A recent eMarketer article announced that there are now one billion mobile applications. The main player benefiting from this dramatic increase in mobile applications over the last several years is of course Apple, with its iPhone and the mobile application store.
While the iPhone was the not the first 'smart device', I believe it is the single smart device that will change the market - and these mobile applications are the main drivers of iPhone's sales growth. It is likely that the "cellphone" as we knew it from 1995-2006 will quickly fade out over the next several years and be replaced by these smart devices which, in addition to being a mobile phone, are a camera, an internet browser, email and text messenger, and, most importantly, a mini computer running all of these new applications.
Allowing open source software developers to create applications for the iPhone was a brilliant move by Apple because it served to drive the sales of iPhones, which could do more for users everyday. It fits with the web 3.0 model, where users are the ones driving trends. While many of these applications are silly trivial games, others have proven to be extremely useful (like iWant) and innovative (like Shazam, which can recognize songs name simply by holding the iPhone next to a speaker playing music). While other smart devices will eventually eat into Apple's market share, the iPhone has developed a huge "first mover" advantage by anticipating the tremendous growth of these open source applications.
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