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Insight: A Billion-Dollar Turning Point for Mobile Apps


The path for Internet start-ups used to be quite clear: establish a presence on the Web first, then come up with a version of your service for mobile devices.

Now, at a time when the mobile start-up Instagram can command $1 billion in a sale to Facebook, some start-ups are asking: Who needs the Web?

Smartphones are everywhere now, allowing apps like Foursquare and Path to be self-contained social worlds, existing almost entirely on mobile devices. It is a major change from just a few years ago, underscoring how the momentum in the tech world is shifting to mobile from computers.

In that context, the Instagram deal looks like something of a turning point, as even the Web giant Facebook tries to get a better grasp on a market that requires a rethinking of old rules.

“For decades, the center of computing has been the desktop, and software was modeled after the experience of using a typewriter,” said Georg Petschnigg, a former Microsoft employee who is one of the creators of Paper, a new sketchbook app for the iPad. “But technology is now more intimate and pervasive than that. We have it with us all the time, and we have to reimagine innovative new interfaces and experiences around that.”

Venture capitalists are eager to get in on the mobile trend. According to the research firm CB Insights, mobile apps and companies attracted 10 percent of the total investment dollars from American venture capital firms in last year’s fourth quarter, and 12 percent of deals were mobile-related, up from 7 or 8 percent in previous quarters.

Ben Lerer, manager of the venture capital firm Lerer Ventures, said he preferred to back companies that were building services for mobile first and the Web second, because “businesses that are thinking that way are planning for the future.”

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