Well, exactly as I predicted, piracy has become rampant for iPhone applications. If people can steal with no chance of getting caught then most people will.
Ngmoco VP Alan Yu now says that iPhone piracy is 50 to 90 %. Absolutely no surprise here because Apple put no anti piracy protection in AppStore when they easily could have. This reflects their initial belief that the AppStore would not make money for them, they only did it as a service for users.
There are two lessons here. One for the many other companies who are going down the application store route. They must put technical protection into the store, otherwise thieves will destroy the business model. The second lesson is for Apple and their upcoming home console. If they do it with exactly the same mechanism as they have done iPhone applications then it won’t work commercially. They need to be far closer to Xbox Live in what they do.
And, to finish off, Ngmoco are going to in-game payments on iPhone to beat the thieves. Doing this they would probably be best giving the game away.