Does iPhone Need The iFund?

31 thoughts on “Does iPhone Need The iFund?”

  1. “There are some who have thrown caution to the winds, proclaiming that iPhone and iPod Touch are going to be this humongous sellers and will crush everything over next two decades. Pour souls with little understanding of mobile ecosystem.”

    Not to mention how there are some serious deficiencies for such a device…no stereo bluetooth (especially for the iPod Touch!), no true GPS, and limited capacity and battery life. These things will improve over time, but even the best apps can’t overcome hardware limitations. The iPhone is popular, and that alone can sustain it for some time. But it’s far from the best mobile device and something better will inevitably come along within a year or two. Maybe it’ll be one of the Android phones 🙂

  2. [quote]Carriers are going to want a piece of the action from this application business or Apple will find itself facing some tough times. Unlike the showdown with the record labels, the carriers know their spectrum makes them king, especially in the US.[/quote]

    Of course the carriers would like to see a piece of the action, but how realistic would that be? My ISP would love to have a piece of google’s income, doesn’t mean they’ll get it though..

  3. If Apple is blowing everyone out of the water with data/internet usage with current smaller market share, aren’t the carriers going to be even happier with more data usage? And they aren’t going to have much of an argument with apps that don’t require their networks at all (the digital level is probably the cleverest, silliest, yet useful app I’ve seen… and no data network needed).

    Agree the fund is largely useless. Games, small niche apps, and apps from established devs won’t need VC. It’s difficult to conceive of something that will be a real stunner, requiring investment. Maybe integrating the location features, but it’s not very precise… Who knows.

  4. Om, I think you hit the nail on the head by bringing up the Java Fund. Which as far as I can recall was a complete flop. So this is KPCB trying to create some hype and ride a wave for something that probably does not need a fund to begin with.

    Let’s say it does though – does one really believe KPCB will be savvy enough to pick the right companies? Their history with the Java Fund points to some pretty weak picks and a lot of misses. I remember they passed on Weblogic stating that Java on the server was not the way forward.

    Clearly there will be money made on the iPhone ecosystem but I don’t have the confidence that KPCB will be a big part of it.

  5. “it’s far from the best mobile device and something better will inevitably come along…” This argument is so similar to the arguments about the iPod so long ago. All one needs to do to predict this future is search iPod + no FM tuner.

    As for OM’s point about spectrum being king and how the mobile ecosystem works, etc…To me the question is not Apple versus the Carriers but Carriers versus Content. Your view on this question will determine who has the upper hand in what will be an epic tug of war. In my view if Apple continues to execute the way they do…and I might add continue to reinvent the way they operate (think Jobs stepping aside in the presentation as long as he did was an apt metaphor) they will continue to dominate and dictate terms regardless of who owns the spectrum.

  6. This is totally a marketing ploy by both Apple and KPCB. That will never get the attention nor every come close to full investment.

    I do mobile apps and there’s one fundamental problem with the iPhone now and for the next few years: there aren’t enough of them out there to make for compelling numbers of potential users. Getting 1, 5, or even 10% of iPhones and then selling a $19.99 app or something for $4.99 mth ain’t a lot of cash. I can’t wait until the b-plans for this start rolling in. “You too can reach a $6mm run rate 4 years out”.

  7. [quote]Not to mention how there are some serious deficiencies for such a device…no stereo bluetooth (especially for the iPod Touch!), no true GPS, and limited capacity and battery life.[/quote]

    Yeah, the stupid iPhone doesn’t even have a floppy drive!!!

  8. bb writes: “Getting 1, 5, or even 10% of iPhones and then selling a $19.99 app or something for $4.99 mth ain’t a lot of cash.”

    Um, well….5 million iPhones, times 5% times $19.99 times 70%…

    5,000,000 x .05=250,000 x 19.99 =4,997,500 x .70=3,498,250.

    $3,498,250. Three Million, four hundred ninety eight thousand, two hundred and fifty. Dollars.

    In what way is that not a lot of cash??

  9. The carriers are about to be cut out of the loop. Apple will somehow become their OWN carrier. They will either buy up some frequencies, go wiMaX or something. Bank on it for them to use that cashpile to make this happen.

  10. To the question of whether the iPhone needs the iFund, well, no. Probably not. But the iPhone wants the iFund, just like I wanted–but didn’t need–my iPhone. The only real question goes to the investors in the fund… do you need your money? You must not, because its hard to see how you will get much of a return on this investment.

    Several people talk about how the iPhone isn’t even the best mobile phone out there, or that Google’s Android will surpass it in a year or two. Do you honestly think that this is the end of the product development lifecycle? They already dropped the price, increased the memory, rolled out 4 software updates, released the SDK, and admitted that the 3G version will launch this year. All in less than a year since it hit the market. You don’t think that this kind of evolution will continue? Remember how the first iPod was derided because it was big and lacked an FM tuner, among other limitations. Then trace the evolution of the entire product line, for which the frequency of new releases increased over time. The iPhone and Mobile OS X platform is likely to follow a similar path. Android may be very good, if it can avoid the pitfalls of having to work with some many different devices. But iPhone is very good, and it works today.

    Hopefully Apple’s SDK and toolset for the iPhone will follow a path similar to that for their desktop tools and applications, which have become more open over time.

  11. Hey Om,

    As to the question of whether iPhone needs the iFund, that is debate-able but I think that from Jobs and company perspective, what they are trying to show is that ‘we get it.’

    Understanding big customers like enterprises matters. Cultivating and growing a developer ecosystem matters. And providing enough chum to garner VC interest matters.

    I would net this one out as Microsoft playbook meets Cisco playbook tuned for the ‘just add water’ sensibility of the internet age.

    Now, when you say, “…any start-up or developer will have its destiny controlled by Apple…I am just trying to understand how a big standalone company will emerge when Apple is going to be gatekeeper,” this belies just how many big companies emerged from the Microsoft ecosystem.

    The devil is in the details but I am more optimist than skeptic. Along those lines, I just posted:

    Mobile reasons for optimism:
    http://thenetworkgarden.com/weblog/2008/03/mobile-reasons.html

    It’s an attempt to connect the dots between the customer-developer-enterprise-investor-Apple big picture.

    Check it out if interested.

    Cheers,

    Mark

  12. there is a quote at the end of Om’s post, about Steve Jobs. It seems to be there out of context; their is no attribution. It just says “MacWorld” at the end. Just wondering who that’s from? (Did Door say that at the Apple event?)

    re: the KP “iFund”, I’m puzzled how venture capital scale investments will be made in iPhone software application developers. Unless they decide to make seed level investments of $250-500k. Those companies aren’t that resource intensive, but more importantly they aren’t going to “grow up” into $200M+ revenue operations. Wish Door would have explained exactly what he is thinking. But it’s great to see something that will stimulate some true Apple-style innovation in the mobile computing market! I just hope the iFund isn’t iHype:)

  13. “Missed out on Facebook”?

    Don’t forget Facebook doesn’t make any money. %99.9 percent of this web 2.0 stuff is hyped garbage. Successful businesses solve a problem – they don’t wildly guess what the market might want….that’s what fad chasing twitter heads do.

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