The Next Steps to Accelerate the Tectonic Shift in Mobile, Part 1

cyriacCyriac Roeding joined Kleiner Perkins Caufield & Byers in 2008 as Entrepreneur-in-Residence, to focus on next-generation cross-platform mobile and online venture concepts. Previously, Cyriac was EVP of CBS Mobile, CBS Interactive. He launched CBS Corporation’s (NYSE: CBS) mobile businesses across CBS Entertainment, CBS Sports, CBS News and The CW. In partnerships with technology start-ups, he created U.S. industry firsts such as location-based mobile advertising, mobile video breaking news and sports alerts, and avatar-based mobile games tied to major TV shows. He grew CBS Sports Mobile into one of the Top Ten highest traffic ad-supported mobile websites in the U.S.; created the first virtual reality video gaming experience across TV, online and mobile with “CSI: NY”; and launched the first Alternate Reality Game with full primetime TV drama episode (Numb3rs) and outdoor billboard integration.

Is the iPhone the answer to all prayers and complaints in the mobile startup world?

No, it is not. One phone alone cannot deliver that.

But it is the kickoff to a tectonic shift. Away from an industry structure based on structural and size advantages to an industry structure driven by innovation, consumer choice and software developers. To date, the players owning the customer billing relationship and the infrastructure have been favored (carriers/operators). The iPhone AppStore and its ease of web browsing kick off the shift to an industry structure that unbundles billing and infrastructure from the services running on top of those.

Part 1: The independent developer community for the first time is becoming the mobile innovation powerhouse

Let’s be clear, we are certainly a long way from the form of perfect competition found on the internet, where the best one (or the one kicking off the network effect first) wins, regardless of size. But for the first time, we are truly on our way.

The Silicon Valley developer community is quickly becoming a center of innovation for mobile. That is nothing new for the online world, but it is completely new for the mobile world. In the last decade, mobile innovations came mostly from Europe (especially Finland), Korea, Japan and Taiwan, and some large U.S. companies outside Silicon Valley. The Valley didn’t get into the game because Silicon Valley developers did not have a platform to work with that allowed them to fairly compete against large sized players. The iPhone AppStore changes that dramatically. While an approval process for new apps still exists on the iPhone, the time to deploy apps went from about 18 months to a few weeks. Consumers are responding to the ease of use as well. 200 million downloads occurred in little over 100 days. Suddenly, we are past the (previously very popular) discussion “Do consumers really want to do anything else besides calling and texting on their cell phones?”  The mobile web is also becoming significant. Apple has only been on the mobile market for 16 months, and the iPhone’s web traffic is already exceeding that of the most established smartphone makers.

This is all good. But there are more key steps that need to happen. We need

– Usage scalability

– Revenue scalability

– Truly mobile services.

In other words, we need rapid growth of open platforms for usage growth; mobile advertising and mobile payments for revenue growth; and creative thinking around new services that goes beyond the cell phone as an extension of online platforms.

These three factors combined, will unlock the full potential of the mobile device for consumers.

So, the kickoff to the tectonic shift in mobile has already happened with the iPhone; now it’s about accelerating the shift further.

More on each of the three factors above in upcoming blogposts here.

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