Fun and games on phones gets serious

Bay Area entrepreneurs bring mobile content to burgeoning market

Any casual glance at teens at a Muni stop or workers at a coffee shop shows that more and more people are using their mobile phones for fun that goes beyond chatting. And from Silicon Valley to San Francisco, firms are starting up and lining up to be the ones behind the action.

“I went to CTIA (Cellular Telecommunications & Internet Association conference) a few months ago. I saw an awful lot of stuff there. It was really exciting. The phone is becoming the new Game Boy,” said Paul DeBeasi, a senior analyst with the Burton Group. “Basically, there’s just an explosion of new applications, really on the consumer side.”

Add-on applications for mobile phones are nothing new as the world market for phones has increased to 1.4 billion subscribers over the past decade, according to the Mobile Marketing Association.

But for years, entrepreneurs and analysts said, United States phone users have lagged behind their European and Asian counterparts in text messaging, game playing, marketing and other applications that use more of a phone’s capabilities beyond simple voice calls.

As that’s begun to change, firms in the Bay Area and elsewhere are hoping to cash in with everything from basics like ring tones and onscreen wallpaper to more creative offerings. Local venture capital investment has followed, after what some entrepreneurs perceive as a delay during the first round of mobile application startups during the dot-com era.

“I think it was early. There have been quite a number of failures in this space. I think the market shifts in the last year and what’s happening in the next year or two have made it a very interesting market. The Valley’s been waiting,” Sam Jadallah, a general partner with Mohr, Davidow Ventures on Menlo Park’s Sand Hill Road said.

Limiting factors in the past were the still-emerging technology of the phones and the willingness of carriers to play nice and make their platforms accessible to third-party firms, industry observers said. Now, hoping to get the best applications on their phones and standing to profit from a cut of the costs of downloadable features, those companies are increasingly encouraging these new firms, Jadallah and Gartner Research VP Mike McGuire said.

What’s emerging is a market similar to the start of the dot-com days but more restrained in scope, since cooperation with Verizon Communications Inc. (VZ), Cingular Wireless and the like is still part of entry, analysts said. By now, the area’s familiar with the pattern to come: much innovation, a few great successes, and many failures.

“What I do believe is going to happen here, and which doesn’t happen in every industry, is that you will see new brands created around mobile content,” Azure Capital venture partner David Limp said.

While many point to the technology features of the newest phones as a business driver, two very different companies in Burlingame and San Francisco are hoping success derives in part from an ability to work on nearly every phone in use.

The Burlingame firm, Limbo 41414, offers a text-messaging game in which users strive to be the lowest unique bidder on an item put up for auction by a company marketing itself through the service. An example: Limbo auctioned off a Hummer vehicle for less than $37. The company woos customers by only texting them clues and new auction notifications on request, and doesn’t ping them with outside advertising.

“They shouldn’t feel they have to trade off by joining,” Limbo CEO Jonathon Linner said.

The San Francisco company, Tiny Pictures Inc., offers a way people can immediately send pictures from their camera phone to their friends’ phones and a protected Web site, with no open Web screen for all the world to see.

“It makes that camera useful in a really compelling way,” founder and CEO John Poisson said. “In Radar [the program], I’ve invited my close friends to look at my pictures and vice versa. We don’t have to deal with things like predators. A lot of parents of Radar users … like that sense of security.”

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