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So this delay has been due to delays in being approved as hardware for the iPhone?

I remember being excited that Apple was opening the 30-pin dock to 3rd parties, but it seems like that was over a year ago and the only things released that I can name are Square and Pedal Brain. Am I right to assume that hardware approval is much more difficult than normal app store approval.

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It's not that hard if you are a larger company. My company just had a medical device that connects to the 30 pin approved by the FDA/Apple. The difficulty is less Apple and more the intrinsic challenges of hardware. Once you get into atoms bugs get harder to fix, costly to iterate on etc. It's really impressive that the wakemate guys have gotten so far with so few resources.

Square connects through the audio jack. Maybe part of the reason they decided to do that was to avoid the approval process? Probably more of a "get on as many devices as possible" situation though.

Its much cheaper to manufacturer a device that uses the audio jack than one that uses teh 30 pin adaptor.

This and we can manufacture only one reader and have it work on iPhones, iPads and pretty much every Android device.

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