Apple released firmware 1.1.1 for the iPhone on Friday. The new firmware locked unlocked iPhones, which is an expected and understandable move by Apple considering their current business model for the iPhone.

What gets iPhone power users irritated is that firmware 1.1.1 also disables 3rd party applications that have been developed by coders around the world.

The screen-shot above shows the iPhone of Gizmodo's Brian Lam. He has all kinds of stuff installed that is not offered by Apple like IM, IRC or classic games. None of these applications work on an iPhone with firmware 1.1.1 installed.

The iPhone is a powerful smartphone and many users want to use it for as many things as possible. It is a big phone after all and there are good Windows based touchscreen mobile phone alternatives out there that very officially support 3rd party applications and are not locked to AT&T.
I see less need for custom apps on an iPhone nano, which Apple needs to come up with to really capture the mass market.
Apple clearly needs to move faster to offer a developer program. A skill that Microsoft just does much better.