The movie industry has the Academy Award nominations. U.S. politics has the State of the Union address. And the Internet marketplace has Mary Meeker’s Internet Trends report. (Or as the New York Times calls it, the Farmer’s Almanac for the tech industry.)
With 164 slides in all, this year’s presentation continued Meeker’s annual state-of-the-Internet report. She has presented it every year since 2001, first as a broker at Merrill Lynch, then as an Internet analyst at Morgan Stanley and now as a venture capitalist at Kleiner Perkins Caufield Byers.
In fact, there’s probably a certain degree of self-fulfilling prophecy in it—“Gee, Mary Meeker says people are going to be doing X, so we’d better do X. Hey, look! She was right!” Consequently, if you have not yet seen this year’s presentation, we figured you’d find a summary of it useful. (You can also watch her entire presentation here.)
- Mobile, mobile, mobile. And did we mention mobile? Mobile data traffic is up by 81 percent over a year ago, driven by video. Video on multiple screens—including tablets, smartphones, and PCs—is replacing television. Twenty-two percent of video, twice as much as last year, is viewed online. Millennials, for example, spend 34 percent of their TV-watching time online—3 times that of non-millennials.
- Mobile Internet use is growing. Mobile usage as a percentage of web usage is increasing. What does this mean for you? If you’re developing apps for your clients, or web pages of any sort, you need to keep mobile in mind. “If you're a developer, and you're not creating mobile apps, you're a fool,” writes Steven J. Vaughn-Nicholas in ZDNet. “By KPCB's count, people spent $38 billion in 2013 on mobile apps, and the market is only going to grow. Gartner predicts that by 2017, mobile apps will generate more than $77 billion in revenue.” Moreover, apps are moving away from single-purpose apps to service layer apps that only pop up in a contextual basis, such as when they’re near something.
- Adoption of mobile devices is growing, but at a slowing rate. Both smartphone and tablet shipments are growing. Tablet shipments grew 52 percent over last year, on a base of just 6 percent penetration worldwide (so lots of room for growth). Smartphone subscribers worldwide grew 20 percent, with smartphones representing 30 percent of the 5.2 billion mobile phone base. There are two aspects of these rates of growth, though, that are interesting. First of all, the overall rates are slowing. Second of all, the fastest growth is in markets such as China, India, Brazil, and Indonesia, where market penetration of mobile devices is just 22 percent. In comparison, the U.S. has 21 percent growth with 59 percent penetration, while Japan has 5 percent growth and 78 percent penetration.
- Growth in the number of people accessing the Internet is slowing. This year growth in the number of Internet users was 9 percent as compared with 11 percent the previous year. What growth there is exists in developing markets such as India, Indonesia, and Nigeria, where the growth is difficult to monetize. In the U.S., growth was only 2 percent, with 83 percent penetration, while Japan showed no growth, with 79 percent penetration. This is somewhat ominous for those companies that are dependent on growth in the number of Internet users to drive their businesses. “If overall Internet usage isn't growing, especially in the developed markets where it's easiest to make money off of users, that suggests that tech companies are, to a large extent, just reshuffling deck chairs, shifting share around as consumer habits change,” writes ReadWrite.
- Pay attention to security. If you didn’t know it already, security is a big issue. Meeker notes that the Honeynet Project, a nonprofit organization devoted to learning the tools, tactics and motives involved in computer and network attacks, found that vulnerable systems placed on the Internet were compromised in less than 15 minutes, and that 95 percent of networks are compromised in some way. Moreover, with the growth of mobile platforms, directed attacks on those will rise as well, she says.
- Remember the 3 Cs. Internet websites are moving to a Content/Community/Commerce model, where the content is provided by consumers and professionals; the community is provided by users, including professionals in the field; and the commerce is fuelled by buying products related to the community. “Marketers who provide context to the content they are creating and sharing are the ones who are able to increase connectivity within their communities of interest and grow stronger, more stable evangelism programs which lead, in turn, to brand loyalty,” writes Business 2 Community.
- Consumers rule. Two-thirds of the content in the digital universe is consumed or created by consumers—as much as 13 zettabytes per year. That’s 13 billion terabytes. Sound like a lot? 1.8 billion photos are uploaded daily, and photo sharing is up 50 percent over 2013 in just the first half of this year, TechCrunch notes.
- Infrastructure costs are declining. Computing costs are declining annually by 33 percent. Storage costs are declining annually by 38 percent. Bandwidth costs are declining 27 percent, and even smartphone costs are declining 5 percent.
- Sensors and Internet-connected “Things” are the next big…thing. While Meeker doesn’t use the term “Internet of Things,” she references it, predicting that people armed with mobile devices and sensors will be uploading troves of findable and sharable data. She notes, for example, that the iPhone now has five sensors while the Samsung Galaxy S5 has 10 (these include gyroscope, fingerprint, accelerometer, proximity, ambient light, gesture, heart rate, and compass). The sensors market has grown 32 percent since last year, to $8 billion.
- Sensors are scary and overwhelming. However, the sensors market has complications, Meeker adds. First is transparency—the instant sharing and communication of information has the potential to make the world a better, safer place, but there’s a significant potential downside for personal privacy. Second, she says, is patterns—mining the increasing amount of data could yield patterns that help solve basic, previously unsolvable problems, but they could also create new challenges related to individual rights, she says. Moreover, she estimates that while 34 percent of the data in the digital universe is useful, just 7 percent of it is tagged and only 1 percent of it has been analyzed. “It brings to mind a modern-day version of Lord Leverhulme's mantra: ‘I know a third of my data is useful, I just don't know which third. And I haven't even got round to looking at 99 percent of it,’” writes MediaTel.
- China is big and getting bigger. While 9 out of 10 global Internet properties in January 2013 were U.S.-based, 79 percent of the users of the properties were outside America. This year, that number has dropped, with only 6 out of 10 global Internet properties being U.S.-based, and the users are increasingly international, with 86 percent of users outside America. “The question is: Will innovation in China spread west?” writes MediaTel. “Over here, we're accustomed to thinking of GAFA dominance (Google, Apple, Facebook, Amazon), but they're not inviolable. Could there be a day when the likes of Tencent and Baidu bring their innovation to Europe or the U.S.? Don't laugh. The Chinese have already moved successfully into devices (Lenovo), cars (Volvo) and household electricals (Haier). So why not technology?” Moreover, 500 million—80 percent—of China’s Internet users are mobile, Meeker notes.
Finally, some commentators suggested that the Internet Trends report itself needed to be re-imagined, such as by making it more frequent and published through social media. In fact, Bloomberg Business Week even redesigned Meeker’s slides to show how the information could have been better presented. Chances are, though, that the Internet Trends Report 2015 will look just the same as it always has—and be followed just as avidly.
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