The developer of Cydia, the software used for jailbreaking the iPhone would be launching application hosting service for iPhone developers. The new service would house applications that are rejected by 

Apple. When this service goes live, developers can decide where to market their applications. If applications are rejected in the App Store, they would always find a place in the Cydia store. 

Apple has not yet commented about this latest development. Apart from being an embarrassment for Apple in view of the move to make jailbreaking illegal, the Cydia store is going to be a direct competition to Apps Store. Developers would not need to sign up for contract, there won’t be any requirement to renew you certificates for deploying applications in the Cydia app store.

If jailbreaking is considered as illegal and copyright infringement, trying to replicate something that Apple owns would be considered as more severe. The revenue sharing structure for the Cydia Store would be the same as App Store’s 70/30 split. Apple won’t be so happy about this.

Jay Freeman of Cydia seems to know the consequences of launching the store, he is said to have hired a lawyer if Apple should at all come knocking at the door. Cydia’s move would likely get backing from those frustrated developers whose applications were rejected for unknown reasons. There are some really handy applications out there for jailbroken iPhones, which got rejected by Apple. 

We’ll all wait and see Apple’s next move.