I've been an iPhone user since the day they announced Exchange support--and thus, my ability to use the phone with my then-employers email server. And, I don't think that anyone would argue that the iPhone is the model of the second wave of smartphone--it's well connected, it's beautiful, it's speedy, and it's much more than just another business tool. But, Apple's been in this position before.

Think back to the late 80s. Apple's Macintosh personal computers had captured the world's imagination. Back when Windows was nothing more than a graphical shell for DOS, the proto-Macs highlighted the power of multitasking and the GUI, and the company was gaining market share as a result. Apple was exploiting a commanding technological advantage and things looked good in Cupertino. Then, Microsoft released Windows 3.1 and Intel released the 486, which taken together changed the whole world. By opening the PC platform with Windows, Microsoft turned Apple's advantages--a single hardware platform and the custom-tailored OS designed to run on it--into impediments to innovation. While hundreds of software and hardware vendors were pushing the WinTel platform forward at an ever increasing pace; the Mac was limited by the size and speed of the teams at Motorola and Apple. We all know how that turned out for Apple, and for Steve Jobs.    

Fast forward 20 years. The iPhone is in exactly the same position today as the Mac was in 1990. It's enjoyed massive success in its 2.75 years of existence, with more than 30M units sold worldwide. Despite that success, the iPhone is at a crossroads today, with more open competitors closing the gap. The problem with the iPhone is that it isn't open--developers and users are extremely limited by the rules that Apple sets on its platform. Unlike the PC, which anyone can expand upon, developers can't even publish applications for the iPhone without Apple's permission, and those applications must follow very rigid rules. The iPhone is a walled garden, where Apple keeps the prettiest flowers--the apps that ship with the phone and that people use most--locked up for itself. This severely gimps the iPhone, especially when compared to a fully open platform, like Android. 

What exactly am I talking about? Take a look at the default Android photo gallery application. In addition to the traditional ways to share photos built into every phone--email and MMS--Android allows third party developers to hook into that Gallery app--adding options for additional photosharing services, such as Twitter, Flickr, or Facebook. And because most of the applications on Android are open source, if a developer wants to customize the stock apps further, it's as easy to do that as downloading the source, making changes, and recompiling and republishing the app. This is eminently more useful than the Apple model, which requires me to run five different applications for each of the photosharing services I use on a regular basis. 

This continued insistence on maintaining an iron grip on the platform has been a hallmark of Steve Jobs' two tenures at Apple, as evidenced by Apple's continued refusal to allow a Flash implementation on the iPhone, iPod Touch, and upcoming iPad. Because Flash on the iPhone OS would allow application developers to build rich apps that bypass Apple's App Store, no site that relies on Flash will work properly on your iPhone or iPad. That means your iPad won't display the video on this site, which is powered by Flash. 

So, what's the fix? It's time to modernize the iPhone OS. While Google has had a nigh infinite number of programmers toiling away on Android, giving us four versions of the OS in just under a year. In the same period of time Apple's released one major update, which added cut/copy/paste, MMS support, push notifications, and many less significant features. A cynic would argue that two of those features were long overdue, and the third is merely a kludge because the iPhone doesn't support multitasking. In order to bring the iPhone OS up to par, Apple needs to add a few simple things to the 4.0 release of the OS--which will be announced at WWDC in March and should be available this June, if past tradition holds. Here's what iPhone OS 4.0 needs to prevent the iPhone from becoming the Macintosh of smartphones: 

• Multitasking: Push notifications are great, but they're no substitute for apps that run in the background. Anyone who's run the iPhone's AIM app will attest to that. That said, no phone manufacturer has really managed to implement mobile multitasking well, Windows Mobile and Android are both messy. We like the Palm's card-based approach with WebOS, but there are other problems with that platform that we'll discuss later.
• Extensibility: We, the users, want integration with Tweetie, Facebook, Dropbox, and Flickr in the Photo Gallery and Camera apps. We want our phone contacts to sync with Facebook, Linked In, and any other service that someone wants to write a plugin for. Apple's apps are undoubtedly the most used apps on the iPhone, they should also be the most powerful and the most extensible as well. Which brings us to the next point...
• Tear Down that Wall: The walled garden that is the App Store must be dismantled, or the iPhone is doomed to suffer same fate as the Macintosh. Users don't want Apple to be the ultimate arbiter of the software we put on our phones. Sure, you can jailbreak your iPhone today, but you shouldn't have to. We want a real Google Voice app for the iPhone. We want a real Adobe Flash implementation. Hell, I just want to be able to use a custom text message alert, without having to jailbreak my phone.

This is simple stuff, really. Android, WebOS, and even Windows Mobile already do all of these things. Today, the other platforms lack the iPhone's high level of polish. Android's slow and crashes more than it should, while WebOS is limited to hardware that's boring at best. All that Apple needs to do to maintain its advantage is to loosen its grip on the reins, and let the iPhone run free. Otherwise, when all those two-year contracts current iPhone 3G owners signed up for expire this June, they're going to look elsewhere for a new phone.