A year ago, we wrote that the launch of the iPhone marked a new era - previously there was B.C., then there was A.D., and now it is i.P.

It was not our keen eye for a phenomenon that fueled our enthusiasm - we would have had to be deaf, dumb and blind not to have not noticed the lines of Apple (NASDAQ: AAPL, $185.64) Moonies lining up to participate in history (even then we would have had to trip over them on our walkabouts on University Avenue in Palo Alto). "Smart phones" weren't that new - having a computer in your pocket was.

Technology's march to the future has become a sprint fueled by Moore's Law. Intel's 8080 CPU (NASDAQ: INTC, $22.90) chip sparked a young Bill Gates and Steve Jobs to be young commanders in the Computer Revolution. The Internet, commercialized with the birth of the Netscape Browser in 1994 showed the world how technology could help you talk, travel, and train - flattening the world and dislocating traditional industries.

What's happening in a relatively short period of time beyond belief is stunning. In what was only 50 years ago or so that IBM (NYSE: IBM, $124.94) founder Tom Watson proclaimed that the whole computer market was "maybe five machines." In barely a generation, PCs have gone from unique and not that useful to ubiquitous and essential. Cell phones have evolved from an obscenely expensive, unreliable "brick" to a fundamental right for anybody over the age of 10. It wasn't so long ago when your long-distance call was a notable event and an expensive one, today you don't think twice about calling somebody in India, and most people I know dial the long distance prefix out of habit even when they are calling somebody locally. Five years ago, getting Internet connection was difficult, cost an arm and leg and it was slooooow - today, we expect to be connected anywhere, at little or no cost, and the service to be lightening fast.

Source: ThinkCapital

It was only a few years ago that "Being Digital" guru Nicholas Negroponte and the United Nations had the big idea of providing a $100 laptop computer in the hands of Third World children. With rumors of the new 3G iPhone being introduced on Monday at Apple's user development conference, and being priced at $200, Negroponte's idea seems like a buggy whip.

In the year since the iPhone has been in the market, 5.4 million devices have been sold - impressive but not the story. After all, that's only good enough to be barely 5% of the "smart phone" market, badly trailing Nokia/Symbian's (NYSE: NOK, $26.13) 58.7% share and Blackberry's 12.1%.

The REAL STORY is what the iPhone has become; my phone, my calendar, my map, my contacts, my clock, my camera, my photo gallery, my stock quotes, my music, my calculator, not to mention my access to everything on the Internet, including YouTube. This is all contained within a device that is smaller than my hand and thinner than a domino. In other words, I have a mobile computer that fits comfortably in my pocket.

As evidence to what a big deal this is, Apple's software development kit has had over 200,000 downloads. Preeminent venture capital firm Kleiner Perkins thinks the iPhone is such a big deal that it created a $100 million fund to invest in iPhone applications. Since John Doerr announced the fund, Kleiner Perkins has received 2,000 business plans.

If you want to understand where the future is going, study your kids. Watch a group of teenagers hanging out - they all have cell phones, often they are talking on them or text messaging, many times completely ignoring the other kids in the group huddle.

The cell phone is how many teenagers express who they are. What's the color of the phone? The make? What's the ringtone? What pictures to use for a background (wallpaper)?

The cell phone is for kids today what the automobile was for my parents. Increasingly, the cell phone is replacing the computer for how kids get information, how they entertain themselves, and how they communicate - basically how they live.

My youngest daughter personalizes her phone with fake jewels and changes her ring tones (and mine!) as often as most people change their clothes. She'll text message with a friend while they're sitting in the same room instead of talking. Some have called this the cell phone generation but I call it the IM (Instant Message) generation, or Always-On. It's expected that everyone is instantaneously available and there is never a moment without stimulation. Web 2.0 as the platform to deliver and update services is the key enabler to be always connected and always on.

Societies like China and India have skipped the whole migration from a world with cords because their countries weren't encumbered by pre-existing infrastructure and a mindset of protecting that. They were able to leapfrog to the future and have started with the cell phone being the phone, the computer, and the game system, etc. China is already the number one cell phone market in the world with over 570 million cell phones in use.

As we enter year two of i.P., the future looks bigger and brighter than ever.

More "Crude Jokes" were what mainly moved the market with oil dropping $122 per barrel at one point on Wednesday and surging to an all-time record of $140 by Friday. Oil shocks coupled with a plunging dollar and unemployment going from 5.0 to 5.5% - the biggest one month increase in 22 years - sank stocks on Friday. Ugly rhetoric between Iran and Israel didn't help an already tensed environment.

For the week, NASDAQ did the best, "only" falling 1.9% followed by the S&P 500 losing 2.8% and the Dow dropping 3.5%.

While fear of more potential War in the Middle East received headline news, the War Clouds developing out in the West between Microsoft (NASDAQ: MSFT, $27.49) and Google (NASDAQ: GOOG, $567.00), appear to be forming an epic battle. Apple would appear to be lined up as an ally to the "do know evil" gang at Google; Google's "Android" initiative is sure to cause a bit of tension at a minimum. (http://www.youtube.com/watch?v=olOZCAu4v9E). Stay tuned - we'll have more to say on this as the story keeps developing.

The noise and the news that has investors zigging and zagging create opportunity for long-term growth investors to profit handsomely. Valuations are attractive, fundamentals are good, and investors are scared - great ingredients for us to do well. We remain bullish.