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I see the issue of cost of software developed by the SDK being batted back and forth, and I think we can all agree that the cost of applications will likely be up to the developer as long as Apple gets its cut. (This is really no different, from a distribution perspective, from how PalmGear did things for Palm OS applications.) What is still unknown is how much the SDK will cost and how much (if it will be separate) digital keys will cost. THAT is what will enable or prevent development by Joe Hacker.
 
Closed systems are those that weren't intended to allow public access for the purpose of writing and executing arbitrary code. Almost all DAPs and PMPs are closed systems; they were not designed to allow the public to access any part of the system's infrastructure to be able to design applications. That some can be hacked is a function of both the ingenuity of the hacking community and the vulnerability of those devices to hacking attempts; that doesn't make them any more open by design than they were originally, it just means that hackers were able to get in and make an opening.

By this definition, assuming I understand it, all operating systems are "closed" insofar as legitimate programming must be done according to published APIs. Programming outside of the APIs is possible with any OS, but this requires, as you say, ingenuity -- AKA, hacking.
 
By this definition, assuming I understand it, all operating systems are "closed" insofar as legitimate programming must be done according to published APIs. Programming outside of the APIs is possible with any OS, but this requires, as you say, ingenuity -- AKA, hacking.
That's not precisely what I was getting at. All operating systems have their APIs, but in a general sense one can choose the language, IDE and DLLs (or equivalents) that they wish to program with. Moreover, the applications designed run natively on the operating system and hook into its API for all manner of system calls. (Excepting scripted languages that require a runtime environment and/or must be run within a specific application, such as a web browser.)

Mac OS/OS X, Windows, Linux, BeOS and all the rest are open systems because they give developers the freedom to develop native applications.

The iPhone and iPod Touch are closed systems, because they do not give the developer this ability, and until recently were not designed to allow third party developers to design native applications. Until the SDK is released, developers must write their applications in Javascript and/or AJAX, and they must be run in Safari. The SDK will make the platform into a more open system by allowing developers to write native applications that do not require a runtime or to be run within Safari. I wouldn't call it a completely open system though because the development environment will still be sandboxes for security purposes, but it will no longer be strictly a closed system.
 
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