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Web 2.0 Summit: VCs Cheer iPhone Development

Considering that 74% of mobile Web traffic comes from the 15 to 20 million devices running the iPhone OS, tech experts are still wild about opportunities created by the iPhone.

Amid talk on Wednesday at the Web 2.0 Summit about the length of the financial downturn, the convergence of IT and philanthropy, and the need for a new government-driven tech and energy policy, there was a ray of hope.

No, it was not the election of Barack Obama as the 44th President of the United States, though that event clearly cheered many of the tech luminaries on the main stage; it was Apple's iPhone.

Though bloggers have referred to the device as "the Jesus phone" as a way to ridicule the hype surrounding the device, the earnest panelists in "The iPhone Marketing Opportunity" referred to the iPhone with such hope and reverence that conference attendees might be forgiven for dropping to their knees at the sight of one of Apple's shiny phones.

Raven Zachary, the panel moderator and iPhone consultant who helped the Obama campaign develop its iPhone application, called it "a device that has had a profound impact on me personally and professionally."

"Apple has shown us, as Google did before, that it can reinvent an entire market," he enthused.

Zachary came to explain "why the iPhone is special." Consider that 74% of mobile Web traffic comes from the 15 to 20 million devices running the iPhone OS (the iPhone and the Wi-Fi-enabled iPod Touch). Or that over 200 million applications have been downloaded from Apple's iTunes Store.

The other panelists swooned no less.

Bill Dudney, an iPhone developer with Gala Factory Software, said "Everyone talks about iPhone... It's a huge opportunity." He said that iPhone developers are in high demand.

Matt Murphy, a partner with Kleiner Perkins Caufield & Byers (KPCB), backed his enthusiasm with similar metrics. For example, among the 250 million non-iPhones on the market, there are some 3 million applications downloaded each week, he said. For the 10 million or so iPhones out there, there are 14 million iPhone app downloads each week. IPhones, he said, generate five to ten times more mobile Internet usage. He predicted there could be as many as 50 million iPhones by the end of next year.

KPCB, not coincidentally is betting big on the iPhone. It launched the $100 million iFund to invest in iPhone-related startups, five of which have received funding so far.

In his praise of the iPhone, Zachary recalled comments by noted venture capitalist and KPCB partner John Doerr that the iPhone would be bigger than the personal computer.

On Wednesday afternoon, during the general session of the conference, Doerr himself repeated that assertion in an interview with journalist John Heilemann.

"The iPhone matters because they're personal," he said. "They know who you are. They know where you are. They're broadband. They're always connected."

In response to Doerr's claim that the iPhone is more important than the PC, Heilemann asked, "Didn't you say that about the Segway?" (The Segway scooter, when it was known only by its code name "Ginger," received more than its fair share of hype.)

Doerr conceded he had. But, he said, that was when the company that made the Segway had a contract from the U.S. Postal Service for 80,000 of the $8,000 scooters.

"Little did I know that the postal workers union didn't want that kind of productivity improvement," Doerr said.

Undaunted, Doerr maintained that the iPhone represented a significant opportunity, particular for game makers. Gaming, he said, tends to be recession-proof.

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