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Boston area poised to ride the mobile tech wave

Justin Fyles ordered a beer through his smartphone with the new BarMade mobile app at Tommy Doyle’s in Harvard Square. BarMade, a consumer app, was conducting a trial run at the bar recently.Kayana Szymczak for The Boston Globe/Globe Freelance

When Adam Besvinick heard about the $1 billion sale of photo sharing app Instagram, the tech entrepreneur's first response was, appropriately, to tweet: "Unreal.''

As Besvinick himself is in the business of developing mobile apps, the Instagram deal earlier this month suggested that his proposition to make an online widget for bar patrons to order drinks no longer seemed a fanciful exercise.

Facebook Inc.'s purchase of Instagram, a two-year-old San Francisco start-up with barely a website, removes any doubt that mobile technology is the wave of the future as the Internet moves rapidly from desktops to smartphones and tablets. And the Boston area is poised to benefit in a big way.


Massachusetts has more than 400 mobile tech companies, ranging from small app makers like Besvinick's BarMade to Nuance Communications Inc., a leading voice recognition firm, according to Mass Tech Leadership Council's first survey of the state's mobile cluster last year. That number is growing fast, according to the trade group, as many of the newest tech start-ups in the area focus solely on mobile technology.

Already, the industry employs about 30,000, according to Mass Tech Leadership, and many companies are hiring. SessionM, a 30-person mobile advertising firm, for example, plans to hire seven workers per month over the near future.

Massachusetts' mobile tech sector is second only to California's, according to PitchBook Data Inc., a Seattle firm that tracks venture investment. Since 2007, venture capitalists have invested $524 million in mobile companies in Massachusetts, compared with $5.3 billion in California. New York trails closely behind Massachusetts with $518 million invested in mobile over the past five years.

Industry analysts and executives say the Instagram sale is only likely to spur more investment in mobile tech.

"One billion dollars for a two-year-old company with only 13 employees validates the value that the market is placing on mobile technology,'' said Bill Seibel, chief executive of Mobiquity Inc., a year-old app development company in Wellesley that has grown to 120 employees. "We see the mobile market poised for explosive growth.''


Boston's mobile tech scene, like its overall technology sector, is led by companies that provide technology for business and professional services, as opposed to consumer apps, such as BarMade. For instance, Mobiquity builds applications for business clients such as the New York Post and Conde Nast Traveler.

Many other companies provide the technology that makes the mobile world go.

Skyhook Inc., founded in 2003 and employing 30 in Boston, provides location-tracking ability in mobile devices, including Apple's iPhone. Nuance Communications, which employs more than 6,000 worldwide, provided the software that enables voice recognition for Siri in the iPhone. In December, it bought Vlingo Inc., another local company that created some of the first voice-recognition apps.

Paydiant Inc., founded in 2010, is developing the back-end technology for big retailers and banks to create their own mobile commerce and payment apps. The company, which employs 19, recently raised $7.6 million in venture capital.

"One of the biggest developments is how mobile is changing commerce,'' said Michael Davies, cofounder of Endeavour Partners, a tech consulting firm, and a senior lecturer at the Massachusetts Institute of Technology. "And it's not just payments.''

Boston has developed a "critical mass'' of mobile companies, he said, that are poised to change how companies market and advertise across mobile devices.


SessionM, for instance, is creating a mobile platform for brands to offer incentives and loyalty programs to customers via mobile devices. Where Inc. uses its technology to alert smartphone users of potential sales when they are near a particular store.

David Chang, Where's chief operating officer, said Boston has long been at the cutting edge of mobile. Among the early pioneers of mobile tech in Boston, Chang was director of product marketing at m-Qube Inc., a company that built a platform for mobile billing and sold ring tones and other content. It was sold in 2006 to VeriSign Inc., which at the time was a California network security company.

After that, he cofounded Snap MyLife, a photo-sharing app similar to Instagram. That company is still around, but hasn't taken off.

Few industry executives and analysts expect Boston's mobile tech sector to seriously challenge California, where the drivers of the industry - Google Inc., Facebook, and Apple Inc. - are. But the region nonetheless has the talent and entrepreneurial culture to build a thriving industry, they said.

While there haven't been $1 billion acquisitions, mobile technology developed here has attracted deep-pocketed buyers. Intuit Inc. of Mountain View, Calif., bought AisleBuyer, a young Boston mobile payment company, for an undisclosed sum this month; PayPal, a division of eBay Inc., snagged Where for $135 million last April; Apple reportedly paid $275 million for Quattro Wireless.

That money is helping to seed new companies looking to profit from the increasing adoption of mobile technology. Just about half of all Americans carry some kind of smartphone that can access the Web, while a combined 35 billion apps have been downloaded from Apple and Google.


Popular apps are coming out of Boston, too, including LoseIt and RunKeeper, two fitness applications produced by local start-ups. There's also a host of newcomers like BarMade's Besvinick and his five twentysomething Harvard Business School classmates, who are betting their apps will take off.

For some young developers, like Aron Schwarzkopf, the Boston area is a fertile testing ground because it's full of college students toting the latest smartphones and eager to experiment with new technology. Schwarzkopf launched the mobile commerce company Leaf in Cambridge last year.

Leaf wants to change the seemingly simple everyday transaction at a cash register. Instead of merchants giving out receipts, it offers a way to deliver them digitally to smartphones. This way, said Schwarzkopf, a retailer has access to their customers' details - such as an e-mail address to send future offers - and customers have instant records of their purchases.

It's just one more way the spread of mobile devices is beginning to alter the simplest daily routines. "It's just starting,'' said Schwarzkopf. "And Boston is one of the biggest catalysts in this industry.''

Michael B. Farrell can be reached at