Executive Summary
Today marks a watershed moment in technology history. Apple's iPhone launch isn't just another product release—it's the starting gun for the mobile internet era. For the first time, we have a device that puts the full power of the internet in everyone's pocket, with an interface so intuitive that a child can use it.
Our analysis concludes that mobile will become the dominant computing platform within five years, creating unprecedented opportunities for investors who understand this shift. The convergence of touch interfaces, mobile broadband, and location awareness will spawn entirely new categories of businesses that couldn't exist before.
The Paradigm Shift: From Stationary to Mobile Computing
For the past decade, internet access meant sitting at a desk. The iPhone changes this fundamental assumption. By combining a phone, iPod, and internet communicator with a revolutionary touch interface, Apple has created the first truly mobile computer that normal people will actually use.
Why This Time Is Different
Previous attempts at mobile internet failed because they tried to shrink desktop experiences onto tiny screens with terrible interfaces. The iPhone's breakthrough is recognizing that mobile requires completely reimagined interactions:
- Multi-touch Interface: Intuitive gestures replace complex menu systems
- Full Web Browser: Real websites, not dumbed-down WAP versions
- Platform Approach: Third-party developers will create unimagined applications
- Always-On Connectivity: Internet becomes ambient, not destination-based
| Aspect | Desktop Internet Era (1997-2007) | Mobile Internet Era (2007+) |
|---|---|---|
| Access Pattern | Scheduled sessions at fixed locations | Continuous micro-interactions throughout the day |
| Primary Input | Keyboard and mouse | Touch, voice, and sensors |
| Key Features | Processing power and storage | Location awareness and camera |
| Usage Context | Work and dedicated leisure time | Every moment of daily life |
| Business Model | Advertising and e-commerce | Apps, services, and micro-transactions |
Our Core Investment Thesis
Mobile internet isn't a smaller version of desktop internet—it's a fundamentally different and more powerful platform. The combination of constant connectivity, location awareness, camera, and sensors creates possibilities that desktop computers could never achieve. We're not just changing where people access the internet; we're changing what the internet can do.
New Business Categories Enabled by Mobile
Our research identifies several categories of businesses that become possible only with mobile internet:
Location-Based Services
Real-time navigation, local discovery, and location-aware social networks will transform how people explore and interact with the physical world.
Visual Communication
Always-available cameras will make photo and video sharing as common as text messaging, creating new social platforms.
Casual Gaming
Touch interfaces and accelerometers enable entirely new game mechanics perfect for short, frequent play sessions.
Mobile Commerce
One-tap purchasing and mobile payments will make buying as easy as clicking, anywhere, anytime.
The App Economy: A New Software Paradigm
While Apple hasn't announced it yet, our intelligence suggests they will open the iPhone to third-party developers within a year. This will create an entirely new software economy with characteristics unlike anything we've seen:
- Micro-Pricing: Apps priced at $0.99-$4.99 will generate billions in aggregate
- Instant Distribution: Developers can reach millions of users overnight
- Continuous Updates: Apps evolve rapidly based on user feedback
- Platform Lock-in: Successful apps create switching costs between ecosystems
Investment Implications: Where We're Placing Our Bets
1. Mobile-First Social Networks
Desktop social networks like Facebook and MySpace were designed for leisurely browsing. Mobile social networks will be built around quick interactions, photo sharing, and location. We're actively seeking founders who understand this distinction.
2. Location-Based Services
GPS in every pocket enables services impossible before: real-time traffic, friend finding, local recommendations, and augmented reality. The winners will combine location data with social graphs to create magical experiences.
3. Mobile Payments and Commerce
The phone will become the wallet. We're investing in companies building the infrastructure for mobile payments, from peer-to-peer transfers to point-of-sale systems.
4. Sensor-Driven Applications
Accelerometers, proximity sensors, and ambient light sensors create new interaction possibilities. Health monitoring, gesture controls, and context-aware computing will emerge.
Timeline: The Mobile Transformation
Risks and Challenges
While enormously optimistic about mobile's potential, we acknowledge several challenges:
- Battery Life: Power consumption limits functionality
- Network Coverage: 3G deployment remains spotty globally
- Data Costs: Carrier pricing could limit adoption
- Security Concerns: Mobile devices are easier to lose or steal
- Platform Fragmentation: Multiple operating systems complicate development
Our 10-Year Mobile Predictions
By 2017, we believe:
- Over 2 billion people will own smartphones
- Mobile will account for majority of internet usage globally
- App economy will exceed $100 billion annually
- Mobile payments will be commonplace in developed markets
- Augmented reality will overlay digital information on physical world
- Wearable devices will extend the mobile ecosystem
- 5G networks will enable applications we can't imagine today
Final Thoughts
The iPhone launch represents a inflection point as significant as the web browser's invention. We're not just putting the internet in people's pockets—we're fundamentally changing what the internet is and how humanity interacts with information and each other. The companies that understand this shift and build for mobile-first will define the next decade of technology. Desktop internet connected places; mobile internet connects people.
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