With sales of apps topping three billion, the smartphone boom offers developers a wealth of opportunities. And UK companies are digging deep to cash in

There may have been more high-profile app launches last year than the unveiling of LogMeIn Ignition but none illustrated better the way in which the market was moving. Ignition allows users to access their internet-enabled office and home computers from their iPhone. Once connected, you can open Word, run PowerPoint, copy files, in fact, operate pretty much as you would sitting in front of a desktop in the office or using a laptop at home.

When history records the key points at which the smartphone gained the ascendancy over its conventional computer cousins then perhaps Ignition's launch date of 17 August, 2009, will be among them. Its arrival came in a year that was definitely the Year of the App, the time when Apple's decision to open up the market in mobile-phone applications to outside developers the previous year really gained traction.

Advertising agency AdMob says sales of apps are running at $2.5bn a year and are set to rise further as BlackBerry, Nokia and the other big players in the sector play catch-up via platforms of their own. The scale of the market and its perceived potential has spawned a demand for app developers that one industry expert compares to the Klondike conditions enjoyed by html and Java programmers at a point in the 1990s when the internet boom was at its height. A striking example of the phenomenon is Ethan Nicholas, a 30-year-old from North Carolina, in the US. He designed the hugely popular iShoot tank game and left his job as an engineer after pulling in £360,000 in one month. As one commentator observes: "They're making hay while the sun shines."

People such as Nicholas are being wooed not just by brands seeking a presence on mobiles but by three groups fighting for dominance of the apps market: the handset manufacturers, the mobile service providers and the retailers. Of these, the handset manufacturers might at first sight appear to be holding the strongest set of cards. It is instructive to look at the plight of Nokia in this area. By far the biggest name in the sector, it sells an array of different handsets at the rate of a million a day worldwide but it is the diversity of its product offering that will impede progress.

Producing a range of apps that are compatible with different models of handset is expensive and time-consuming, and we can expect Nokia and its competitors to develop more touch-screen phones in the near future to get round this problem. Apple, on the other hand, not only retains first-mover advantage but, with its policy of producing as few hardware variants as possible, has a valuable upper hand.

The service providers, such as Vodafone and Orange, have the same problem as Nokia multiplied by a hundred as there are estimated to be no fewer than 5,000 different models of handset on the world market today. And there are signs they are being outmanoeuvred by more nimble competitors such as Google, which makes different versions of its Android format for many of the major handset brands such as Samsung, Motorola, Sprint, AT&T and LG. Which brings us to the retailers. Here, companies such as GetJar have made headway but Apple's App Store remains the biggest game in town.

Many of the apps that have been most successful early on have been frivolous. Take Pocket God. One of many to lay claim to the title of best-selling app, it is a computer game based on a community of pygmies living on a tropical island in which most of the enjoyment is gained from doing sadistic things such as flicking them into a volcano.

But the creation of PocketGod has valuable lessons to teach entrants to the market, says Jason Dunne, a book publisher turned apps publisher, who co-ordinates a monthly get-together for developers and publishers. "It's an interesting example of the differences between producing in the new world and the old world," he says.

While no one would manufacture a car, for example, without designing and refining to the nth degree, in the world of mobile apps the constantly evolving prototype is king. "He [Pocket God creator Dave Castelnuovo] produces a new version every month, if not every week, and every time he updates it, there is a new reason for people to talk about it or to buy it," says Dunne. "Little and often is how to make products in the new world."

Another of the buzzwords in the apps sector is "disintermediation", which essentially means getting rid of the middle man. No one has done this more successfully in the sphere of apps than Jamie Oliver, the über-celebrity chef, who is said to be one of the highest-grossing authors in book publishing.

The middle man remains to a degree of course. Apple insists on vetting and approving every app it supports and takes 30 per cent of the proceeds.

One of Oliver's apps, Jamie's 20 Minute Meals, offers a mix of video and recipes, and has been described by The Observer as "the daddy of all food apps". The punters obviously agree as it is consistently among the App Store's UK bestsellers.

"His app sells for £4.99 and his books typically sell for between £10 and £25, and so you might ask why he would do this," says Dunne. "The answer is that he is collecting 70 per cent of the revenue, whereas in book publishing you can expect 10 to 20 per cent. Yes, he is taking the risk, but he is also getting a bigger cut."

And Oliver is not alone. These days virtually every brand appears to be looking for an app. Even the venerable Monopoly board game. Its app was in the App Store's top 20 UK rankings as Director went to press. Apart from games—one called Angry Birds was at number one—several of the most successful UK apps relate to public transport. Londoner Lance Stewart invented Tube Exits after growing frustrated at never knowing where to board a train at the most convenient point. "I spent about two weeks visiting all 268 station stops several times and writing what number carriage was nearest the exit for each station," he says. In his first week, he sold 3,000 downloads of the resulting app at £1.79.

Meanwhile, NextBuses, which tells you when your next bus is due at a cost of 59p, and National Rail Inquiries, whose train times app sells for £4.99, both made the top 50.

As more people wake up to the potential of the sector, more businesslike applications are being made available. The SugarSync, for example, will archive your contacts and files to a remote portal, and it is up to you when to configure what is archived and how often. It is available for BlackBerry, Windows Mobile and Android-enabled phones as well as iPhones.

If your smartphone runs Windows Mobile, you could also try SyncExpress, which allows you to share email and contacts between your PC and your smartphone and synchronises your schedule for business meetings. Cost-conscious Palm Pre users can use the ExpenseTracker to keep tabs on lunch bills, travel costs, and petrol and mileage.

The sector has come a long way since iBeer, an app that made your iPhone screen look like a pint of ale and, if you tilted it towards your mouth, the beer would move just as if you were drinking a real pint. That said, two years on, the app remains in the top-selling 100.

Jason Dunne runs a free monthly gathering in London called AppFusion, aimed at first-time app publishers who want to meet developers in person. For more information, visit AppFusion

In the driving seat

After spending nine years building up a business providing Web development services to major clients such as 3i and the BBC, Gareth Langley and Gez O'Brien of Stardotstar decided that one way to hit the big time might be through apps. But after a couple of brainstorming meetings progress was limited. "We realised that we were fantastic problem-solvers but not great at coming up with ideas out of thin air," says Langley. "So we decided to look for problems that needed solving. "Our head of development came in one morning and said, 'I've got it'. We asked, 'What is it?' and he replied: 'Car parks'."

The idea was that, once drivers left familiar territory, finding a place to park could be a real chore. If Stardotstar could develop an app that offered people a list of nearby parking places after clicking on a "locate me" button, it would have a tempting offer to anyone from a parent taking the family for a spin in the country to a businessperson heading for a meeting in an unfamiliar area.

Their first challenge was to come up with a database of UK car parks. Fortunately, they discovered that the work had already been done by Ian Betts. "He's a car park consultant who deals with local authorities and he had been collecting data for 13 or 14 years," says Langley. "He even had a website. The only problem was that the website doesn't know where you are when you visit it."

Langley and O'Brien duly signed a deal with Betts and now their app—with the inspired name of Nosey Parker—offers access to the location and price details of 13,400 car parks up and down the country. That's 1.8 million parking spaces.

The website, noseyparkerapp.com, launched in February and within two weeks, they had sold 5,000 apps at an introductory price of 59p apiece. Nosey Parker peaked at number 21 in the list of best-selling apps offered in the UK. Not bad considering there are no fewer than 150,000 apps on offer in all.

Nosey Parker now sells for £1.79 and Langley and O'Brien are set to introduce new features so users can plan a search in advance using postcodes, together with improved search filters showing free spaces, spots for disabled drivers or credit-card friendly parks.

They are also in talks with sat-nav company TomTom about forming a link-up that would allow drivers to not only find a local car park but get directions to it as well.