Apple's iPhone is already looming over the next-generation mobile phone market in the same way as its iPod towers over rival MP3 players. But it is not just the hardware giant that is benefiting, since the ease in which applications can be developed for the innovative gadget is opening a whole new revenue stream for digital media companies. Business editor SAM THOMSON reports on how firms in Brighton are leading the way.

This is one of the most exciting times to be involved in digital media since the internet was invented.

The advent of the next generation of mobile phones – the iPhone, in particular – is offering innovative developers the chance to not only create fantastic new programmes but sell them for serious money as well.

Currently, people who own smartphones are willing to spend cash on a quirky game or application in the same way they have stumped up for ringtones over the years.

This has led to a flurry of interest in developing software for phones and Brighton, with its large collection of small, flexible design companies, is looking to cash in. Although applications can be created for the different smartphone operating platforms, Apple is leading the way by making its iPhone one of the easiest platforms to use from both a user and a developer’s point of view.

There is so much potential for the digital industry in Brighton that developers are coming together to share ideas and explore the opportunities the technology can offer.

One of the driving forces behind this spirit of collaboration is Adam Martin, who has spent most of the past decade in online games development and most recently worked for NCSoft, in charge of internal development.

He said: “In my opinion, the iPhone is the most important thing to happen to the games industry since the original Playstation was launched in 1994.

“I had a friend who designed himself an application in his spare time which tracked snooker scores, telling you what the maximum available break was each time.

“He thought no one else would want it but I encouraged him to put it on sale.

“He was amazed when more than 1,000 people bought it.

“He has already made enough profit to pay for a new computer.

“The potential is enormous, especially for small, innovative companies.”

Mr Martin first realised how important the iPhone could be when he was trying to found a start-up company creating educational online games and travelled to San Francisco in the US to speak to venture capital firms.

Mr Martin said: “To make it easier to pitch at meetings, I imported some of the games on to the iPhone by rewriting the source code.

“I found that the new versions I had created were a lot more fun than the stuff I had designed to run on a web browser.

“Eventually, we decided to stop the original company because we could not get traction on the sales side. But I carried on developing for the iPhone.”

Another person making money using iPhone technology is Phil Watten, media technology manager at the University of Sussex, who has formed a company called Dr Phil’s Apps.

His first creation was time:calc, a calculator which makes it easier to add or subtract hours, minutes and seconds, and is useful for people working in video or music recording.

It has been on sale since Apple launched its Appstore last year and Mr Watten gets about 84p for every unit sold at £1.19.

The site works in the same way as iTunes so users with an existing account do not have to keep on entering their credit card details.

Mr Watten said: “It’s a fantastic arrangement but a lot of people were unhappy with Apple in the beginning because they thought apps should be free.

“But I would not have bothered if I had been forced to give it away.”

Mr Watten has also created DigitDisco, a “ d a n c e mat” game for fingers, which he created with his brother Matt, a freelance musician, and PHD student Patrick Holroyd.

He said: “Brighton is ideal for iPhone development because it is so easy to collaborate with people. Big developers are finding it difficult to compete with small firms because the applications that tend to sell the most are very cheap and the big firms just don’t find development worthwhile.”

Tom Hume is managing director of Future Platforms, in Gloucester Street, which created a viral iPhone application to promote Paramount’s recent Watchmen film.

The company has been developing for mobile phones for almost ten years and is also creating for Google’s Android platform.

Mr Hume said: “It is a good way of doing some fantastic stuff for a comparatively small audience. It is as exciting as the internet.

Phones are much more personal and people spend most of their time with them.”

Although the iPhone is currently the biggest selling smartphone, Mr Hume believes it is important for developers to be flexible about the platform they cater for.

He highlighted the fact that Google has allowed its Android operating system to be used by other mobile phone manufacturers and predicted it will dominate the market in the future.

Nokia, which has about 40% of the global mobile phone handset market, may also be a big player through its Symbian system.

Mr Hume said: “You are seeing a lot of one and two-man bands popping up like when people started doing Java games for phones.

“But those companies shut down within six months because it is not just about writing games but marketing them.”

To prevent this outcome, Mr Martin has started an online service for iPhone developers to share ideas about marketing. He has organised regular meetings where people can hear about the latest innovations from guest speakers. The next is taking place tomorrow at The Skiff in Cheltenham Place, Brighton, at 7pm. To find out more, visit http://groups.google.com/group/brighton-iphone-creators.