The Future of Mobile in Asia - Echelon 2013


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Keynote presentation I gave at Echelon tech conference in Singapore in 2013.

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The Future of Mobile in Asia - Echelon 2013

  1. 1. CONFIDENTIAL 1The Future of Mobile in AsiaEchelon 2013Information contained in this presentation is confidential & proprietary in nature and contains information pending patent protection.This document is meant strictly for the addressee and may not be copied or redistributed without prior authorization from Bubble Motion, Inc.
  2. 2. CONFIDENTIAL 2Asia is DifferentMobile Trends Across the RegionThe OTT App ExplosionThe Messaging App Phenomenon
  3. 3. CONFIDENTIAL 3First… Why Does Asia Matter?The Majority of the World’s Population lives within this tiny circle
  4. 4. CONFIDENTIAL 4However, Within the Circle, Things are Very Diverse•  Consumer loyalty for mobile services is the lowest in the world–  Consumers are extremely price sensitive and willing to trade off inconvenience for savings•  Credit card penetration is minimal–  Only real electronic payment system is fragmented prepaid card systems or operator billing•  Feature phone users outnumber smartphone users 4-to-1–  2.4B+ feature phone users still represent the masses–  Japan and Korea growing fast, but India, China, Indonesia are much slower–  Many countries have limited data plan penetration – even with smartphones•  3B+ mobile subs vs. ~1B Internet users–  Majority of Internet usage is mobile–  Prepaid users outnumber postpaid 5-to-1•  Highly diverse population–  52 primary languages with 1,000+ regional dialects–  27 currencies with some of the lowest and highest GDPs per capita in the world–  Very different political and legal systems
  5. 5. CONFIDENTIAL 5Asia Accounts for 65% of World’s Internet GrowthRank   Country  2008-­‐2012  Internet  User  Adds  (M)  2012  Internet  Users  (M)   Y/Y  Growth  PopulaBon  PenetraBon  1   China    264      564     10%   42%  2   India    88      137     26%   11%  3   Indonesia    39      55     58%   23%  4   Iran    35      42     205%   55%  5   Russia    33      70     6%   49%  6   Nigeria    31      48     15%   30%  7   Philippines    28      34     32%   35%  8   Brazil    27      88     6%   45%  9   Mexico    19      42     9%   37%  10   USA    18      244     3%   78%  11   ArgenGna    17      28     57%   68%  12   Egypt    17      30     11%   38%  13   Colombia    14      25     39%   54%  14   Turkey    13      35     17%   47%  15   Vietnam    12      31     7%   35%       Top  15    654      1,473     15%   34%       World    902      2,406     8%   34%  Source: Mary Meeker,“2013 InternetTrends”
  6. 6. CONFIDENTIAL 6Asia Represents 77% of the BRIC’s GDP andSoutheast Asia itself could be a BRIC CountryGiving Asia 3 of the World’s 5 Leading Economies
  7. 7. CONFIDENTIAL 7Asia is DifferentMobile Trends Across the RegionThe OTT App ExplosionThe Messaging App Phenomenon
  8. 8. CONFIDENTIAL 8By 2015, 65% of the World’s Mobile Users in AsiaAsia Mobile SubscribersSource: ROA Holdings Analysis
  9. 9. CONFIDENTIAL 9Mobile Penetration Continues to Grow RapidlyAsia SmartphonePenetration ForecastAnd while ARPUs will decrease slightly in some markets,it is less dramatic than in Western marketsSource: ROA Holdings Analysis
  10. 10. CONFIDENTIAL 10Asia is ‘Mobile First’ because of the InverseCorrelation between Income and Mobile CentricitySource: Mobile Monday SE Asia Mobile Report 2012
  11. 11. CONFIDENTIAL 11Smartphone Penetration in Asia Still Lags SizablyMore than 2B+ mobile subs will still be on feature phones in Asia through 2015Source: ROA Holdings Analysis
  12. 12. CONFIDENTIAL 12Thus, Massive Reach in Asia via 2B+ Feature PhonesSource: ROA Holdings Analysis
  13. 13. CONFIDENTIAL 13Asia is DifferentMobile Trends Across the RegionThe OTT App ExplosionThe Messaging App Phenomenon
  14. 14. CONFIDENTIAL 14China is now the largest App Market in the World –and All Asian countries are still growing rapidlySmartphone App Growth is Massive in AsiaSource: Distimo
  15. 15. CONFIDENTIAL 15But Monetization of Apps Still is still Very Low in AsiaPrice sensitivity to Apps is much higher in Asia – users are 6X more likely topurchase the ‘paid’ vs. the ‘free’ version of an App in Western countriesSource: Distimo
  16. 16. CONFIDENTIAL 16Macro Factors Drive Need for DifferentMonetization Strategy in Asia•  Lower purchasing power with higher price sensitivity–  Excluding Japan, consumers are much more price sensitive and have lower purchasing power;–  Thus, their likelihood to pay for an app is 1/6th of that in Western markets•  Digital ad spend is still in its infancy–  Online and mobile ad spend in Asia is significantly smaller than Western markets–  Thus, companies cannot rely on an ad-funded monetization strategy•  Low credit card and electronic payment system penetration–  Even if consumers want to pay for an app, low credit card penetration makes it impossiblefor most users–  Thus, while virtual goods are a very popular model in the online world throughout Asia, itstill lags in smartphone app world
  17. 17. CONFIDENTIAL 17Asia is DifferentMobile Trends Across the RegionThe OTT App ExplosionThe Messaging App Phenomenon
  18. 18. CONFIDENTIAL 18First, Where There Were Once Many…QQFacebookOrkuthi5FriendsterWretchMixiCyworldZingMost Popular Social Networks 2Years AgoSource: WPP Presentation
  19. 19. CONFIDENTIAL 19… Now There is OneSource: Edelman
  20. 20. CONFIDENTIAL 20…With Some of its Largest User bases in the RegionSource: Salingsilang
  21. 21. CONFIDENTIAL 21Asians Have Always Been Much More Blog SavvySource: We Are Social report
  22. 22. CONFIDENTIAL 22And Now They Love Sharing Everything Online% of Population that Shares ‘Most Everything’ OnlineSource: Mary Meeker,“2013 InternetTrends”
  23. 23. CONFIDENTIAL 23Twitter has Now Taken Off as wellIndonesia is Twitter’s 3rd largest market in terms of tweet volume andJapan is its 2nd largest market in terms of revenueSource: Salingsilang
  24. 24. CONFIDENTIAL 24Twitter & FB Both Focusing on Feature Phones Nowfor Growth in Asia•  Nearly 90% of mobile users inIndia still do not access data•  75%+ of users across SE Asianmobile do not have data plans•  FB & Twitter both have teams inthe region focused on operatorpartnerships in Asia now•  FB acquired Snaptu solely to builda feature phone accessibleversion of the FB app•  Twitter now focused on buildinglightweight apps for low-endfeature phonesSource: Analysis Mason
  25. 25. CONFIDENTIAL 25And Messaging is becoming UbiquitousAcross User’s Lives…FamilyFriendsWorkApplications•  Text•  Photos•  Voice•  Video•  Group Chat•  Text•  Photos•  Voice•  Video•  Games•  Group Chat•  Text•  Voice•  FileTransfer•  Appointments•  Group Chat•  Text•  Voice•  Photos•  Video
  26. 26. CONFIDENTIAL 26Leading to the Explosion of Social Apps Across Asia
  27. 27. CONFIDENTIAL 27Asian Users Love a Fun & Cheaper Way toCommunicateOTT Messaging•  Innovative services and veryconsumer driven•  Across top layer of network only•  Limited interop so far, but likely tochange quickly•  Reliability is lower than operatorstoday, but improving fast•  Free – monetizationexperimentation•  Little-to-no customer supportOperator SMS•  Seen as ‘old school’ and pay-per-message•  Still viewed by many though as themost reliable•  Interoperable across platforms /operators / devices•  Direct monetization via usage orsubscription•  Strong customer relationshipsincluding billingBeingreplaced by
  28. 28. CONFIDENTIAL 28It’s a Crowded Space, but Players as LargelyComing from 3 Different Angles & Quickly MergingMessaging Social Media VoIP
  29. 29. CONFIDENTIAL 29Time to Critical Mass has Decreased DramaticallyTime to Reach 50M UsersLine 384 daysDraw Something 50 daysInstagram 612 daysWhatsApp 438 daysTwitter 1,218 daysSMS 3,120 daysMobile Subs 4,422 daysFacebook 1,321 days
  30. 30. CONFIDENTIAL 30Who is Winning in the Messaging Battle Asia?Source: TechCrunch
  31. 31. CONFIDENTIAL 31What is Happening on the Ground?•  Only Korea has a clear cut winner – KaKaoTalk–  Korea’s local app is used by 90%+ of Korean smartphone users•  In Japan – Line dominates, but others are growing–  Increasingly crowded space with KaKaoTalk teaming withYahoo! Japan and both DeNA (COMM)and GREE launching their own competitive apps•  Much of Southeast Asia dominated by Line–  Thailand is dominated by Line with Indonesia and Philippines tipping in that direction as well•  WeChat is growing outside of China, but unclear how strong–  Only messaging app with a “17+ rating” – seems to be strong among pockets of users•  WhatsApp is an early leader in India, but still quite fragmented–  Also, BBM is still much larger than any of the OTT messaging apps
  32. 32. CONFIDENTIAL 32Globally, Each Country Shows a Different WinnerMessaging Apps Market ShareSource: TechCrunch
  33. 33. CONFIDENTIAL 33Monetization Strategies Varying Widely by Region•  Ad-rev model – free with lots of ad placement potential•  Charging brands to send out promoted messages to Korean user base•  Charging users for packs of emoticons/stickers, manga, games, etc•  Selling virtual goods and gifts•  Free – money made from iOS device lock in•  Initially free, but now charge $0.99 as one-time purchase•  Charge $9.99 for the app for unlimited SMS/text messaging
  34. 34. CONFIDENTIAL 34The Future of Messaging Apps in Asia…•  Each country is exploding into a different battle ground–  First battle is domestically in each country, but the bigger war is regionally, then globally–  Winner likely to come from Asia•  Due to strong network effects, it’s a Winner takes all market–  Could be divided by country or communication type though•  Switching costs are minimal and decreasing–  With FB connect and deep contact list integration on the phone, it is extremely easy to migrate–  This war will never be over – its going to be very long and ongoing•  UI & UX are key – not feature breadth–  FB spun off Messenger for exactly this reason; Instagram the best example of UX vs. Features•  Careful curating of the community early on is extremely important–  Facebook and Twitter did it extremely well early on – not as good though early in Asia
  35. 35. CONFIDENTIAL 35In Summary…Asia is a MASSIVE Mobile Market, but ExtremelyDiverse1Monetization approach has to beVERY differentin Asia2Messaging Apps are EXPLODING, but the Battleis far from over3