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Business Report

Five Opportunities for Mobile Computing

Thousands of startup companies see mobile computing as their chance to strike it big. We picked five.

Mobile computing is causing large business shifts that benefit startup companies.

About three dozen mobile-computing startup companies get funded by investors each month in the United States, according to PricewaterhouseCoopers. Around the world, tens of thousands more entrepreneurs are dreaming and coding and trying to invent something big.

Here’s what we think are five large opportunities in mobile computing, and a startup company pursuing each.

If you live in San Francisco, you’ve probably seen cars roving around with hot-pink furry mustaches on their grills. This signals that the drivers are for hire through Lyft, a ride-sharing app offered by startup Zimride. Anyone with a car can become a limo driver and pick up fares, who can hail a driver using the app. Lyft takes about 20 percent of the revenue from each ride.

This story is part of our May/June 2013 Issue
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Zimride and competitors Uber and SideCar are using smartphones to challenge the taxi industry. It hasn’t been smooth. In November, the California Public Utilities Commission fined all three for operating illegal taxi companies.

Who’ll win the struggle isn’t clear. But the mobile-app companies have a numerical advantage. In San Francisco, there are 1,700 licensed cabs but more than 380,000 registered cars.

How much? San Francisco taxicabs licenses have been sold for $300,000. (Source: SFMTA)

Internet Access
Many people in poorer countries are still using feature phones with prepaid minutes. A switch to smartphones is happening fast—yet few can afford a data plan to connect to the Internet.

Blaast, a startup based in Helsinki, Finland, thinks the key to these markets will be shrinking the apps people use and making them work cheaply over older, slower wireless networks. The company compresses and caches streamlined versions of apps like Facebook and Twitter, offering access to a package of applications for 5 to 10 cents per day.

How many? India has nearly as many cell-phone subscribers (1.1 billion) as people. Only 4 percent use smartphones. (Source: KPCB)

Things That Communicate
What if any object could talk to your phone?

Tagstand, a San Francisco–based startup, sells inexpensive near-field communication (NFC) tags that can be stuck anywhere. The tags communicate information or commands over short distances to phones that also have an NFC chip. When you set your phone down on your bedside table, for example, a tag on the table could turn the phone off and turn your alarm on. Cofounder Omar Seyal says NFC tags at movie theaters’ entrances could automatically silence your phone.

How soon? About one in five smartphones sold has an NFC chip. (Source: ABI Research)

Phone Security
Online bad guys have been paying attention to the swift growth of smartphones and tablets, and malware for the small screen is on the rise.

One of the first to jump to phones’ defense was Lookout, whose security apps are now used by 30 million people. Lookout’s free software for Android can scan downloaded apps for malware and back up smartphone contacts. Features include Signal Flare, which can help find a missing phone by logging its location as the battery is dying, and Lock Cam, which will silently take and send a photo of any person who tries and fails three times to unlock your smartphone.

All this warms up users for the company’s premium service, which costs $3 per month and adds extras like the ability to remotely erase your phone’s memory.

How safe? By 2016, consumers will spend more than $2.4 billion a year downloading mobile security software. (Source: Infonetics)

Credit Card Payments
Smartphones and tablets are changing the way people pay for things. One startup in the field is Braintree, which processes credit card payments, mostly for high-profile Web merchants.

Braintree recently launched Venmo Touch, an app that will let any other app execute a payment with “one touch” if a person’s credit card information is already on file. The feature is available with popular apps like the last-minute hotel booker HotelTonight and the errand-running service TaskRabbit.

Braintree CEO Bill Ready says the company is processing more than $1 billion in mobile transactions annually. It charges 2.9 percent of the purchase price, plus another 30 cents for each transaction, though it pays most of that money on to banks and card companies.

How much? In 2013, people in the U.S. will spend about $13 billion using mobile phones. (Source: Forrester)

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Next in this Business Report
Making Money in Mobile

Mobile computing is the fastest-spreading consumer technology in history, but the real change for the technology business is only just beginning.

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