I was really interested in developing our project for the iPhone since it's the next cool, new thing, but unfortunately, it turns out that such a thing is not possible.
This article explains it all very clearly from a very unbiased approach. It's a great read:
http://theocacao.com/document.page/408
It'll be interesting to see how Cingular restricts such development in the future -- will third parties ever be able to develop for the iPhone, and if so, will it be under strict guidelines of what is and isn't allowed?
Aseem
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