Apple is set to celebrate a billion downloads from its iPhone App Store as predictions suggest the iphone market will become even bigger still. Blackberry and Nokia are also getting their app acts together and the entire industry is excited about the resulting new source of revenue. In the longer term it will be the bigger, more established software houses that will profit from this bouyant app economy.

Matt Farrugia, a freelance software developer, has created Slideshow Builder, which gives iPhone users a better way to display their photos. The business was slow initially as he began with a paid option. Hence, three weeks ago he introduced a free lite version that received a good response and earnings of GBP100,000. According to Matt, the only developers expected to make good money in the longer term, are developers of gaming software.

Michael McNeela, a 17 year old schoolboy from Harrow in London has perhaps the best success story having earned GBP15,000 from a simple iPhone app. He came up with a Mobile Allowance app that helps customers know how many minutes they've used of their monthly contract. 40,000 people have downloaded the app so far at 59p a time, of which Michael gets 36p. He's now planning to buy himself a very expensive laptop!

Malcolm Barclay, another freelance software developer, started with a free app, Tube Status that helped Londoners find their way across the capital's underground system. It was downloaded more than 100,000 times. He has since built a paid application, Tube Deluxe earning GBP4,000 from 11,000 downloads a month. Malcolm Barclay is planning to enter another contract with a major company soon .