionality. But for those who have been developing iPhone software via the unauthorized process called jailbreaking, the announcement raises questions about whether the thriving underground iPhone development market will continue or wither away into a small collection of carrier-unlocking hacks.

Although Apple CEO Steve Jobs suggested in May 2007 that Apple was working on a rich development environment , when the iPhone was first unveiled, the only opportunity for third-party developers was in the realm of Web-based applications accessed through the phone's Safari browser. Four months later, Jobs acknowledged that Apple would allow the development of native iPhone applications .

For the first year of the iPhone's existence, those who have wanted to create or run native iPhone software have been reliant upon the work of hackers who have managed to bypass the iPhone's software barriers. "Jailbreaking" an iPhone gives access to all of the phone's underpinnings, which are similar to the underpinnings of Mac OS X. Once programmers had access inside the iPhone, they quickly began assembling a set of tools that would allow them to create iPhone applications.

Those third-party apps brought in additional functionality that Apple didn't build into the phone's software itself. The programs ranged from the obvious omissions -- instant messaging clients and a to-do program -- to those with more limited appeal, such as an app to help you remember where you parked .

With most new releases of the iPhone software, Apple plugged the holes that the hackers had used to gain access to the iPhone's software. The back-and-forth between Apple and the hackers at times resembles a breakneck ping-pong match, with each Apple release followed in short order by the discovery of a new hole allowing the jailbreak to continue.

But now that Apple has take the wraps off its own development and distribution plans -- complete with their own set of restrictions and limitations -- the future of jailbreaking has been thrown into question. Why, with an Apple-approved and easy-to-use distribution method, would anyone continue to go through the bother of jailbreaking their phone?

Where the money is
When asked why he robbed banks, notorious thief Willie Sutton was said to have replied, "Because that's where the money is." The same might be applied to Apple's iPhone application distribution plans. While there is nothing to prevent those developing apps for jailbroken phones from charging for their software, it's certainly an uphill climb to convince the average user to fork over money for a program that requires them to hack their phone.

"Many developers will undoubtedly switch to the Apple distribution system in order to make money," said Cody Overcash, co-founder of ModMyiFone.com , a site that tracks applications for jailbroken iPhones. Overcash expressed hope that some developers might adopt a two-pronged approach, making applications available in both Apple-approved and jailbroken flavors.

Overcash also suggested that open-source developers would be more likely to remain on the jailbroken track. "There is the age old battle between closed-source software for money and open-source software for free," he said. "One is about making money, the other is about sharing and learning from one another to build upon each other and make something great."

"I think we will see many of the current apps pulled from free distribution and put into the iTunes Store for pay," said Nate True , one of the hackers who contributed to the efforts to jailbreak the iPhone. True suggested that some developers might opt to also take advantage of jailbreaking in order to beta-test their products, but admitted that "the vast majority of developers will move to the SDK." (Apple will also give developers the option of releasing their software on the iPhone's new App Store for free.)