The New York Times, earlier this week pointed out that browser wars had erupted again with Mozilla Corp’s Firefox, Microsoft’s Internet Explorer and Apple’s Safari looking to one-up each other. While that certainly is true, the browser wars on the desktop are not as interesting as the sudden explosion of interest in the browsers on mobile devices. With billions of devices sold every year there is a big demand for mobile browsers. The market is an emergent one, with no real winners.

WebKit-based browsers on S60 and Apple’s iPhone are strong contenders. In addition, Mozilla is looking to develop mobile browser for phones that are based on Linux OS, as CEO John Lilly said in a chat with us earlier this month. They are all fighting it out with Opera of Norway. I have Opera Mini on my Blackberry Curve and I love it.

However, all these players should watch out for Skyfire, a Mountain View, Calif.-based company that went into private beta earlier this year. The company is about to announce that it has raised $13 million in Series B funding from Lightspeed Ventures previously investors, Trinity Ventures and Matrix Partners. The company has raised $17.8 million thus far.

What makes Skyfire so special? It has a mobile browser that can render regular web pages almost perfectly like the way you expect to see them on your desktop. Only Apple’s iPhone version of Safari has that kind of ability. However, Skyfire’s server centric approach allows it to render Flash-based content such as YouTube videos on mobile devices. That makes this browser really useful. While Skyfire works only on Windows Mobile platform, the company is hard at work on a Symbian version. I have seen an early stage demo and it works very well. When I saw this browser for the first time, my initial reaction was: Microsoft should buy this company and replace their lousy Mobile IE with this much nicer product. It would instantly make HTC devices usable.

On a more macro level, everyone in the mobile ecosystem – from handset makers to mobile carriers – is interested in a mobile browser, that can render web pages for view on the handset without writing special versions of the web content. Apple’s iPhone showed that a good browser (married to easy to use experience) can raise demand for data services. With Voice-related revenues peaking, mobile carriers are increasingly banking on demand for mobile data services to make money, as we have noted previously. According to UBS Research analysis, wireless data services “now account for 21% of total service revenues for the major carriers, up from 16% a year ago.”

In a recent report, mobile market research firm, M:Metrics pointed out that among smartphone users in the United States, mobile browsing has increased 89% year over year, and pageviews have increased 127 percent. More importantly, the time people are spending on non iPhone mobile phones based web browsers is increasing as well. Mobile advertising start-up, AdMob had come to similar conclusions when it analyzed the data it collected from its ad-network.

Against such a backdrop, it is not difficult to see why VCs want to take a flyer on a company like Skyfire. Sure it has its risks including fighting with deep pocketed incumbents, but the upside is big as well. As I said, it is early days in the mobile browser wars.