In today’s cell-phone market, the iPhone stands out as the shining example of what a handheld device should have: a sleek design, easy-to-use software, and an intuitive interface. But the day Apple released it, geeks found the phone lacking, and they went to work to make their own software for it. These hackers have been crafting clever add-ons that range from instant access to a Blockbuster Online DVD queue to a pocket guitar that takes advantage of the touch screen. In addition, people have found ways to unlock the iPhone from AT&T, so that it can work on other cellular-phone networks.

All of these hacks, however, are done without Apple’s blessing or technical support. This month, Apple is expected to release a software development kit (SDK) that will allow programmers to write legitimate software for the phone. This will enable developers to make more reliable software, and it will let the average iPhone owner easily download new programs without needing to follow arduous online instructions from blogs. And importantly, an SDK will likely spawn a new world of applications–possibly even business software–that could extend the reach of the iPhone beyond a user base of four million, as announced in January. “When you have a device like the iPhone that can attract so many people, you also have enterprise developers who want to use that interface,” says Mike McGuire, an analyst for Gartner, a market research firm. He says that an SDK will lead to commercial applications for the business sector, “and that’s where the real money is.”

The average iPhone owner uses the handheld as Apple intended, updating the software and installing media via iTunes. “By default, the only way to get anything on the iPhone is by using iTunes,” says Jerry Jones, a developer who has made an iPhone widget that accesses a user’s Blockbuster movie queue, as well as a program that lets people adjust the phone’s shortcuts so that a double click of the home key launches different applications than Apple’s default. But if you want to add these kinds of illegitimate files to your iPhone, you must jump through some technical hoops. “Truthfully, it’s not for the faint of heart,” Jones says. “If you’re not a technology geek, it’s not super simple.”

Still, there is a large community of people who are hacking their iPhones. One of the most popular programs is a game called Labyrinth that lets a user roll a virtual marble through a maze by tilting the phone (the game accesses the built-in accelerometer). Labyrinth has been downloaded hundreds of thousands of times, Jones says. Comparatively, his Blockbuster application, which targets a niche market, has been downloaded about 56,000 times. Although these numbers don’t indicate how many people have hacked their phone (some people might have downloaded the software more than once to test it, for example), they show that the number of people interested in such software isn’t trivial.

One hack that has garnered YouTube notoriety turns an iPhone into a guitar. Shinya Kasatani, who wrote the software, says that it is easy to use for people familiar with a real guitar: the phone’s screen is turned into a virtual fret board on which a person can press and pluck. “It’s basically a software-based synthesizer with a guitar user interface,” Kasatani says. “The audio sample of a guitar string is loaded from a file and stretched to the desired frequency when playing.” Since there wasn’t an SDK, Kasatani says, he struggled with understanding the intricacies of the iPhone’s built-in software. It was difficult to adjust the volume of the sound output and detect the multitouch input without a trial-and-error approach. “We, the developers, definitely need the official SDK and [programming] documentation to build stable applications,” he says.

When Apple releases its SDK, more applications like this could become available, just as they are on PCs and Macs today. However, details on the upcoming SDK are scant, and McGuire guesses that Apple won’t open much of the functionality of the phone. “I suspect that it’s not going to be a wide open SDK,” he says. Programmers might have access to certain layers of the phone’s underlying software, such as the instructions that allow widgets to access the Internet, but Apple may keep the instructions for accessing the accelerometer, for example, under wraps. “Apple likes to keep things locked down,” McGuire says.

He adds that the control is essential to ensuring that the iPhone works well for most of the people most of the time. In addition, Apple’s control is important for ensuring software stability and security–two important criteria if the phone is to be used in the business setting. “I get the impression that [Apple] wants to make [the iPhone] somewhat corporate friendly,” McGuire says. “I think you’re going to see a lot of focus on pulling developers in to make form-based applications”–the kind used in a sales environment, for example. He says that he suspects Apple will treat third-party software the same way that it approves iPod accessories: by requiring vendors to register with Apple to acquire a badge noting Apple’s approval. In this way, Apple could maintain some control over the quality of outside applications, which could help make them more secure.

Regardless of the access the SDK provides to programmers, and the safety precautions available for certified third-party programs, the hacking community will continue to innovate around the iPhone. “Even without the official SDK,” says Kasatani, “it’s much more attractive than Windows Mobile.” The Mac operating system and user interface are more fun to use, he says, and the multitouch display makes it especially interesting to work with.