When Facebook agreed last month to spend $1 billion to buy Instagram, a 12-person company with no revenues, technology watchers had to recalibrate their speedometers.
Facebook, the social network created for personal computers in February 2004, is now planning an IPO that could value it at $100 billion. Instagram, which began giving away its photo-sharing app for the iPhone only in October 2010, represents something new: a shift away from the Web and the PC to a kind of consumer experience built expressly for mobile devices, particularly smart phones.
Mobile computing is advancing much faster than other technologies did in their early years. To reach an audience of 50 million people, radio took 38 years, television 13 years, the Internet four years, Facebook three and a half years. Instagram took 1.3 years. That helps explain why Facebook founder and CEO Mark Zuckerberg reportedly negotiated the deal privately over the course of a weekend. The message was that these are do-or-die times, and only visionary founders with total control—and millions to spend—will be swift enough to keep up.
How fast is the change? Smart phones and tablets outsold personal computers for the first time last year. Forty-two percent of U.S. residents now own a smart phone; in the U.K., it’s more than half, comScore estimates. Last week, while reporting record iPad sales, Apple CEO Tim Cook continued to predict that tablets by themselves would soon overtake the PC market. Even Afghanistan is licensing its 3G spectrum; there, many people’s first computer will be a mobile one. Forrester Research tells us that globally, more users will access the Internet from mobile devices than from PCs within four years. The market research firm recommends that companies begin hiring for a new position: chief mobility officer.
Navigating this change is a challenge for all kinds of companies, whether or not their main business is tied to mobile technology. For many, pocket computers will offer huge, obvious benefits to customers, clients, or employees. But there are also big uncertainties. Will union employees sue for overtime if they use a smart phone to work during off hours? Will the stream of consumer data from mobile devices be as useful as it seems? For all the clarity the Instagram deal seemed to offer, things are not so clear. Some observers even predict that native apps—those that exist only on your phone, like Instagram—could be a short-lived phenomenon.
This month’s issue of Business Impact looks at major questions now facing mobile computing and the factors that could limit or shape its direction. These range from device issues like screen sizes, battery life, and rapidly growing bandwidth consumption to the trade-offs between native apps and the open Web.