I reviewed this for a client who would like a circular transparent badge to match his company logo. Here is what I found:
The iTunes 512x512 icon is loaded in JPEG or TIFF format, which does not support transparency, so you have to make a square background for your circle. Since the home screen icon should look exactly like a large icon, your home screen icon should also have the same background.
As Brandon suggests , you could use a pre-selected icon with a black background, but you would be dominated by App Store reviewers. The docs say that the icon for your home screen should be a “smooth, square icon sized 57x57 pixels” (my emphasis). You can leave with a circular icon with a black background, but it really depends on how the reviewer checks this requirement. You can leave it if they haven’t checked, or just check that the alpha channel is 100% for life, but it won’t be if they decide whether the icon will look square.
The circular icon will look strange next to all the other icons on users' phones, so this is probably a bad idea.
Will Harris Jun 16 '09 at 13:23 2009-06-16 13:23
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