MOBILE IS EATING THE WORLD
BENEDICT EVANS

For the first time, tech
is selling to everyone

Growth into the bubble 0.5
0.4 0.3 0.2 0.1 0.0 Billion people online 1995 2000 Source: ITU, a16z

Growth since the bubble 3.5
3.0 2.5 2.0 1.5 1.0 0.5 0.0 Billion people online 1995 2000 2014 People online Smartphones Source: ITU, a16z

Growth into the future -
everyone Another 1bn people will come online, all due to smartphones 5 4 3 2 1 0 Billion people online 1995 2000 2014 2020 People online Smartphones Source: ITU, a16z

The unconnected are shrinking 100%
75% 50% 25% 0% Global adult population 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015e 2017e No Internet No smartphone [Source: a16z, World Bank, Apple, Google, Nokia]

The world in 2020 By
2020 80% of the adults on earth will have a smartphone 8 7 6 5 4 3 2 1 0 Population Adults TV audience Literate adults Mobile Online pops Smart phones PCs Consumer PCs Global population (bn) Growth to 2020 2014 Source: World Bank, GSMA, a16z

Source: Apple, Intel, a16z A
new iPhone CPU has 625 times more transistors than a 1995 Pentium iPhone launch weekend: Apple sold 25x more CPU transistors than were in all the PCs on Earth in 1995 Everyone gets a pocket supercomputer

Yes, everyone The utility of
mobile increases as income falls 80% 70% 60% 50% 40% 30% 20% 10% 0% Cellular coverage 3G coverage now 3G coverage by 2019 Improved water Electricity Mobile users Sub-Saharan Africa population coverage Source: Ericsson, McKinsey

The first thing this changes
is the internet

Post-Netscape, post-PageRank More time is
spent in mobile apps than on all of the web 1,250 1,000 750 500 250 0 US time spent online (bn minutes) June 2013 June 2014 Mobile web Mobile app Desktop web Source: comScore Media Metrix Multi-Platform & Mobile Metrix, U.S., June 2013 - June 2014

And remains totally unsettled “Android”?
Forks, Google Play Services, Chrome… “I installed an app on my Android smartphone ” “Installed” an “app”? Web apps, cards, APIs, push notifications, social platforms, Google Now… “Smartphone?” Watches, Glass, wearables, TV, tablets…

Ecosystem complexity Ecosystem dynamics depend
on where you are and what you’re doing 100% 75% 50% 25% 0% Mobile platform share Phone unit sales SF FB users Delhi FB users App store revenue Global Browsing China browsing Android iOS Source: Facebook, Apple, Google, Gartner, Akamai, Baidu, a16z

New sensors, new businesses Smartphones
are far more sophisticated than PCs A computer shouldn’t ask anything that it should know Sensors profoundly change what a computer can know Every new sensor creates a new business

Key: mobile leverage I n
creased sophistication from mobile is as important as the increase in scale x Personal Taken everywhere Frictionless access Sensors, cameras Location Payment Social platform Much easier to use = 10x the opportunity 2-3x more smartphones than PCs by 2020

Facebook’s multi-stage rocket Mobile ads
have doubled revenue and built a $6.5bn run-rate business in just 24 months 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Facebook revenue by segment ($bn) June-11 December-11 June-12 December-12 June-13 December-13 June-14 Mobile ads Payments & Other Desktop ads Source: Facebook

Source: GSMA, WhatsApp Global SMS:
7.5tr messages a year WhatsApp: 7.2tr messages a year (with just 30 engineers)

Fundamental change in costs Mobile
leverage plus collapse of development costs transforms early capital needs 2000 100 staff 1m users $10m raised Today 10 staff 10m users $1m raised YO 1 man 1m users $0 raised

Mobile remakes the
tech industry

The smartphone industry dwarfs PCs
4bn people buying every 2 years instead of 1.6bn buying every 5 years 300 250 200 150 100 50 0 Quarterly unit shipments (m) March-95 March-97 March-99 March-01 March-03 March-05 March-07 March-09 March-11 March-13 PCs iOS & Android Source: Gartner, Apple, Google, a16z

Mobile scale eats consumer electronics
Smartphones & tablets are now close to half of the consumer electronics industry 50% 40% 30% 20% 10% 0% Smartphone & tablet share of global CE retail revenue 2008 2009 2010 2011 2012 2013 2014 Source: GfK, a16z

1999 – 80bn consumer photos
taken on film This year – 800bn photos shared on social networks More iPhones & Android phones sold than Japanese cameras ever Source: Kodak, Companies, CIPA, a16z

Shift away from Microsoft 100%
75% 50% 25% 0% Microsoft share of personal computing device sales March-09 March-10 March-11 March-12 March-13 March-14 Source: Gartner, Apple, Google, Microsoft, Nokia, Blackberry, a16z

Apple, the minority smartphone player,
is overtaking the entire PC industry * PC industry excluding Mac sales Source: Apple, Microsoft, Barclays Capital 250 200 150 100 50 0 Revenue ($bn) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Apple PC industry * Microsoft

Tech centre of gravity moves
from Seattle and Finland (and Japan) Old New Computing platform Microsoft Apple & Google Chips Intel ARM & Qualcomm Mobile Nokia Shenzhen, China

Leveraging the mobile supply chain
Enabling new categories Wearables, Internet of Things, Smart TV Connected cars, Drones etc etc Flood of small, cheap, low-power, high-performance smartphone chips And pushing into the data centre From ‘big iron’ and Intel to ARM and commodity components

More interesting:
remaking other
industries

Technology dominates our attention Source:
Ofcom

And tech brands are huge
50% 40% 30% 20% 10% 0% Share of top 100 global brand value 2004 2014 Google, Apple, Facebook, Amazon All tech brands Source: Interbrand

What would children miss the
most? Mobile 100% 75% 50% 25% 0% ‘Media you would miss most', UK aged 11-15 Boys Girls Other TV set Games console PC Mobile & tablet Source: Ofcom

Comms are going pure digital,
pure mobile Email is for grandparents 100% 75% 50% 25% 0% Share of communication activity, UK Adults 12 to 15 Photo messages Messaging apps Social networks Phone calls Email Source: Ofcom

TV sets are in the
minority Computing devices used for video now far outnumber actual ‘televisions’ Source: Apple, Google, Nokia, Blackberry, Displaysearch, a16z TVs 24% iOS 13% Google Android 23% Chinese Android 9% WP/RIM 1% PCs & Macs 30% Global install base of video players “By the summer of 2012, the majority of the televisions you see in stores will have Google TV embedded” - Eric Schmidt

Glass is eating the world
Close to a square foot of screen sold for every adult on earth 5 4 3 2 1 0 Global LCD display sales (billion square feet) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Corning

Yet tech is still a
pretty small industry 1,600 1,400 1,200 1,000 800 600 400 200 0 Global revenue, 2013 ($bn) Music Films Online ads Books PCs Phones GAFA TV Advertising Mobile Apparel Cars Source: Companies, PwC, a16z

Three phases of technology deployment
Companies that write a check to buy technology Companies that make technology Companies that are created with technology

Companies that write a check
for technology

Amazon: Sears Roebuck of the
21st Century Tech company? Or retailer created with tech? 80 70 60 50 40 30 20 10 0 -10 Amazon since launch ($bn) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenue Net income Source: Amazon

But still (relatively) tiny Amazon
still only has 1% of US retail 1.25% 1.00% 0.75% 0.50% 0.25% 0.00% Amazon North America ecommerce as % US retail* 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * Excluding gasoline, building supplies, food & beverage service. Source: a16z, BLS, Amazon

Each wave of tech creates
new businesses Railways & steam press Photography Color printing Internet & Social Hearst Life Glossy Magazines Buzzfeed … but these are all still media businesses

But are those ‘tech’ businesses?
Trucks & inter-state highways Trucks & inter-state highways Web & Smartphones Smartphones McDonalds Walmart AirBnB Uber/Lyft Food Retail Travel Transport

When tech is fully adopted,
it disappears 1800 1810 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Source: Google Frequency of ‘Railways’ in Google Books

Steel 1800 1810 1820 1830
1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Source: Google Frequency of ‘Steel’ in Google Books

Computerization 1800 1810 1820 1830
1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Source: Google Frequency of ‘Computerization’ in Google Books

Software 1800 1810 1820 1830
1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Source: Google Frequency of ‘Software’ in Google Books

‘Software is eating the world’
Tech outgrows the tech industry