Last week, Connor Mulcahey, 13, downloaded Bump onto his iPhone. Bump let’s you trade contact info and other stuff like photos on your iPhone to a nearby iPhone. Using an internet connection you select what you want to share with your chum and then you bump your phones together or wave them nearby. Your phone detects your chum’s phone from the accelerometer. Connor went down in the record books as the person who downloaded the billionth application onto an iPhone. Connor could have downloaded any of more than 10,000 other applications in the iPhone store but Bump got the nod for this record breaker.

The billionth download also provides a good opportunity to reflect on the brilliance of Apple in turning its iPhone into a multi-sided platform that anchors an ecosystem of enormous and increasing value. Apple didn’t invent this business model. I think Microsoft deserves credit for realizing that enormous value that can be created by encouraging software developers to write applications for a platform. Microsoft invested gobs of efforts in making Windows incredibly useful to application developers who in turn wrote lots of applications that made consumers want to use Windows. But Apple was the first to really take this model off of the personal computer and use it for another device. Its genius was three-fold.

First, it bypassed the navel-gazing mobile operators who just don’t seem to be able to come to grips with the world of open ecosystems that are more or less mandated by the web. It did that by coming up with a great phone that sucked the power from the operators into Apple. Second, it opened up the iPhone to third-party developers who take on all the risk and provide all the ingenuity. Since the iPhone controls its own ecosystem these developers new that their applications would work on any iPhone anywhere. Third, it kept control over the applications by selling them itself through its iPhone store. That helped reduced the transaction costs for the application developers by creating a separate clearing house. But it also gave Apple an additional revenue opportunity.

The rapid development of applications for the iPhone places Apple’s competitors in a very difficult spot. Apple is incredibly far ahead of rival suppliers of mobile devices like Nokia or suppliers of operating systems software like Google and Microsoft. iPhone users that have gotten used to a lot of apps aren’t going to be keen to switch. It isn’t like the old days when you just had to reenter your phone numbers. Those who are still thinking of switching to a new mobile phone will take Apple’s lead in applications into account. This isn’t an impossible hurdle—application developers will port applications to any phone or operating system that presents a market opportunity. But it is a hurdle nonetheless.

Meanwhile, as Google, Microsoft, Rim, and others promote applications for their own ecosystems the game in mobile phones has changed forever. Increasingly as mobile phones are connected to the internet people will care a lot about the rich set of applications they can use on their phones. So long as mobile carriers offer competitive internet connections, consumers will mainly care about which phone or operating system has the best set of applications.

The mobile operators have lost the battle to control the mobile ecosystem. That billionth download was just one more nail in their coffins. The real action is going to revolve around Apple and whoever else can take it on in its own terms.