The iPhone’s industrial design and virtual keyboard are appealing to many users and the source of much imitation by rivals. However, the key technology that sets the iPhone apart is the software, according to Business Week on Wednesday.

That immediate influence on the hardware design of rivals is seen in the Samsung Instinct which Sprint believes is an iPhone killer. Even RIM, according to rumors, is looking into a touch-based virtual keyboard.

"Such efforts largely miss the point," Stephen Wildstrom wrote. "Certainly, the beautiful hardware design adds tremendously to the emotional appeal of Apple products. But it’s the software that makes the iPhone, the Mac, and the iPod stand out from the pack of wannabes."

The problems go deep for the competition because they lack the energetic developer program that Apple is building for the iPhone. That developer enthusiasm is well founded thanks to OS X technologies and cross platform tools that make writing for the iPhone a breeze and leverage everything Apple has already done on the Mac side.

"The Instinct shows that Samsung and Sprint have learned a lot, too. It’s a handsome product -- maybe Samsung’s best ever. Its no-button face, with a display just a bit smaller than the iPhone’s, makes it look like the Apple handset’s brother, and it even comes packed in an iPhone-like box," Mr. Wildstrom noted.

In the end, however, the beauty of the iPhone is not just skin deep. Great apps and games written to exploit the built-in accelerometer and the ease and speed with which developers can produce location services will set the iPhone apart.

"...despite its strong multimedia capabilities, the Instinct offers little more than the typical cell phone, and nothing near the iPhone’s computerlike capabilities. Yes, good hardware design is critical. But in the end, it’s the software that really makes the difference," the BW author concluded.