New ventures and Smart Phones

In my last class of Entrepreneurship, there were seven different groups presenting their ideas for new firms. All the teams were given four weeks of time to come up with an idea that can be successful in the present economic environment. It was interesting to notice that out of seven presentations five were based on technology. Moreover four out of five technology based ideas were either for smart phones or had a potential to be used as smart phone application. All the teams recognized the growing power of smart phones while doing the brainstorming over the new firm creation ideas. No doubts smart phones are gaining popularity increasingly and playing a huge role in accessing information and providing entertainment. There is a prediction that smart phone downloads from all app stores will reach 6.7 billion per year in 2014. The most sellable point of this kind of business is the low cost to entry. One needs only two-three software professionals, servers and a little space to start the business. Non-capital intensive businesses were center of attraction during dot com period and same is happening now. All these facts can work like a magnet for any entrepreneur to try this new space. However I have some doubts over the long term sustainability of these ideas because technology changes are happening not within few years but few months. Some of the brilliant ideas may sustain the business in long term but majority of ideas will either burn out while matching the pace with rapidly changing technology or will be bought out by bigger players. Entrepreneurs entering this sector with short term goal of selling out their idea to bigger firms within five years will be in better situation because of vulnerable nature of the business. Those who are targeting to remain in this sector for a long term have to strategize their business in such a way that people keep using their applications without getting bored. This will be an interesting phenomenon to watch in next five years.