Update: Don't miss Sascha's after-the-fact analysis of today's Apple iPhone SDK announcements here: "Suddenly, the iPhone is a Mobile Computer."

Today Apple promises to reveal details on its promised software developers' kit for the iPhone. Our lead analyst for cell phones, Sascha Segan, will be in the audience and blogging the press conference as it happens, live, with pictures even.

Meanwhile take a look at Sascha's preview of what's in store for developers in his story, iPhone Software Developers, Start Your Engines!, at PCMag.com.

12:31 EST: And we're in. It's coffee and pastries for this pretty small, elite crowd. I see nametags from Disney, Sega, Nike and several large banks. There's maybe 20 press.
Other attendees: Intel, Glu Mobile, E-trade, Epocrates, AOL, Cisco ... Genentech? Some of these guys are clearly partners. There are maybe 100 people here total.

Compare that to the size of Moscone!

Ah, here's someone from AT+T. Insiders say there will be big announcements up to the very end.

Sascha has arrived!

12:45: Now we're just milling around outside, waiting to get in.

12:56: The event is about to begin. They're playing some sort of music I don't recognize, but it's the sort of mellow nouveau-classic rock that The Steve prefers.

1:01: And here's Steve!

Statistics about how far we're come with the iPhone: In just 8 months the iPhone has gotten 28% market share, second only to RIM at 41%. (Fourth calendar quarter data.)

Steve: As you know the iPhone is really bringing the internet to a mobile device for the first time ... iPhone has 71% of the US mobile browser usage as of February 2008.

First, Phil Schiller with Enterprise:

Genentech and Stanford University both use iPhones heavily. Enterprise customers want push email. Push calendar, push contacts, global address list, built-in Cisco IPSEC VPN.

They want 2-factor authentication with certificates and identities - WI-FI with wpa2 and 8021x.
Enforce security policies. Tools to help for device configuration to set up all those services. Remote wipe.

We are doing all of these things in the next release of the iPhone software.

Microsoft exchange support right into the iPhone. We have licensed the ActiveSync protocol to build directly into the iPhone.

[He's mocking Blackberry's NOC-based system.]

Phil: The iPhone can now work directly with the Exchange Server. Push email, push calendar, push contacts, global address list, remote wipe.

Will be built into existing built in iPhone apps. [Hey, what about tasks and notes?]

Exchange ActiveSync preference pane in Mail. [Demo.]

Microsoft Exchange appears as an account type on top of the list of account types when you're setting up a new mail account.

Exchange account settings include contacts, calendars, mail. Calendar days to sync, mail days to sync. No notes or tasks. Very easy to set up.

[Demoing the Exchange support.]

Push email arrives within seconds via an Exchange server. Ditto for pushed contacts and calendar changes.

Meeting requests with locations SEEM to be supported. Lists of attendees are supported.

They have been testing it with Exchange at Nike. Ditto for Disney.

Thats it for enterprise. Most notably, no Lotus announcement.

Update on web apps. Already more than 1000 available. You can put icons on the home screen for web apps, as we all know.

Scott Forstall is highlighting his favorite Web apps. Facebook.

Adding new features to Web apps, but today, it's all about the SDK.

They are releasing all of Apple's own native APIs and tools for building apps.

iPhone OS contains bottom three layers of Mac OS X: media, core services and core OS, but not cocoa application framework, as that's based on mouse and keyboard input.

New UI application framework for the iPhone: "Cocoa Touch."

The iPhone uses the same kernel as OS X. Networking layer is the same as OS X.

The core OS power manages all of the chips, sensors, and even your application automatically.

Complete set of APIs to talk to address book. complete database with SQL Lite. Core location API lets you create location-aware apps using triangulation.

Core audio. OpenAL, a three-dimensional multichannel positional audio API. JPG, PNG, TIFF, PDF, Quartz. H.264 video playback.

Core animation, which was introduced with Leopard but built for the iPhone. OpenGL ES. This entire layer is heavily hardware-accelerated for great performance and long battery life.

Cocoa touch: multitouch events, multitouch controls, accelerometer, view hierarchy, localization, alerts, web view, people picker, image picker, camera. Multitouch is accessible. Accelerometer is a full three-axis sensor, and you can use it in your applications as well. Web view is the Safari engine usable in your application. Image picker lets you use camera.

Tools for developers. XCode is used to build apps for OS X. Apple uses it to build apps and the OS for the iPhone.

XCode knows all about the iPhone SDK and all the APIs. It will code complete the APIs in your project. Integrates in with your source-control management system. If you're a Mac developer, you probably know it. You can basically code an iPhone app just like a Mac app.

They have a remote debugger: You can plug your iPhone in with a standard connector to your mac, run your application live on your iPhone, and be debugging it right from your Mac.

Interface Builder, a graphical interface design tool which lets you drag and drop acceptable UI controls into your application. It's also a localization tool and lets you connect controls up to your code.

Instruments. This is new. Suite of performance-analysis tools. Runs live connected to your iPhone. You can run your application on your iPhone and record graphics performance, CPU, file system, memory usage. See if you have leaks. Records live logs in multiple tracks.

New: iPhone simulator. Right here on your Mac, you can run your application in the simulator. Runs side by side with XCode for quick debugging.

And now for a demo of development tools.

Full Safari built in; it's just an iPhone in your Mac.

[He's building "Hello World" in XCode. Pow, he hits one button and it loads in the simulator and runs in the debugger.]

Plug a standard iPhone in using a standard 30-pin connector, and you can debug your app on an actual iPhone just as easily. One click.

Demoing an application that took two days to write: "Touch FX." It lets you choose or take a photo, slide up standard image-picker panel, pick an album and a photo, and use finger touches to apply OpenGL distortions to the image.

Shake the phone, and it undoes the changes, using the accelerometer API.

Under 2K lines of code to do the photo alteration app. Under 10K lines of code and two weeks to write "Touch Fighter," an OpenGL and OpenAL first-person spaceship shooter game.

You steer with the accelerometer and fire with touch. "All I do is move the phone around, and now I'm steering!"

You can hear the audio move around as you tilt the phone, thanks to OpenAL.

You can use Instruments to optimize performance. Use the stack trace to see when you dipped to 19 frames per second and optimize the code right there.

Electronic Arts: Travis Boatman from EA. [I sent him an email yesterday and he didn't reply. This must be why.]

Demo of Spore for the iPhone!

You move your Spore using the accelerometer, and evolve your Spore using the touch screen.

It took them 2 days to get Cocoa Touch up and running. They have ported over 18 levels and a level editor.

Customized video cutscene.

Next: Salesforce.com.

Chuck Deitrich from Salesforce.com. Bringing over 63,000 platform applications to the iPhone.

Force.com dashboards, leads, accounts, etc. And since it's stored on the device, you can use it on the plane - no connectivity needed.

An iPhone-formatted version of a "deal opportunities" screen. Can resort the data on the device.

Taps into Maps application to map a business contact. Apps can access address book, Maps, network stack. They did that with one developer in under two weeks.

AOL. AIM. [AIM AIM AIM AIM AIM AIM AIM AIM AIM AIM! Yahoo! No, I didn't mean Yahoo!, that was just an exclamation of joy.] iPhone AIM app.

First thing you see: a live buddy list with photos, status, presence and away messages.

Can switch between multiple active chats just by swiping. Can update status, set invisible. Can tap on buddy icon and set a photo as status from the camera and image picker.

Next, Epocrates. You may not have heard of it, but it's used by 25% of U.S. doctors.

[Epocrates rep Glenn Keighley sounds EXACTLY like Wesley from the TV show "Angel."]

Drug list view screen, drug interaction and dose information for 3,300 drugs. Sounds boring, but it will help you not die. They used SQL Lite. They show pill images for the first time on any mobile platform.

You can identify a mysterious pill by color and shape with pictures.

Sega is last.

3D Super Monkeyball from Sega. You tilt the device to move it around.

This is not a cell phone game, this is a full console game. They had to fly in an extra artist to scale up the quality of the visuals.

Steve Jobs here to discuss how to get apps on your phone. [I am biting my nails.]

Steve: The App Store. This is an application we've written to deliver apps for the iPhone. And we're going to put it on every single iPhone.

Developers will be able to reach every iPhone user. The App Store is an app on the phone. They have categories. Yes, there are free apps. Free and for-pay apps both.

Top 50 downloads screen. Wireless downloads. Also built a section into iTunes where you can peruse all the apps, download them to computer, and sideload them to iPhone.

If you downloaded an app and an update is available, a little alert will appear on the app store icon and then you can auto-update the app.

The App Store is going to be the EXCLUSIVE way to distribute iPhone applications.

The developer picks the price. Apple gets 30% of the revenues. "We keep 30 to pay for running the App Store." There are no credit card or hosting fees. There's no marketing fees. The developer gets 70% of the revenues, paid monthly. No charge for free apps!

They will bar some categories of apps: "porn, privacy, bandwidth hog, illegal, malicious, and 'unforeseen.'" [In other words, I'm betting no P2P.]

Both of these things will be delivered together in the iPhone 2.0 software update. Beta release going out today. The beta release is going to be in the hands of thousands of developers and hundreds of companies.

Shipping to everyone in late June, and it's going to be a free software update. The same software release is going to run on the iPod touch.

There will be a "nominal charge" for the iPod touch update due to accounting issues.

In one hour, you can download the SDK for free from their Web site. You can run the simulator on the Mac for free. To run your apps on an iPhone/iPod Touch user and distribute your app, you must join the developer program for $99. developer.apple.com

One more thing!

There is a big venture capital firm called KPCB. Oh, it's John Doerr. He's on stage.

He's praising Steve. Calling him "the world's greatest entrepreneur."

Announcing something called the "iFund." It will be $100 million. [Say that with your pinky in the corner of your mouth, please.]

Matt Murphy and Bill Joy are on board as leaders. KPCB.com.

"If you want to invent the future, the iFund wants to help you build it."

They're asking the press to stay. End of official event, but maybe there will be a Q&A.

It's a Q&A with Steve and everyone.

Steve: Okay. Let's talk about what we saw and what we didn't see. There's going to be a lot of application announcements very soon. But what about Yahoo!, or Microsoft Office compatibility, or anything Adobe? And those categories of "barred" applications could be broad - what is "unforeseen"?

Q: What does the $100 million do for the iPhone community?

Steve: KP will invest in a lot of small companies that will jump on to developing for the iPhone.

Q: Should RIM be worried?

Steve: You should go ask them. I have no idea. We're not sending them a message, we're sending customers a message and developers a message that we're going to try to serve their needs. Remember, the iPhone has been out for less than a year. This stuff is going to be shipping right around the one-year anniversary of the iPhone.

Q: What have you done to make sure that these apps are going to be secure and don't violate user privacy?

Steve: This is a big concern. It is a dangerous world out there. We tried to strike a really good path here. On one side you have a closed device like iPod, which always works ... on the other side you've got a Windows PC. We want to take the reliability and the dependability of that iPod, and we want to take the ability to run third party apps from the PC world, but without the malicious applications.

The developers have to register with us and for that $99 they pay ... they actually get an electronic certificate. We can track them down, we can tell their parents, and we will know who they are. If we're alerted to a malicious app that we didn't catch, we'll cut off the spigot.

Q: VoIP?

Steve: The initial take on it--and this could become more liberal in the future--we will only limit VoIP apps over the cellular net. We'll allow them over Wi-Fi. If you want to write one that works over Wi-Fi, that's fine. You can have multiple email accounts, multiple calendar accounts, multiple contacts databases.

Scott: You can only have one Exchange account, but we do allow multiple other accounts.

Q: Is there a monopoly issue? What if a developer doesn't want to distribute through the Apps Store?

Steve: Then they won't be able to distribute their app on the iPhone. We think this is going to be a boon for developers. They can download applications from a version of the App Store, which is loaded on the Mac or PC. We don't intend to make money off the App Store. We don't make a lot of money off of iTunes, and the split with the music companies is about the same. We just want to create a very efficient channel for these developers to reach every iPhone user. Most developers don't have a store to sell their apps on their Web site.

Engadget Q: How about unlocking software? Will that be considered software that won't be allowed in the App Store?

Steve: Yes.

Q: How much will the software update cost for the iPod touch?

Steve: Because of the way we account for it, we do have to charge a nominal fee for updates to the [iPod] touch. We'll set it when we release the software for the iPod touch in June. But we don't look at this as a profit opportunity.

Q: What do you see as the IT ease of use so IT managers can convert from BlackBerry to iPhone?

Phil: Because we're using the Exchange Server with the built in ActiveSync protocol, it's built on the technology they already have in-house. [Also, configuration tools are coming. IT departments can create device profiles.]

Steve: Why aren't CIOs really worried about security? [More knocking of the RIM Canadian NOC strategy, fear-mongering about people at the NOC snooping on e-mails.]

Q: Is this an international rollout?

Steve: This is an international rollout. Everything we do will be in all the countries we're in. This is not an open-source project, this is a for-profit project.

Q: Alternative wireless network connectivity?

Steve: We're not here to talk about hardware today.

Q: How can private organizations distribute internal custom apps?

Phil: We're working on a model for enterprises where they can securely deliver apps just to their end users.

Q: Can IT managers lock out functionality or the App Store?

Steve: We could. We haven't really thought about it.

Scott: One thing we actually have added in this release that's going out is parental controls. Turn off Safari, App Store, YouTube, etc. [This is a new feature!]

Q: Why did they change their mind on third party apps? Is there a waiting period before apps are available?

Steve: We all at Apple change our minds a lot, I guess, from time to time, but I don't really know what you're talking about. I think the Web applications have worked really well for what we do, but developers did give us the feedback that they wanted to do even more. To create an SDK is a lot of work, because once you give it to developers, you want to live with it for the next 20 years.

Phil: [There's a new process for securely submitting apps, it'll be "quick, efficient," but no promises on how quickly they'll put apps up.]

Q: What is the relationship with the carrier, especially regarding billing and bandwidth?

Steve: We have great relationships with our carriers ... Apple's responsible for the software on the phone. So we define the software on the phone, we are running the developer program, we're distributing the apps ... Really, this is our program and we're running it. We don't go into our financial arrangements with our developers [he means carriers].

Q: Interface with dock-connected accessories?

Scott: There will NOT be APIs to talk through the dock connector differently than what we have right now. IP mechanism to talk to dock connected devices.

OK, it's over! Look for Sascha's news story/analysis on PCMag.com; we'll link when that goes up.