Does anyone have any idea how they develop applications that are used to communicate with the short codes on cellular networks? Like if you sms the word "naked" to a certain number it automatically responds with the relevant content? Can it be done in php? Where do i get started?

It can be done with PHP

What you need to do is find an online SMS service with an API. Google brought me to http://www.txtlocal.co.uk/receive-mms.php which seems to have an API. Though it seems to be a bit pricey, but I'm sure you should be able to find a more local and cheaper service.

Good luck