CORRECTED-PluggedIn: Next up for the iPhone ... video games?

"We're huge believers in the iPhone and believe that's going to be a viable market going forward," Boatman said. "It has an amazing interface for games and there are lots of beautiful things you can do with that touch interface."

And there are hints that Apple is working on games of its own.

When Apple updated the iTunes software used to activate the iPhone, curious hackers who looked under the hood quickly found lines of software code indicating that games will be eventually run directly on the iPhone rather than in the browser.

That's not unprecedented: the company developed several of the 18 or so games offered for its iPod media players.

"We look at the iPhone as a really big deal. It basically makes the channel of distribution owned by Apple as opposed to owned by the carrier," said Michael Chang, founder of Greystripe, which distributes free cellphone games supported by advertising.

"Apple understands content, as opposed to carriers that are acting a lot like media companies," Chang said.