VCs see Android gaining on iPhone

SAN FRANCISCO Tue May 18, 2010 5:58pm EDT

SAN FRANCISCO (Reuters) - The boom in mobile computing is set to heat up as Apple Inc's (AAPL.O) dominance of cool applications on its iPhone platform is being challenged by the fast-growing Android environment created by Google Inc (GOOG.O), Silicon Valley venture capitalists said on Tuesday.

More than 200,000 iPhone apps already exist and more are being developed. But application developers are viewing the Android as a viable open platform, according to three venture funds that invest in technology startups.

"I am quite impressed by the traction the Android ecosystem is getting," said Chris Moore, a partner with Redpoint Ventures, which is invested in online video store Netflix and question-answering service Ask.com.

Moore told the summit that it felt as if as many start-ups were walking into his office to pitch Android applications as those for the iPhone.

A dozen handset makers offer devices that feature Google's Android smartphone operating system and more than 65,000 Android-based devices are shipped every day, according to Google.

Currently, the iPhone and RIM's RIM.TO BlackBerry dominate the market along with the Android operating system.

"The trendlines are interesting to watch," said Rich Wong, partner of Accel Partners, an investor in social networking site Facebook and mobile advertising network AdMob.

All three venture capitalists are early investors in startups that are developing applications for the mobile platforms. App developers have to choose one of the mobile platforms available as in most cases, it is not easy to adapt the application to run on other platforms.

The transition from PCs to mobile devices is a trend that has captured the attention of venture capitalists.

"It's been a long time since such a significant market has been up for grabs," said David Weiden, a partner with Khosla Ventures, which is invested in mobile device Jawbone and popular iPhone app Tapulous.

All three carried a BlackBerry phone, and they agreed that none of the platforms was going to take the lion's share of the market in the short term.

"It's not going to be winner-take-all environment. There is going to be fragmentation," Wong said.

"Ideally I think it would be great if we had five to eight, which is what we have right now," Weiden said.

Internationally, the picture gets murkier with the presence of another major player, Nokia Corp (NOK1V.HE).

"Internationally, Nokia's Symbian is still extremely strong," Wong said. "In India, Nokia has more than 70 percent market share and isn't going to give up ground that easily."

(Reporting by Alexei Oreskovic and Poornima Gupta; Editing by Steve Orlofsky and Matthew Lewis)