With its easy-to-use touch screen and slick software–including Apple’s iTunes–the iPhone is the darling of the cell-phone industry. And last week, Apple made an announcement that only enhances the phone’s appeal. The Cupertino, CA, company unveiled a set of new features for the phone that allow it to work well with business software, including e-mail and data-synching software. And crucially, the company released the instructions for the iPhone’s hardware, offering a software development kit (SDK) that lets programmers outside Apple peek inside the gadget and write their own applications for it.

Anyone who uses an iPhone will soon reap the benefits of the phone’s new capabilities–from accessing business e-mail, to running familiar desktop programs, to exploiting the built-in accelerometer for new gesture-based interfaces.

“This is a huge deal,” says Ken Case, CEO of Omni Group, a company that implements ideas from David Allen’s Getting Things Done in organizational software for the Mac operating system. “Apple has built this small handheld computer that’s based around the same fundamental technology of the Mac. What [the SDK] means for us is that we now have the opportunity to build software that people have been clamoring for since the iPhone was announced.” Case says that Omni plans to make an iPhone version of its “to-do list on steroids” that will capture data using the phone’s camera and incorporate location information made available through the development kit. Omni’s software could, for instance, automatically pull up a list of grocery items when it recognizes that the user has entered a store.

Businesses will be more likely to dole out iPhones to employees because, in addition to e-mail compatibility and synching ability, Apple is now offering a way for employees to access business servers that are behind firewalls. Moreover, the phones can be cleared of all data remotely, if they are lost or stolen. And Salesforce.com, a business services company, has already built applications using the iPhone development kit. “I think what you’re going to see is, just the release of the enterprise integration alone is going to drive substantial business sales [of the iPhone],” says Raven Zachary, a software developer who started iPhoneDevCamp, a series of workshops to spur development of Web-based iPhone applications. “You’ll see people leaving their BlackBerrys at the office.”

The health-care industry, specifically, could benefit from the open iPhone, says Steven Frank, a developer and founder of Panic, a Mac software company. EPocrates, a medical-software company, demonstrated its iPhone application at Apple’s press event last Thursday, and Frank immediately thought of his wife, a doctor. “She uses and loves her iPhone but still carries around a Palm handheld solely to run ePocrates and other similar medical databases,” he says. Frank predicts that when those databases are accessible on the iPhone, his wife will leave her Palm at home. “The important thing here is that Apple was of course never going to supply a prescription-drug database application for the iPhone. The SDK enables that to be made, which opens up a whole new class of people who can now realistically use an iPhone as their sole mobile device.”

When the iPhone was first announced last June, programmers were excited by the possibilities it presented, but Apple withheld a lot of information about the inner workings of the phone’s software. Instead of promoting downloadable applications, Apple encouraged the development of Web-based programs that ran inside the Safari browser. But that limited the programs’ capabilities. For instance, they could not take full advantage of the touch screen or the three-axis accelerometer, and they couldn’t store data on the phone’s flash-memory chip. Some programmers turned to hacking the phone–in essence reverse-engineering instructions that control the hardware–so that they could build their own applications, including virtual guitars. (See “The Next Generation of iPhone Hacks.”)

Some of the software that the early iPhone hackers developed, such as the virtual guitar and games that use the accelerometer, illustrates the potential of the SDK. The entrepreneur and iPhone expert Christopher Allen, for instance, envisions writing software that could filter calls or text messages depending on the position of the phone: laying the phone flat on your desk might indicate that you want to accept only work-related calls. (See “The iPhone’s Untapped Potential.”)

Nonetheless, says Allen, it’s still not a complete free-for-all. It’s not clear whether programmers will have access to certain layers of information about the phone, such as those that could allow them to build Bluetooth peripherals like keyboards. Allen says that he hasn’t yet had a chance to dive deeply into the SDK, but he’s not sure whether it will allow for software that lets iPhone users receive data, such as instant messages, while they’re placing calls over the cellular network (something that’s not possible now).

Already, Apple has enlisted some major companies to develop early applications that will give the public a taste of what the development kit allows. At the press event, AOL unveiled its iPhone-compatible instant-messaging program, and the game company Electronic Arts showed off Spore, a game that uses the accelerometer to control play.

While the SDK is downloadable right now, third-party programs written for the phone won’t be available until June, when Apple releases the iPhone 2.0 update. At that time, people will be able to download programs via iTunes, in the same way that they download songs and movies. Allen suspects that, as it has with podcasts, Apple will promote the programs that are the most popular, “which means the quality stuff wins,” he says. “That’s definitely not what’s happening in the cell-phone world right now: quality is not there.” Of Apple opening the iPhone, Allen says, “I think this is a pivotal thing.”