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As Mobile Surges, Can Smaller Companies Beat the Internet Giants?

Kevin Chupka
Executive Producer/Writer

Earlier this year, Cisco (CSCO) predicted in its Visual Networking Index that the number of mobile devices in use around the globe would exceed the world's population by the end of 2012. That projection came along with a tally showing a strong 2011, when mobile data traffic surged by 133%.

The next logical question then, is which companies are best-positioned to succeed in the mobile space from here? Eric Jackson, founder of Ironfire Capital, points to companies like Google, (GOOG), Yahoo! (YHOO) [the publisher of this website] and Facebook (FB) as the winners in terms of total users across both their mobile and desktop platforms. However, he also believes that some powerful smaller players may unseat the big names as mobile use continues to skyrocket.

"Certain verticals are going to be big winners in mobile," says Jackson. "Music is unquestionably going to be a big winner. Directory information like the kind of stuff you get off of Yelp (YELP) obviously is [also] going to continue to do well."

With music such a key growth play, it's no wonder Pandora (P) tops the list of companies whose users prefer mobile over desktop. "There are about twice as many people who access the Pandora app from a mobile device only, compared to the size of the people that are plugging in at work and listening to Pandora music on their PCs," Jackson says.

Still, even though it may be at the head of the pack, Jackson warns that intense competition from Spotify, Songza and perhaps even Apple (AAPL) makes Pandora a slightly risky investment. The truth is in the tape, with Pandora's stock down over 27% in the last six months.

It's Yelp that Jackson says is poised to be a standout in the mobile arena. "I think Yelp is the category leader in directories," he says. "It's got this partnership with Apple ... . They're really going up against Google with their Zagat listings, which I just don't think is as good." Jackson even goes so far to suggest that Yelp might be an acquisition target for Apple down the road.

But the mobile space won't come down to just a few companies like Pandora and Yelp. Several firms are finding plenty of success in handheld devices. Among those that Jackson notes are Craigslist, the Weather Channel and Disney's (DIS) ESPN.

What do you think? Can the smaller companies overtake goliaths like Google? Or will the Internet giants find new ways to succeed in mobile?