Top mobile internet trends feb11

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<ul><li>1.TOP MOBILE INTERNET TRENDS Matt Murphy / Mary Meeker 2/10/11 2011. All rights reserved. Duplication or redistribution of this presentation are prohibited without prior written authorization.1</li></ul> <p>2. Mobile Trends Rapid Growth + Disruption1.Mobile Platforms Hit Critical Mass2.Mobile is Global3.Social Networking Accelerating Growth of Mobile4.Time Shifting to Mobile Usage5.Mobile Advertising Growing Pains But Huge Promise6.mCommerce Changing Shopping Behavior7.Emergence of Virtual Goods &amp; In-App Commerce8.Not All Platforms Are Created Equal9.Change Will Accelerate, New Players Emerging Rapidly10. Summary Trends to Watch 2 3. MOBILE PLATFORMS HITCRITICAL MASS 4. iPods Changed the Media IndustryiPhones Ramped EvenFasteriPad Growth Leaves its Siblings in the DustFirst 3 Quarters Cumulative Unit Shipments, iPod vs. iPhone vs. iPad 16,000iPad iPhone iPod 14,000 12,000 Global Unit Shipments (000) 10,0008,0006,0004,0002,000 00 1 23Quarters After LaunchSource: Apple. 4 5. iTunes Changed the Media IndustryApp Store Growth Leaves it in the Dust Cumulative Number of Downloads, iTunes Music / Video / Movie vs. Apps,First 10 Quarters10 Apps iTunes 8 # of Downloads (B) 6 4 2 0 0 123 45 67 8 910Quarters After LaunchSource: Apple. 5 6. Android has Hit Critical MassFirst 9 Quarters Cumulative Android Unit Shipments 80Android Global Units Shipped 70 Global Cumulative Unit Shipments (MM) 60 50 40 30 20 1000 12 3 4 5 6 7 8 9Quarters After LaunchSource: Gartner. 6 7. Smartphone + Tablet &gt; PC Shipments Since CQ4:10Global Unit Shipments of Desktop PCs + Notebook PCs vs. Smartphones + Tablets,2005-2013E700,000CQ4:10: Inflection PointSmartphones + Tablets &gt; Total PCs600,000 Global Unit Shipments (MM)500,000400,000300,000200,000100,000 020052006 20072008 20092010 2011E 2012E 2013EDesktop PCsNotebook PCsSmartphones TabletsNote: Notebook PCs include Netbooks. Source: Katy Huberty, Ehud Gelblum, Morgan Stanley Research.Data and Estimates as of 2/11 7 8. MOBILE IS GLOBAL 9. 5 Countries = 46% of Internet Users China, USA, Russia, Brazil, India 2009 1.8B Global Internet Users, +13% Y/Y(1);18.8T Minutes Spent, +21% Y/Y(2) Russia 60MM users; +31% Y/Y 42% penetration* USA 240MM users, +4% Y/YChina76% penetration*384MM users; +29% Y/Y 29% penetration*Brazil India 76MM users, +17% Y/Y 61MM users; +18% Y/Y 39% penetration*5% penetration*Note: *Penetration is per 100 inhabitants.Source: 1) Internet user stats per International Telecommunications Union; pertime spent data per comScore global 12/09. time spent data per comScore global 12/09. Source: 1) Internet user stats 2) International Telecommunications Union; 2)9 10. 35% Y/Y Global Mobile 3G Subscriber Growthto ~726MM, CQ3 CQ3:10 3G3G SubCQ3:10 3G3G Sub 3G Subs Penetra- Y/Y 3G Subs Penetra- Y/Y Rank Country (MM) tion GrowthRank Country (MM) tion Growth1 USA141 47% 27%16 Taiwan 1142% 40%2 Japan109951217 Malaysia9 26233 Korea40 791218 Saudi Arabia8 18504 Italy34 402119 Sweden7 57435 UK 31 413220 South Africa7 15366 Germany28 282821 Turkey6 10 1607 Spain27 482122 Netherlands 6 32278 Poland 23 503523 Philippines 67989 Indonesia21 115424 Portugal6 35 8 10 France 21 333025 Austria 6 4630 11 China202 45826 Israel5 5218 12 Brazil 19 10 17727 Vietnam 54 707 13 Australia18 662928 Singapore 4 5948 14 Canada 12 50 14729 Egypt 4734 15 Russia 1256730 Greece4 2628 Global 3G Stats:Subscribers = ~726MM Penetration = 14% Growth = 35%Note: *Informa reports a lower global 3G subscription # vs. Ovum due to the exclusion of 4G and the use of different sources. 3G includes CDMA 1x EV-DO andRev. A/B, WCDMA, HSPA; Source: Informa WCIS+.10 11. SOCIAL NETWORKINGACCELERATING GROWTH OFMOBILE 12. Different Types of Platforms = Facebook + Apple + Google iPhone/iTouch/iPad662MM users 130MM+ usersSOCIAL +41% Y/Y+103% Y/YMOBILE550K+ apps 350K+ apps 500MM+ downloads10B+ downloads * 972MM users +8% Y/YSEARCHCQ4: CPCs +4% Q/Qpaid clicks +18% Y/YSource: Company data, comScore global 12/10.*Google Android momentum especially strong too. 12 13. Emerging Types of Social NetworksMore to Come INFORMATION253MM130MM+ unique visitorsmonthly active users GAMING SHARING +85% Y/Y +15% Y/Y 51MM subscribers+25x Y/YCOMMERCESource: Groupon, Twitter, Zynga.13 14. Zynga Proves that Great New Social Products for Old Users Can Ramp Extremely Quickly Daily Active Users, FarmVille vs. CityVille, First 60 Days Since Product Launch 20FarmVille CityVille Daily Active Users (MM) 16 12 8 4 -1 6 11 1621 26 31 36 41 46 51 56 Days After LaunchSource: Zynga. Note that FarmVille launched in 6/09, CityVille launched in 12/10. 14 15. Real-Time Social Features Accelerating Mobile UsageGrowth - Sharing + Location + Friending... Location Sharing CommunicationMusic SharingFourSquare WhrrlTwitter TextPlus TextFree ShazamSpotify FB Connect for Mobile Built in Friend Connectivity, Share, Virality Invite Friends ShareFeed15 16. KPCBs John Doerr Calls It SoLoMoSo Lo MoSocialLocalMobile16 17. TIME SHIFTING TO MOBILEUSAGE17 18. Japan Social Networking Trends Show Importance of Mobile Mixi Mobile Page Views = 85% vs. 14% 4.5 Years AgoMixis (Japans Leading Social Network) Monthly Page Views,Mobile vs. PC, CQ2:06-CQ4:10Mobile Page Views 85% 30,000Desktop Page Views Monthly Page Views (MM) 25,000 CQ3:09 Platform opened 20,000 to 3rd-party developers 15,000 10,000 14%5,000 86%15% 02Q06 4Q062Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10Note: Mixi is one of Japans leading social networking sites on PC and mobile with 20MM registered users as of12/31/10. It monetizes mobile usage via sales of avatars, customized homepages and other premium services.Source: Company reports, Naoshi Nema, Morgan Stanley Research 18 19. 60% of Time Spent on Smartphonesis New Activity for Mobile UsersAverage Time Spent on Various Mobile Functions, 1/11 10 minutes (12%)Web/Web AppsNEW ACTIVITY 27 minutes (32%) 40 minutes (47%) TelephonyAll Other Phone Maps Skype Games Messages Social Networking Utilities More 7 minutes (9%)Mail AppSource: AppsFire, 1/11.Note that Android users show a higher % browsing activity. 19 20. Global Mobile Data Traffic Should Grow 26x Over Next 5 Years Global Mobile Data Traffic, by Type 2008 2015E2010-2015E ,,CAGR Total Mobile Data Traffic (Tetabyte per month) Total92%6,000,0005% 22% M2M* 109%5,000,000 6%Data 80%4,000,0003,000,000File Sharing 62% 66%2,000,000Video104%1,000,000 VoIP 42%02008 2009 2010 2011E 2012E 2013E 2014E 2015ESource: Cisco Visual Networking Index (VNI) Global Data Traffic Forecast, 2010-2015 20 21. Strong Mobile Trends for Leading Social Companies200MM mobile active users vs.Mobile = 50% of total active users, 50M in 9/09vs. 25% Y/Y2x more active than desktop-only usersMobile = 40% of all tweetsIntroduction of mobile product drove 2x conversion ratio from free to paying subscribers Mobile users = 25-30% total users in mature markets 100MM mobile users vs.50MM Y/Y Adding 3MM users per month50% of all users subscribe on mobile 21 22. MOBILE ADVERTISING GROWING PAINS BUT HUGEPROMISE 23. So Far, Difficult to Build Consistent Mobile Ad Revenue Owing to Lumpy Buys, Need for More Premium Advertisers 2010 Mobile eCPMs for 4 KPCB Portfolio Companies $43AB2CD10Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSource: KPCB Companies23 24. Yet the Efficacy of Mobile Ads vs. Other Media is Compelling Relative Efficacy of Mobile vs. Other Advertising Media, 1/11Reach Targeting Engagement Viral TransactionMobile100 9070 8080Internet505080 4060 1TV503090 0 2011 1Print 400 20 0 0Radio 6010 40 1 01Outdoor20 010Source: Chetan Sharma, January 2011 24 25. Media Time Spent vs. Ad Spend Still Out of WhackInternet/Mobile (upside) vs. Newspaper/Magazine/TV (downside)% of Time Spent in Media vs. % of Advertising Spending, USA 2009 Time SpentAd Spend 50% % of Total Media Consumption Time or Advertising Spending 40%39% 30%31% 26%28% ~$50BGlobal 20%Opportunity 16% 10% 12%13%9% 0%Print Radio TVInternetNote: Time spent data per NA Technographics (2009), ad spend data per VSS, Internet advertising opportunityassumes online ad spend share matches time spent share, per Yahoo!. Source: Yahoo! Investor Day, 5/10.2525 26. Advertising $s Follow Eyeballs Ad Revenue per User = $46 in 2009E vs. $0 in 1994E 1995E 2009EGlobal Internet Ad Revenue$55MM$54BAd Revenue per User $9 $46Global Internet Users 6MM1.2BSource: Global online ad revenue per Juniper Communications (1995), ZenithOptimedia (2009). Internet users perMorgan Stanley estimate (1995) and comScore (2009). We note that comScore reports a lower global Internet user #than International Telecommunications Union. Morgan Stanley Research. 26 26 27. Google Paid Clicks &amp; Cost-Per-Click Continue toAccelerateMobile Search as a Key Driver?CQ4:09 CQ1:10 CQ2:10 CQ3:10 CQ4:10Gross Advertising Revenue ($MM) $6,465 $6,475 $6,562 $7,032 $8,167 Y/Y Growth 17%21%23%22%26% Q/Q Growth 12% 0% 1% 7%16%Aggregate Paid Clicks (MM)12,401 12,909 12,651 13,157 14,669 Y/Y Growth 13%15%15%16%18% Q/Q Growth9% 4%-2% 4%11%Cost per Click (CPC - $) $0.52$0.50$0.52$0.53$0.56 Y/Y Growth4% 6% 7% 6% 7% Q/Q Growth3%(4%)3% 3% 4% 27 28. New &amp; More Powerful Ad Units are Rolling Out Quickly in MobileDisney Super Bowl Sunday takeover campaign -- All pages of textPlus, February 7, 201028 29. And Many Brands are Testing 29 30. Branded Virtual Goods &amp; Sponsorships areImpactfulInterstitial Call to action click to mobile site, app, call,location, add tocalendar, and moreSource: Booyah and Shazam. 30 31. Smartphones Can Make TV InteractiveTV Action Via Mobile:- Get coupons / offers- Learn more aboutproducts- Share content withfriends 31 32. M-COMMERCE CHANGING SHOPPINGBEHAVIOR32 33. Online Commerce Gaining Share vs. Offline Online at ~5% of USA Retail, Mobile Should Get to Same Level Much Faster USA eCommerce % Share(1) of Total Retail Sales, CQ3:00-CQ4:12E 7%eCommercePenetration 6%4% in CQ2:10eCommerce as % of Total Retail Sales 5% 4% 3%Mobile eCommerce Penetration? 2% 1% 0% Q3:00 Q3:01 Q3:02 Q3:03 Q3:04 Q3:05 Q3:06 Q3:07 Q3:08 Q3:09 Q3:10 Q3:11 Q3:12eCommerce PenetrationLinear Trendline (y=0.094x + 0.9895, R^2=0.9599)Note: (1) Adjusted for eBay by adding back eBay US gross merchandise volume;Source: US Dept. of Commerce (CQ2:10), Morgan Stanley Research.33 34. Mobile Revolutionizing Commerce With Constant Product Improvements Location-Based Services Enable real-time physical retail / service opportunities Transparent Pricing Instant local + online price comparison could disrupt retailers Discounted Offers Deep discounts drive foot traffic to local retailers Immediate Gratification OTA (over-the-air) instant digital product + content deliveryLocation-Based Services Transparent PricingDiscounted Offers Immediate Gratification Shopkick iPhone AppShopSavvy Android App Groupon iPhone App iTunes Store on iPhone Finds deals and offers Comparison shopping amongLocal ServicesMusic / video / appsin your area online + local stores Up to 90% Off delivered wirelesslySource: Company Reports, Morgan Stanley Research. 34 35. Mobile Shopping Apps - Changing Behavior + Driving Revenue &amp; ROI For Retail Partners Shopkicks Daily Walk-Ins to Retail Partners, 11/15/10 12/6/10 More shopkick walk-insto a retail partner on 3XCyber Monday due to Cyberthe 3x kickbucks Monday promotion than on # of Daily Walk-InsBlack FridayBlackFriday These types of experiments havebeen repeated adozen times at 5 different retailers:every time, 50-100%increase in foottraffic11/1511/18 11/2111/24 11/2711/3012/312/6Source: Shopkick. Note Shopkick has 750K users in five months since launch. 35 36. Mobile Devices + Services Driving New Ways to ShopMobile is clearly becoming a new way peopleshop[eBay has] nearly tripled mobile GMV (grossmerchandise value) year-over-year to nearly $2billion, with strong holiday shopping momentum inQ4. In 2011, we expect Mobile GMV to double to $4billion.- John Donahoe, President &amp; CEO, eBay CQ4:10 Earnings Call36 37. EMERGENCE OF VIRTUALGOODS &amp; IN-APP COMMERCE 38. Virtual Goods = $2B Market in USAU.S. Virtual Goods Revenue, 2008 2011E $2,500U.S. Virtual Goods Revenue $2,000 $1,500 ($MM) $1,000$500$0200820092010 2011Source: Inside Virtual Goods: The US Virtual Goods Market2010-2011.38 39. What Are Virtual Goods Anyway? Average # of Transactions &amp; Annual Dollar Spent by Virtual Goods, 9/09 $60 Average Monthly Revenue per $50# of Transactions Gross Dollars Spent $50 $40 $30 $30User$20 $20$20 $20 $12 $11 $10 7 55 55 5 5 $0Source: Playspan survey of 1736 respondents in 9/09. 39 40. Monetization Shift From Paid Downloads To Virtual GoodsHas Been Profound For Many Developers Average Daily Revenue for a KPCB Portfolio Company Virtual Goods Introduction Drove 5x Revenue IncreaseSource: KP Portfolio Company40 41. Powerful Shift to Ad &amp; Virtual Good Monetization from Initial Pay per Download ModelsRevenue Composition for Pinger a KPCB Portfolio Company12/200912/20105%Paid DownloadsAdvertising 35%30%64%63%Affiliate2%Virtual GoodsSource: Pinger. 41 42. Gaming Elements = Key to Success For Many Mobile /Social ApplicationsGamification of apps is the ultimate way toengage a new generation of audiences.Bing Gordon, KPCB Partner, AIAS* Hall-of-FamerNote: *AIAS is the Academy of Interactive Arts &amp; Sciences. 42 43. NOT ALL PLATFORMSARE CREATED EQUAL 44. Global Smartphones Huge Android + iPhone Growth Global Smartphone Market Share - Q4:10 vs. Q4:09Q4 2010 Q4 2009 Growth OS vendor shipments (M)% shareshipments (M) % shareQ410/Q409 Total 101 100% 54100% 89% Google*3333% 59%615% Nokia3131% 2444%30% Apple1616% 9 16%86% RIM1514% 1120%36% Microsoft3 3%47% -20% Others 3 3%23%65%*Note: The Google numbers in this table relate to Android, as well as the OMS and Taps platform variants.Source: Canalys estimates, Canalys 201144 45. Differences in Platform Engagement Internet + AppUsage Massively Higher on Android + iOSMobile Platform Installed Base vs. App Downloads per Day1,200 20 App Downloads per Day (MM) 17Installed Base (MM)1,000 16 8001112 6008 400 5 4 200 24 50% population in developed markets will have Smartphone SoLoMo Social / local / mobile converging Gamification Ultimate way to engage a new generation of audiences Empowerment impact of empowering billions of people around the world with real-time connected devices has just begun...Its going to be a fascinating decade54 55. Big Changes AheadWere at the beginning of a new era for socialInternet innovators who are re-imagining and re-inventing a Web of people and places, lookingbeyond documents and websites.- John Doerr, Partner, KPCB55 56. Contacts, PresentationMatt MurphyMary mmeeker@kpcb.comtwitter: @mmurph Murphy Meeker </p>