This year has been an interesting one for the mobile industry. It is finally crossing the infamous “chasm” as popularized by Geoffrey Moore. Don’t agree? Maybe we can convince you.

Smartphone adoption is increasing. The number of data-centric Smartphones grew from 102.4MM worldwide to 165.2MM in 2008, which represents a61.3% CAGR (RBC Capital Markets, “Sizing the Global Smartphone Market”, Nov. 2008).

Mobile Internet and mobile advertising have grown considerably this year. Admob’s metrics (http://www.admob.com/s/solutions/metrics) show that mobile ad impressions (on their networks) have grown from 2.4B in January 2008, to 5.8B in November 2008 (142% growth for the 11-month period). Much of this growth has come from Smartphones that have better Internet browsers and display capabilities, and better data networks (3G or better, and WiFi connections).

Mobile applications are driving the usage of mobile phones for data-centric activities. The Apple App Store has seen more than 300MM application downloads (http://news.cnet.com/8301-13579_3-10114894-37.html) from its catalogue of over 10,000 applications in just over 5 months from its launch in early July 2008. Many other companies have already launched competitive platforms (Nokia, Google, Microsoft), or are planning to in the near future (BlackBerry, May 2009). To-date, nobody has managed to generate quite as much buzz as Apple in this regard.

BlackBerry remains the leader in Smartphones for business users. RIM has a 42% share of the market for business Smartphones, and has grown its install base by 55% in the past year in this customer segment. It is forecasted that RIM will grow its enterprise-only user-base from 12.4MM to 27.5MM in 2011 (RBCCM, Nov. 2008).

Devices

This year was marked with some of the most innovative and feature-laden devices to ever be released; in particular, the BlackBerry Bold, BlackBerry Storm, iPhone 3G, Nokia E71, and the HTC G1 (Google Android phone) became market leaders.

Mobile phone makers are acting to quickly satisfy the appetite of tech-savvy prosumers and business users. In doing so, device manufacturers are releasing phones at record paces. Even in recessionary times, RIM (BlackBerry) has just announced that they are hiring 1,250 new employees to support its current growth (http://www.financialpost.com/story.html?id=1053725). This is a good sign for the mobile industry!

Smartphones have reached a seemingly standardized set of hardware-based criteria. Some notable highlights of this set include: high-speed data (UMTS (3G) or HSPDA (3.5G) connectivity, and WiFi), quad-band or greater network support, Bluetooth, embedded-GPS, touch-screen or scroll wheel interaction, full qwerty keyboards (either tactile or virtual), on-board cameras, and stereo sound output (some phones include surround sound).

In terms of device capabilities, we predict near-term innovations and improvements in battery life, screen resolutions and on-board video processors, main device processor speed and efficiency, disk storage capacity, and WiMax or LTE support (4G). We expect the next generation of mobile applications to work with these device enhancements to fuel increases in productivity for users, and experiences not possible today.

Applications

The proliferation of mobile applications has significantly increased. Two key factors affecting this trend include Apple’s distribution platform, and RIM’s strategic alliances with strong partners to bring exceptional application experiences to the BlackBerry. Other macro trends promoting adoption of mobile applications include faster wireless capabilities from carriers, lower data plans, and over-the-air (OTA) application downloads and installations.

Some of the top applications to make it big this year include:

1. Facebook Mobilehas expanded the reach of Facebook’s social networking platform to mobile users. Their integration with the BlackBerry, iPhone, Palm, and Windows Mobile has driven a 300% increase in mobile users (http://www.afterdawn.com/news/archive/15977.cfm) in the last year. Facebook currently has 15MM mobile users and is expanding it’s mobile team (Nov. 2008)
   
2. WorldMate Live(http://www.worldmatelive.com/) hasrevolutionized the way millions of business travelers plan and manage their trips. WorldMate Live roams with you in real time, delivering relevant information, warning of potential pitfalls, and making it easy to resolve issues, so your trip is as efficient and enjoyable as possible. The product is offered on BlackBerry, Windows Mobile, UIQ, Palm, and S60 platform devices and there are almost 2 million users worldwide.
   
3. Shazamis a free mobile music discovery service. It was once an IVR service, that has now become a hugely successful client application that boasts 20MM users worldwide and 8MM tracks in its database. It is available on iPhone and Android Smartphones.
   
4. SkyFireisa free, carrier-agnostic mobile browser that supports Flash, Java, Ajax, and other multimedia, and offers a full-featured, “PC-like” experience.

The Near Future

At the BlackBerry Partners Fund, we remain bullish that Smartphones will become the end-user’s next computer. In a new "Future of the Internet" report by the Pew Internet & American Life Project, it was noted that the “mobile phone will be chief Web connectivity device by 2010.” We agree!

The number of data-centric Smartphones will grow to 448.7MM worldwide by 2011, representing a 3-yearCAGR of 42.9% (RBC Capital Markets, “Sizing the Global Smartphone Market”, Nov. 2008).

Mobile applications will drive adoption of Smartphone purchases. Just as we have seen “The iPhone effect” in 2008, the launch of the BlackBerry Application Center and other Smartphone application-centric download platforms will help to spur the adoption of BlackBerry and other Smartphone devices in 2009.

Season’s Greetings and Happy New Year!

On behalf of the team at the BlackBerry Partners Fund, we would like to thank everyone who has shown interest to-date, including entrepreneurs who considered our fund as a potential investor and other VC funds looking for a strong syndicate partner. We’re looking forward to a great 2009!