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Before the release of Apple Inc.'s iPhone, many aspects of mobile technology – like user engagement, device capabilities and ways of profiting off of new software – were purely theoretical.
But those days have passed, and today it's common knowledge that smartphones work, that consumers love them, and that they will pay for the various features that are available for them.
At a mobile technology conference in San Francisco on Thursday, investors in a panel discussion called the release and rapid adoption of the iPhone "the first wave" of mobile technology – and they scanned the horizon for the next wave.
"Monetization itself will be the next great catalyst," said Matt Murphy, the Kleiner Perkins Caufield & Byers partner who oversees that firm's $100 million iFund for developers of iPhone applications.
"You're beginning to see companies building meaningful-sized businesses on advertising alone," Murphy said. "We will see a lot more of that in the second half of the year."
Subscription-based apps and those providing in-app commerce are also showing strength, he said.
Accompanying Murphy on the panel – which was part of a conference organized by investing and technology blog VentureBeat – were investors from Qualcomm Ventures and the BlackBerry Partners Fund, as well as an executive from Verizon Wireless.
Now that the first wave of mobile technology has passed, investors need to learn to read between the lines and behind the numbers as they aim to profit in this quickly evolving area, panelists said.
For example, when Apple announced recently that its App Store had passed 1.5 billion downloads, many took it as proof that apps are the industry's next goldmine. But this number can be deceptive, panelists said, because users have been found to throw out a great number of apps after a single use.
What is most important, investors said, is figuring out what makes a consumer keep an application for years, and make it a part of his daily routine.
"The App Store is great, but it's just part of a much bigger story," said Marc Faucher, a JLA Ventures partner who helps administer the $150 million BlackBerry Partners Fund for BlackBerry developers. "The points of value go way beyond [any individual company's app storefront], and as an investor we need to apply discipline."
According to Murphy, apps that are single-purpose and useful – for example the mobile commerce app created by Swedish start-up Mint AB, or the online radio app from Pandora Inc. – stand the best chance of passing the test of time.
Nagraj Kashyap, vice president of Qualcomm Ventures, said mobile devices other than phones – for example the Kindle reader - are also on the crest of mobile technology's next wave.
"That's the best kind of device for the future," he said. "It utilizes wireless technology, but nobody really cares about that" because the device simply does one thing well, and consumers are buying it.
Kashyap also pointed out that Americans might be slowing down their spending on gadgets because of a tough economy, but that spending on handheld phones in emerging markets like India is still on the upswing.
"People moving up the socio-economic ladder want better phones," he said.
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