Soon, Apple is expected to release a software development kit (SDK) that will allow native applications on the iPhone. That could radically expand the iPhone’s profile, according to the MercuryNews on Thursday.

American Technology Research analyst Shaw Wu has weighed in on the potential of the SDK. While computer users are accustomed to downloading applications, it’s new territory for the average cell phone user. ""It’s going to make the platform more attractive, no question," Mr. Wu said. However, he’s still unsure if that will translate into increased sales.

Clearly, the potential is there to radically alter how users work with their iPhone as well as expand it’s capabilities in the enterprise. What was a multi-media cell phone with a closed architecture could suddenly become the pocket computer of the 21st century.

"I think the phone portion will be reduced as a service on these cool devices. You won’t be buying it because it’s a phone," said Jim Grossman, an equity analyst in Minneapolis at Thrivent Asset Management. "I call it a mini-computer."

Along these same lines, there are about 300 unauthorized applications that require the user to unlock the iPhone. Some are so attractive, that the customers are willing to risk bricking their iPhone to install them. The official Apple SDK from Apple will be a huge opportunity for all those developers who want to get into the mainstream. The energy there also has the potential to build next generation portable, amazing and killer applications that could drive the iPhone platform to new levels.

These new apps "will allow developers free rein to develop applications that won’t be killed by Apple during regular updates," Mr. Grossman added. That alone will change the customer perception of the iPhone. In addition, if Apple manages and blesses the process, customers can download digitally signed applications with a lot of confidence.

Even with this new era of the iPhone coming, both Mr. Wu and Grossman both expressed concern about Apple’s stock and the current economic trends. However, if Apple can continue to execute as they have been, it won’t be the first time Apple will have innovated its way out of tough economic times.