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VCs Debate Mobile Computing's Future

SAN JOSE, Calif. - "The market for mobile devices is about to undergo a dramatic fragmentation."

No one really argued this provocative statement in what was mostly a chummy discussion between four leading big name venture capitalists. Roger McNamee, co-founder and managing director of Elevation Partners, made the fragmentation comment as part the Churchill Club's 9th annual Top Tech Trends event at the Fairmont Hotel before over 800 here in the heart of Silicon Valley.

In probably the most pointed comments of the night, McNamee said, "Windows Mobile is toast." He pointed to the success of devices like the Blackberry and iPod as the inevitable trend of where mobile devices are headed. "Everything that's fun is delivered by a single-purpose device," he said.

Steve Jurvetson, managing director of Draper Fisher Jurvetson, gave a little push back when he noted that unlike McNamee most people "won't want to carry an armada of devices on your waist."

But McNamee stuck to his guns, comparing the choice of mobile devices to having an extra pair of shoes or another watch. He drew a few hisses from the audience for asking how many women in the audience carried a smaller mobile phone at night. Several raised their hands.

John Doerr, a partner with Kleiner Perkins Caufield & Byers, declared Apple's forthcoming iPhone as "the biggest thing in tech for the next year." While Apple is a newcomer to the mobile phone business, Doerr noted Apple already has 100 million users trained on how to sync with iTunes. "You're going to compete with that?" Doerr asked rhetorically.

Joe Schoendorf, a partner with Accel Partners, agreed that the iPhone is pretty hot for a device not even shipping yet. "What I've heard is Cingular has a million people on its wait list of iPhone," he said. (AT&T announced at the CTIA conference this week that over a million people have asked to be "notified" when the iPhone becomes available).

Doerr declared the cell phone "the next PC" and predicted the FCC will approve at least one wireless broadband network over the next 12 months. It's a development Doerr said is long overdue. He noted the U.S. is "17th in the world and falling behind in broadband. It's pitiful."

McNamee said he hopes Doerr is right and there's more broadband available soon. "Why is Tivo a wired device? Or why do we need Slingbox? I want to be able to capture my stuff wherever I am," he said.

Schoendorf warned significant iPhone sales and increased transmission of video and bandwidth-hungry Web content will come at a cost. He said we may well look back fondly at today's erratic cell phone reception as "the good old days."

Moderator Tony Perkins of AlwaysOn predicted a shakeout among companies offering consumer-oriented Web 2.0 services such as YouTube (not necessarily YouTube itself, though Perkins said Google's $1.6 billion purchase of the company was way over-priced). The other VCs disagreed with Perkins, but he has perhaps the most credibility on the issue. Perkins was co-author of the Internet Bubble, a book that forecast the dotcom demise.

Perkins predicted that over the next 12 months we'll see the beginning of a shakeout with name brand online companies having a hard time raising money for their Web 2.0 or so-called social computing efforts.

Doerr disagreed predicting there will be more YouTube-like ventures in the next year, not less. "There's too much venture capital in the sector for it to go away," said Doerr.

McNamee said there are big untapped opportunities in the Internet. "If I was an entrepreneur, I wouldn't be looking at how to go a million miles wide, which is what the Web does really well today," he said. "I'd want to get a million miles deep into what [a user] really wants to know. The technology for this is just getting started."

He also said the next wave of enterprise software has to be oriented toward collaboration. Corporations fought the use of instant messaging because of security concerns, but the technology has finally gained acceptance and McNamee thinks the same will happen with wikis . "Enterprises have to capture institutional memory and wiki's are the way to do that," he said.