Having openly stated that mobile applications are one of the BlackBerry Partners Fund's areas of investment interest, we are often asked the question, "Does a mobile application company constitute a viable venture investment opportunity?" I'd like to focus on answering that question in this blog.

We have been inundated with mobile application investment opportunities. Many of these "opportunities" are simply point solutions or feature applications that answer very basic questions: where am I? Where is my friend? Where is my husband and is he cheating on me? Can I read the newspaper on my phone? These applications that solve very basic challenges, while interesting, do not, in our opinion, represent venture opportunities. We categorize these as feature applications.

In order to get to a real mobile venture application opportunity you have to think bigger - think in categories: Travel, Finance, Sports, Search, Voice. Think back to the inception of the internet where companies chased these categories. Google: Search; Travelocity/Expedia: Travel, etc. Nobody would have predicated how the Internet would have unlocked frictionless distribution channels hence spawning the business that is today Ebay. Nobody would have envisioned the value of community touch points that resulted in the reach of Facebook. Our belief is that many of these same dynamics are sure to repeat themselves within mobility, leveraging the fundamental characteristics entirely unique to mobile.

Consider a few profound dynamics working in favor of mobile:
- Shear market size will dwarf the number of laptops almost five to one; unprecedented reach
- Mobile devices are akin to your wallet and/or car keys; always with you. Furthermore they enable a real time, location aware communication channel; no doubt an extremely powerful combination

That being said, these new categories will often act as extensions to existing internet categories i.e. owning internet travel may be significantly different from owning travel on mobile (more on that later).

Keep in mind however that the online players are predominately focused on their core offerings which may include only cursory mobile components i.e. very basic wap offerings. Extending into mobile is not a trivial venture; handset and network fragmentation, walled garden distribution, ever evolving handset capabilities, network latency, limited screen sizes, challenging discovery and user interfaces….to name a few. In other words, the existing incumbents have a very long way to go in creating real mobile experiences and this opens the door to the next generation of mobile players.

The good news is that, unlike the evolution from fixed goods to internet, many of the customer behavioral challenges have already been conquered. Consumers are not afraid to purchase over the internet; consumers already understand the power of the digital revolution. This means quicker uptake. One need look no further than the recent download numbers (over 200MM) on the iPhone for proof of the significant pent up demand for compelling games and applications on mobile devices.

We have recently made an investment in Worldmate. What makes this company attractive to us is the fact that it will own the travel concierge category. Worldmate does not have to reinvent the wheel by repeating deals with every hotel and airline on the planet; instead it has done a deal with Hotels.com and extends the functionality of Expedia and others into the mobile realm. In other words, Worldmate is not a threat to the internet travel category; it builds on its capabilities to create a whole new category.

Using Worldmate as an example: Being a road warrior, I want a mobile application that knows my itinerary; that lets me know if a plane is delayed or cancelled; gives me the relevant weather report; gives me currency calculations; directions; allows me to quickly book a hotel, car, etc. We believe that owning this category is a billion dollar investment opportunity and would love to debate it with anyone who disagrees.

To summarize, we believe there are several key elements that need to be present for a new mobile application to become a category leader. The following highlights a few to pay close attention too.

- Paramount to have a compelling “utility” value proposition
- First mover in new categories does make a difference; critical mass of users is a viable defensible position
- First mover in distribution also makes a difference. Unlike the online world, distribution channels can be highly influential (via participation of mobile carriers)

- Customer touch points continue to be critical (billing, brand, community)
- High degree of personalization helps avoid churn
- Excellence in user experience (highly proficient at mobile UI) is imperative
- Maximize full capabilities of this portable device; multi layer integration into multiple assets (address book, calendar, location, applications, usage behaviors, etc)

- Effectively leverage the two screen dynamic; use online as a compelling service extension
- Always look for ways to build community elements around your utility
Once you have all these covered, it then becomes a question of execution.
- Team-Do you have the right team? Do they have the expertise in both the domain and in mobile to strategically put the two together?

- Distribution-What's the quickest path to getting the application on devices? Does the company have an existing user base that can be converted to mobile? Does the company have pre-existing relationships with operators and handset manufacturers that would give them a significant edge in being front and center on a consumer's handset?

- Platforms and roadmap-Do they cover the critical platforms? Do they have a viable roadmap that continues to add value as handset and network capabilities evolve?

- Revenue model- How does the company monetize the opportunity in both the short and longer term?

If, as Worldmate does, your company has the right answers to these challenging questions; you're well on your way to a successful mobile venture. Remember, you heard it here first!