Prior to the App Store, developers had to negotiate with operators to convince them to preload the application on phones, sometimes offering the application to users for free or including the application in a portal where users could buy it.

That's very different than the environment that the App Store has created, said Satoshi Nakajima, president of iPhone application developer Big Canvas and founder of UIEvolution. When he launched UIEvolution, long before the App Store, and released certain applications, "we couldn't even recoup the cost of business development. We're not talking development costs, I'm talking calling AT&T and saying we want to sell this app. Wining and dining and negotiations costs a lot. Then we'd launch and sell 200 copies. What's the point?" he said.

The beauty of the iPhone is that it gets rid of the business development cost, Nakajima said. The 30 percent that developers share with Apple in order to sell the application in the store "is nothing compared to the painful cost of dealing with wireless operators worldwide," he said.

While the Internet bust around the turn of the century sent many wireless application development startups out of business, the effect might not be so dramatic in this market downturn, Nakajima said. That's because while venture capital is drying up at the moment, small developer companies have the potential to earn revenue from their applications in the App Store with relatively little outlay as compared to the old process, he said. "It's not all that difficult to become cash flow positive as long as you keep your company small," he said.

Avi Greengart, analyst at Current Analysis, sees a fundamental shift in the mobile industry that has only just begun. "We've gone from an era of hardware design where all you needed was something pretty to an era of software design where people expect to do more with their phones," said Greengart.