Clearly, Palm (PALM) is on the mend. Still, the fact that the company is entering a market characterized by fierce competition and a furious pace of innovation puts it at an enormous disadvantage. Further, to stage a comeback, it needs a thriving developer ecosystem. And by some accounts, Palm’s developer ecosystem is in disrepair.

“The Palm developer ecosystem is in pretty bad shape for a lot of reasons,” says Alexis Hinds, founder of Blue Nomad, developer of award-winning Palm apps like BackupBuddy. “Some of these reasons have to do with Palm, and some do not. A lot changed when [Palm founder] Jeff [Hawkins] and [former Palm CEO] Donna [Dubinsky] left to form Handspring, including how Palm related to developers.”

Ben Gottlieb, founder of Stand Alone software, which has been developing Palm apps since 1997, agrees. “There really isn’t much of a Palm developer ecosystem at this point,” he says. “The handwriting has been on the wall for a year or more that the existing Palm OS was dead. Palm’s been working on its next-generation OS for years, but the lack of any real advances in OS 5 has really told the tale. The Foleo was an intriguing concept, but I think quite a few people were burned by its termination (we were not). I can’t speak for other developers, but I know we’ve looked at the whole Palm/PalmOne/PalmSource/Access relationship more with sorrow than with anger. Obviously they were trying to do right by the platform, but there were too many competing interests and players. Most of the Palm developers I talk to have written Palm off, at least in its current iteration.”

Not exactly the words of an enthusiastic of developer ecosystem, are they?

Have they destroyed much of the developer good will? I’m sure some developers would say yes, others might just shrug. Certainly I don’t think the same level of ‘loyalty’ to the platform is there.”

— Ben Gottlieb, Founder, Stand Alone

And indeed, both Hinds and Gottlieb say that prior to the announcement of the Pre and Web OS, they’d been dialing back emphasis on future Palm OS development and spending more time on iPhone and Google’s (GOOG) Android mobile OS. “The demand just isn’t there, and the market is shrinking fast,” says Gottlieb. ”We’ve refocused our efforts on iPhone, and are looking quite intently at Android.”

For its part, Palm may be looking more forward than backward, aiming to attract a new developer base rather than relying heavily on its old one. In any case, neither Hinds nor Gottlieb has written Palm off entirely. “We’re very intrigued by the new Web OS, and will definitely take a closer look when the SDK and devices become available,” says Gottlieb. Hinds says Blue Nomad will port its apps to Web OS if customers adopt the device in any meaningful numbers.

Still, Gottlieb and Hinds both have substantial reservations about the platform’s chances for success in an already crowded market. “I’m not sure the world needs yet another mobile OS,” says Hinds. “I’d have been much more excited if their software stack were running on top of Android. It’s just not clear to me which market segment the Pre is targeting. Watching the keynote, it appeared to be more focused on advanced users of mobile devices, the Web, and social-networking applications. Are there are enough of those people to really sustain Palm in the long run? Is it sufficiently differentiated from the iPhone? I don’t think so,” she adds, noting that that there’s nothing to prevent Apple (AAPL) from copying such Palm innovations as its unified inbox.

Raven Zachary, founder of iPhoneDevCamp, an iPhone advisor, and contributing analyst with The 451 Group agrees. “I think Palm overestimates its opportunity relative to Apple,” he says. “This is not a platform that effectively competes with iPhone. It competes with the other smartphone platforms. With Pre, Palm is back in the game, but not a game with Apple–a game with Google, RIM (RIMM), and Microsoft (MSFT), as a second-tier smartphone platform.”

Which is, of course, a much, much easier game in which to play–and perhaps even for Palm to win. But how? Get the Pre to market fast, promote the hell out of it and do its best to court developers–old and new.

“They need to convince consumers to buy the phones, and developers to write apps,” Hinds quips. “And as far as getting developers on board, I’m sure they will if enough devices are sold. But I don’t think a developer will necessarily start writing for Web OS just because he or she had been previously a Palm developer. And supporting more than two platforms [e.g., iPhone and Android] is very challenging for the smaller developers that drove a lot of the innovation on PalmOS.”

Palm, it should be noted, plans to do all it can to encourage developers to do just that. “Palm OS developers are very important to us,” says Palm spokesperson Lynn Fox. “There are a number of ways to migrate data from an existing PDB file to a new webOS app, and soon we will share more information for developers with Palm OS applications who want to build webOS applications.”

“For the OS to succeed, I think Palm really has to execute quickly,” says Gottlieb. “They’ve shown a stellar product, but if it doesn’t hit the market soon, they’re liable to get equaled or surpassed by other players in the market…well, one player really,” he adds, referring to Apple. “To be honest, we weren’t expecting anything of this level out of Palm. They really hit a home run with the design and architecture of the OS, at least in terms of what’s been disclosed. Last week, I would not have projected a bright future for Palm, but the Pre has a lot of promise.”

Sometimes, the cleverest ideas and applications arise from these chance encounters, despite having only two days to come up with these applications.

Here are brief descriptions and a few screenshots of some of the nearly 40 applications developed or demo’d during iPhoneDevCamp 2. For a complete list, visit the iPhoneDevCamp 2 Web site.

Applications

• Converter: Karelia Software’s Dan Wood wrote this simple currency conversion application in 90 minutes.
• Fashion Season Collection: View photos and videos of haute couture fashion from the catwalk.
• Gifter: Demonstrates autofill in Web views in this gift-giving application.
• Heatmap Mobi: See what’s hot and what’s cold in your city.
• iRa: Easily the most impressive demo at iPhoneDevCamp, iRa takes mobile control and viewing of surveillance systems outside of the windowless, multi-monitor command center and puts them in the palm of your hand.

  

• Mapfoot: Find malls, stores and–most importantly–where you parked your car.
• My Emergency Info:Store and display emergency information.
• Quicktate: Stop listening and start reading your voicemail.
• Record-a-Call: Record and transcribe phone conversations.
• red:green: Have you iPhone voice your approval (green) or dismay (red) with this simple app.
• sStitch: A personal favorite, sStich provides citizens with the power to report disaster information. The developer showed how it was used to track a brush fire in San Diego.

  

• Substrate: Make pretty procedural wallpapers for your iPhone.

  

• Taxi!: With Safari, it can take over a dozen taps to find a nearby taxi company. With Taxi!, you’re only one tap away from hailing your next cab.

  

• Taxi Guide: With the Olympics just around the corner, you’ll need this app to help you browse Beijing hot spots and tell your taxi cab driver where to go … in Chinese, of course!

  

• WAn/WordPress Demo: Make your WordPress site look great on the iPhone.

Fun

• Free Kaleidoscope: An open source kaleidoscope application using OpenGL.
• Paddle Ball: Bounce the virtual ping-pong ball on your virtual paddle and don’t let it fall to the virtual ground!
• PushUp: Get in shape by having your iPhone count how many pushups you can do. Be sure to touch your nose to the screen to make it count!
• Tally Counter: A simple tally counter.

Development

• Gap: Open source development tool and framework for accessing features of the iPhone SDK from within HTML and JavaScript.
• TouchClipboard: Copy and paste clipboard frameworks for iPhone applications.
• GreasePocket: GreaseMonkey functionality on the iPhone.
• MagicTable: Build data-driven iPhone user interfaces with XML documents.
• REDACTEDDebugger: Debugging framework.
• TouchJSON / TouchSQL / TouchXML: Open source libraries and frameworks for handling RESTFUL JSON-based Web services, communicating to SQLite database and efficiently processing XML documents on the iPhone.

Music

• Harp: Multi-touch harp synthesizer with some unique user interface features.
• hum.itfor.us: A submission from a team in Colorado, hum.itfor.us allows songs to be identified by humming. It is similar in function to Midomi.
• iMusicMash: Retrieve lyrics and more information about songs in your iTunes Music Library by mashing them up with Last.fm and YouTube.

  

• MusicID: Identify music and retrieve additional information about songs.

Social and Gaming

• Bar Trivia: It’s trivia night, but this time with your friends over a Bonjour network.
• DudeZap: Send contacts from one iPhone to another.
• Fwerps: Feed and stroke your pet fwerp or it will become angry with you.
• Hot iPotato: Pass the iPotato to play an elimination game like musical chairs.
• iBoard: A Web-based micro-forum on the iPhone.
• irrSokoban: Move boxes around a maze into designated locations.
• LightBikes: Will you get to the MCP before your opponent gets to you?

  

• rspRoyale: A rock, paper, scissors game you can play with multiple iPhones.
• RPS: Another rock, paper, scissors game you can play with multiple iPhones.
• Tattle Talz: Find out if your friends are telling two truths or a lie on your iPhone.

  

• Wildcard: Free-form gaming surface (checkers, cards, chess, etc.) from the developer of Quicksilver.

  

When the iPhone was released in June, many developers were disappointed by the absence of an SDK for writing third-party applications on day one.

At D5, Steve Jobs explained to Walt Mossberg that Apple (AAPL) first needed to iron out some security issues before they would open up the device to outside developers:

We would like to solve this problem and if you could just be a little more patient with us, we’ll do it.”

–Steve Jobs at D5 on the availability of an iPhone SDK

Fast-forward to the first quarter of 2008, when Apple made good on its promise by releasing an early version of the iPhone SDK. The fruits of the patient developers’ labor was evident at the launch of the iTunes App Store, where 500 free or commercial applications were available to download onto the new iPhone 3G or the original iPhones running iPhone OS 2.0.

No longer were iPhone users confined to using Web applications running in Mobile Safari or resorting to jailbreaking their devices to use third-party programs.

The App Store made it dead simple for every iPhone user to duel their friends with PhoneSaber or satisfy their Dance Dance Revolution/Guitar Hero/Rock Band craving with Tap Tap Revenge, a game which recently celebrated its one millionth download.

At iPhoneDevCamp this year, there’s a greater and more palpable sense of excitement in the air than last year, and it’s reminding me of the time when I was writing applications for another Apple handheld product: the Newton.

While the green device from Apple was not a commercial success–it was surpassed in sales and popularity by the less-capable, yet smaller and more convenient Palm Pilot–the Newton nevertheless pioneered many features we now see perfected in the iPhone.

Fourteen years ago, the Newton could fax, send email and receive pages; the iPhone is a communications powerhouse with 3G/EDGE/Wi-Fi/Bluetooth.

Newton’s handwriting recognition was dramatically improved with Newton OS 2.0 in 1995; the iPhone has fantastic Chinese and Japanese character recognition.

Finally, the Newton promised a day when users everywhere had their own personal digital assistants in their pockets; today, millions of people have chosen their phone to be an iPhone.

Despite leading the Newton protest at Apple Computer in 1998, I admit that Jobs was right to cancel the Newton. He made the correct decision to focus the company’s efforts on Mac OS, and it’s paid off.

The iPhone, after all, is running a version of the same operating system powering today’s Macs. The release of the initial iPhone raised the bar significantly for mobile users tired of using the same-old devices from Palm, Microsoft, and Symbian.

At iPhoneDevCamp 2, the bar is rising even higher for native third-party applications. If you were excited about the first 1,000 apps, wait till you see what comes out this weekend!

Below are photos from Friday’s welcome reception at iPhoneDevCamp 2. For more information, visit the iPhoneDevCamp 2 web site.