Investing in and Building on New Platforms

Scoble posted today about the “Silicon Valley VC Disease”, which can best be summarized as only investing in companies that are addressing markets that are big today and have a good chance at earning revenue over the next couple of years.

I don’t hang out with VCs enough to know whether Scoble is right, but what interested me about the post was that he was using investing in iPhone applications as an example of what they generally aren’t investing in because the market is still so small.

I’ll say this, the iPhone and its applications are going to be big. The market may be small today, but it’s just going to continue to grow. As a first generation iPhone owner I was already addicted to my phone and only kept using my Blackberry because I couldn’t get my work email on my iPhone.

The addition of the AppStore has changed things even further. Before my phone mainly served as a phone, email, and web browsing device for me. The AppStore turned it into a restaurant recommendation tool, a movie research tool, a gaming device, a remote control, etc. On a recent business trip where I was gone for three nights I realized I never turned on my hotel TV once the entire trip because when I got back to my room at night I just used my iPhone until it was time for bed. Not that I watch a ton of TV on trips, but to never even turn it on due to my phone was a definite change in my usage.

Maybe I’m an early adopter, but almost everyone I talk to is planning to get an iPhone the next time they get a phone. I’ll recommend an iPhone to my mom, and if my kids were old enough to need a phone I’d be getting them one today.

Sure, there are problems. They need to open it up more, they need more than one carrier, etc. And yes, it is possible that other phone manufacturers build similar devices by copying Apple. That doesn’t matter though if you’re thinking about building mobile apps for the platform. I’d suspect good application developers will be building apps for all mobile platforms that have enough usage, and I imagine we’ll continue to move towards one or two platforms over time.

What it does mean though, is that starting or investing in companies in this space is a great idea. Based on the usage and passion of iPhone users, it’s obvious that these phones are becoming the new computer, or at least as equally important. Getting the jump now will be a huge advantage.

There is a lot left to be figured out. Mobile advertising will need to not only grow from a functionality perspective, but advertisers and publishers will need to understand it as well.

Essentially, this is a multi-year process, but it will happen much faster than it did with computer usage and internet usage.

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