Although antivirus companies such as McAfee continue to warn that malware is a potential threat to smart phones, it has yet to become a huge problem. In fact, some security researchers argue, it should never be a problem, because of differences between the mobile and PC platforms. Applications for Apple's iPhone, for example, all come from the App Store. Phones that use Google's Android can download software from anywhere, but Google is able to remove programs remotely. "If we really need antivirus on current smart phones, something really went wrong," says Collin Mulliner, a PhD student at the Technical University of Berlin, who knows Hering and Mahaffey from their Bluetooth research days.

Attackers are, however, starting to exploit the particular weaknesses of smart phones, and Lookout has to regularly update its service to detect the latest known threats. In February, a Trojan horse known as DroidDream infected hundreds of thousands of Android phones. Lookout detected other programs in the Android app marketplace with the same malicious code and notified Google. In May, the same attacker tried again with a simpler version, known as DDLite, and Lookout blocked it again.

Despite the battle between malware writers and companies like Lookout, the problem of malware is a sideshow compared the bigger problem of device management, says Andrew Jaquith, chief technology officer of Perimeter E-Security and a former analyst who covered the mobile market. "In the end, it is management that is wagging the dog, not security," Jaquith says. "And in that space, in terms of implementation, there's Lookout and then there's everyone else."