Can developing free software for mobile phones be a business? It can whether you’re Illusion Labs, a fledgling company in the Swedish port city of Malmo.

Illusion Labs was started a year ago by Carl Loodberg and Andreas Alptun, who had worked together at another Swedish company called TAT, designing software for companies including Samsung and Nvidia. They set up their own company so they could concentrate on developing applications specifically for Apple’s iPhone. “When the iPhone came out, we were excited about the big screen, the graphics chip, and the good components,” says Loodberg. “We thought it was an opportunity too big to pass up.”

It looks like they were right. The first game they developed has become one of the most popular pieces of software for the iPhone. The game is called Labyrinth, a digital update to the old wooden box on which you maneuver a small silver ball through a maze while avoiding

cut-out holes the ball could plunge into. The game, which is available for free from Apple’s iTunes, is being downloaded 80,000 times a day, according to Loodberg, and is getting rave reviews from users. “Controls extremely precise,” wrote one person on iTunes. “Smooth, very fluid, and is realistic,” wrote another.

While the game is free, its success could mean rich rewards for Illusion Labs. The company is selling a souped-up version of the game, which is plus quite popular, for $6.99 on iTunes. More promising, advertising agencies have contacted the company to develop variations on the game with the logos of advertisers embedded in them.

Marketing and Mobile Phones

Already, Illusion Labs has designed a game called iPint for Carling beer, with the London-based ad agency Beattie McGuiness Bungay [BMB]. In iPint, an iPhone user tilts her phone to guide a beer down a bar through a variety of…

Orginal post by Mike

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