2013 year in mobile

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2013 year in mobile

  1. 1. 2013  -­‐  The  Year  Ahead  In  Mobile  Alex  Cocotas  Research  Analyst,  Business  Insider  Intelligence  
  2. 2. Now  that  the  year-­‐end  2012  data  is  in,  where’s  the   mobile  industry  headed   this  year?  
  3. 3. First, some context
  4. 4. As  of  year-­‐end  2012:  2.5+  billion  people  online   Global)Internet)Popula4on) 3,000" 2,500" 2,000"(millions)) 1,500" 1,000" 500" 0" 1990"1991"1992"1993"1994"1995"1996"1997"1998"1999"2000"2001"2002"2003"2004"2005"2006"2007"2008"2009"2010"2011"2012" Source:(Interna-onal(Communica-on(Union,(Google,(Internet(World(Stats,(BI(Intelligence(es-mates(
  5. 5. ~35%  of  global  population   Global&Internet&Popula*on& 8,000" 7,000" 6,000" 5,000"(millions)& 4,000" 3,000" Global&Popula*on& 2,000" 1,000" Internet&Popula*on& 0" 1990"1991"1992"1993"1994"1995"1996"1997"1998"1999"2000"2001"2002"2003"2004"2005"2006"2007"2008"2009"2010"2011"2012" Source:(Interna-onal(Communica-on(Union,(Google,(Internet(World(Stats,(BI(Intelligence(es-mates((
  6. 6. Mobile  is  already  1/7  of  global  Internet  traffic  and  growing  its  share  quickly  
  7. 7. Mobile  now  accounts  for  15%  of  global  Internet  traffic   Global(Internet(Traffic:(Mobile(vs.(Desktop( 100%# 90%# Desktop( 80%# 70%# 60%# 50%# 40%# 30%# 20%# 15%( Mobile( 10%# 4%( 1%( 0%# Dec#08# Apr#09# Aug#09# Dec#09# Apr#10# Aug#10# Dec#10# Apr#11# Aug#11# Dec#11# Apr#12# Aug#12# Dec#12# Source:(StatCounter(
  8. 8. Mobile  on  pace  to  top  25%  of  traffic  by  year-­‐end  2013   Mobile#Internet#As#A#Percentage#Of#Total#Internet#Traffic# 100%# 90%# 80%# 70%# 60%# 50%# 40%# 30%# 20%# 15%# 10%# 4%# 0%# Dec#10# Apr#11# Aug#11# Dec#11# Apr#12# Aug#12# Dec#12# Source:(StatCounter(
  9. 9. Device  sales  are  pushing  people  onto  the  mobile   Internet    
  10. 10. Smartphone  growth  continued,  while  PC   shipments  actually  declined  last  year   Global)Internet)Device)Shipments)1,400,000,000"1,200,000,000"1,000,000,000" Tablets) 800,000,000" 600,000,000" Smartphones) 400,000,000" 200,000,000" Personal)Computers) 0" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" Source:(Gartner,(IDC,(Strategy(Analy5cs,(company(filings,(BI(Intelligence(es5mates(
  11. 11. And  the  disparity  will  only  grow   Global)Internet)Device)Shipments)Forecast)3,000,000,000"2,500,000,000" Tablets)2,000,000,000"1,500,000,000" We  are  here  1,000,000,000" Smartphones) 500,000,000" Personal)Computers) 0" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013E" 2014E" 2015E" 2016E" Source:(Gartner,(IDC,(Strategy(Analy5cs,(company(filings,(BI(Intelligence(es5mates(
  12. 12. Tablets  are  poised  to  take   a  huge  leap  this  year    
  13. 13. U.S.  tablet  penetration  now  ~25%,  so  plenty  of   room  to  grow   U.S+Smartphone+and+Tablet+Owners+ 140" 120" 100" (millions)+ 80" 60" Smartphone+Owners+ 40" 20" Tablet+Owners+ 0" May+10" Aug+10" Nov+10" Feb+11" May+11" Aug+11" Nov+11" Feb+12" May+12" Aug+12" Nov+12" Source:(Pew(Research(Center,(comScore,(U.S.(census(bureau( Note:(Includes(smartphones(owners(over(age(of(13(and(tablet(owners(over(the(age(of(18(
  14. 14. But  …  unlike  smartphones,  tablet   sales  aren’t  usually    subsidized  by  carriers  
  15. 15. That’s  why  current  owners  tend  to  be  moneyed   U.S."Tablet"Penetra6on"By"Household"Income" 50%# 47%# 45%# 40%# 36%# %"of"U.S."adults"that"own..." 35%# 32%# 30%# 27%# 25%# 22%# 20%# 20%# 16%# 15%# 10%# 10%# 10%# 9%# 8%# 8%# 5%# 4%# 4%# 3%# 3%# 0%# Nov#10# Dec#11# Jan#12# Aug#12# Source:(Pew( <$30,000# $30,000<$49,000# $50,000<$74,999# $75,000+#
  16. 16. And  a  bit  older  …   U.S."Tablet"Penetra6on"By"Age" 35%# 31%# 30%# 27%# 27%# 25%#%"of"U.S."adults"that"own..." 25%# 24%# 20%# 15%# 15%# 14%# 13%# 10%# 10%# 8%# 7%# 6%# 6%# 5%# 5%# 4%# 2%# 0%# Nov#10# Dec#11# Jan#12# Aug#12# Source:(Pew( 18829# 30849# 50864# 65+#
  17. 17. Thankfully,  tablets  and  mini-­‐tablets  are  getting  cheaper  …  Even  Apple  is  price-­‐cutting   iPad%Average%Selling%Price% $700# $600# $500# $400# $300# $200# $100# $0# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012# Q4#2012#
  18. 18. Lower  prices  will  help  tablet  sales  skyrocket   Tablet)Shipments)Forecast) 500" 450" 400" 350" 300"(millions)) 250" 200" We  are  here   150" 100" 50" 0" 2010" 2011" 2012E" 2013E" 2014E" 2015E" 2016E"
  19. 19. And  tablet  sales  are  just  getting  started  globally   Global&Tablet&Shipments& 40" 35" 30" 25"(millions)& 20" 15" Global& 10" 5" China& 0" 1Q11" 2Q11" 3Q11" 4Q11" 1Q12" 2Q12" 3Q12" Source:(Analysys(Interna1onal,(iSuppli,(IDC,(BII(es1mates(
  20. 20. In  2013,  the  mobile  growth   story  will  shift  to  the   developing  world    
  21. 21. Mobile  is  driving  Internet  penetration  in  China   ChineseInternetUsers 600" Total 500" Mobile 400"(millions) 300" 200" 100" 0" June"06" Dec"06" June"07" Dec"07" June"08" Dec"08" June"09" Dec"09" June"10" Dec"10" June"11" Dec"11" June"12" Dec"12" Source:(China(Internet(Network(Informa5on(Center(
  22. 22. (Which  stands  at  42  percent)   China&Internet&Penetra,on&50%#45%# 42%#40%#35%#30%#25%#20%#15%#10%# 9%# 5%# 0%# Dec#05#Jun#06#Dec#06#Jun#07#Dec#07#Jun#08#Dec#08#Jun#09#Dec#09#Jun#10#Dec#10#Jun#11#Dec#11#Jun#12#Dec#12# Source:(CNNIC(
  23. 23. It  is  now  the  world’s  largest  smartphone   market   Global%Smartphone%Shipments% !180,000!! !160,000!! !140,000!! !120,000!!(thousands)% !100,000!! !80,000!! Rest%Of%The%World% !60,000!! !40,000!! !20,000!! China% !"!!!! 1Q11! 2Q11! 3Q11! 4Q11! 1Q12! 2Q12! 3Q12! Source:(Gartner,(IDC,(Strategy(Analy5cs,(Canalys,(BII(es5mates(
  24. 24. Android  is  winning  China’s  platform  race   ChineseSmartphoneMarketShareByPla9orm100%# Other 90%# 80%# Symbian 70%# Apple 60%# 50%# 40%# Android 30%# 20%# 10%# 0%# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012# Source:(Analysys(Interna1onal(
  25. 25. Which  is  bad  news  for   Apple  
  26. 26. Because  the  next  wave  of  adoption  will  come   from  countries  like  China   BRICs:)Mobile)and)Smartphone)Penetra:on) 1,400% 1,344% 1,241% 1,200% 1,090% 1,000% 1,090% 800%(Millions)) 600% 400% 259% 222% 228% 197% 200% 142% 48% 33% 14% 0% China% India% Russia% Brazil% Popula>on% Mobile%Phone%Subscrip>ons% Ac>ve%Smartphones%(YearJEnd%2012e)% Sources:)Carriers,)governments,)Flurry,)TomiAhonen)Consul9ng,)Umeng,)Cybermedia)Research,)BII)Es9mates)
  27. 27. Large  populations,  low  penetration  …  but  less  money   BRICs:)Smartphone)Penetraon)As)%)Of)Mobile)Subscripons) 25%$Penetraon)As)%)Of)Mobile)Connecons,)Year7End)2012)Esmate)) 20%$ 20%$ 15%$ 14%$ 10%$ 5%$ 5%$ 5%$ 0%$ China$ Russia$ India$ Brazil$ Sources:)Carriers,)governments,)Flurry,)TomiAhonen)Consul9ng,)Umeng,)Cybermedia)Research,)BII)Es9mates)
  28. 28. And  iPhones  aren’t  getting  any  cheaper   iPhoneAverageSellingPrice$700$$650$$600$$550$$500$$450$$400$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ 2008$ 2008$ 2008$ 2009$ 2009$ 2009$ 2009$ 2010$ 2010$ 2010$ 2010$ 2011$ 2011$ 2011$ 2011$ 2012$ 2012$ 2012$ 2012$
  29. 29. Which  is  what  is  driving  this…  
  30. 30. The  shift  to  low-­‐end  emerging   markets  is  crucial  because  …  
  31. 31. Technology  adoption  growth  slows  after  hitting  the  50%  penetration  tipping  point  
  32. 32. Because  under-­‐penetrated  segments  are  older   and  less  wealthy   Smartphone+Penetra-on+By+Age+And+Income+(U.S.)+90%$ 81%$80%$ 76%$ 74%$ 72%$70%$ 67%$ 60%$ 61%$ 59%$ 58%$60%$ 51%$50%$ 47%$ 46%$ 42%$40%$ 34%$ 31%$30%$ 25%$ 22%$20%$ 16%$10%$ 0%$ Ages$18$1$24$ Ages$25$1$34$ Ages$35$1$44$ Ages$45$1$54$ Ages$55$1$64$ Ages$65+$ <$50k$ 50k$1$100k$ 100k+$ Source:(Nielsen(Mobile(Insights,(Q1(2012(
  33. 33. Even  though  it  may  look  like  upside  is  still   huge  for  phone  manufacturers   U.S&Mobile&Market&Share&By&PlaAorm& 250" 200" 150" Non8Smart& Total& Mobile& Users&(millions)& 100" Android& 50" Apple& Blackberry& 0" Other& Microso,& Q4"2009" Q1"2010" Q2"2010" Q3"2010" Q4"2010" Q1"2011" Q2"2011" Q3"2011" Q4"2011" Q1"2012" Q2"2012" Q3"2012" Q4"2012" Source:(comScore(
  34. 34. (as$a$percentage$of$the$mobile$popula9on)$ 0%# 10%# 20%# 30%# 40%# 50%# 60%# Jan#10# Feb#10# 18%$ Mar#10# Apr#10# May#10#Source:(comScore( Jun#10# Jul#10# Aug#10# Sep#10# Oct#10# Nov#10# Dec#10# Jan#11# Feb#11# Mar#11# Apr#11# May#11# Jun#11# Jul#11# Aug#11# Sep#11# Oct#11# Nov#11# Dec#11# Jan#12# U.S.$Smartphone$Penetra9on$ Feb#12# Mar#12# Apr#12# May#12# Jun#12# Jul#12# Aug#12# Sep#12# Oct#12# The  U.S.  has  already  reached  that  point   53%$ Nov#12#
  35. 35. So  have  the  largest  European  markets   European)Smartphone)Penetra/on)70%$ (%)of)mobile)phone)users,)age)13+)) 63%$ 62%$60%$ 55%$ 51%$ 51%$50%$ 48%$ 48%$ 48%$ 42%$ 42%$40%$ 38%$ 38%$ 34%$ 35%$ 34%$ 31%$30%$ 26%$ 25%$20%$10%$ 0%$ EU5$ Spain$ UK$ France$ Italy$ Germany$ Source:(comScore( Dec$10$ Oct$11$ Oct$12$
  36. 36. And  penetration  will  slow  as  a  result   U.S.%Smartphone%Market:%Year9Over9Year%Net%Adds% 40" 35" 30" 25" Users% Added% 20"(millions)% 15" 10" 5" 0" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" 2008" 2008" 2008" 2008" 2009" 2009" 2009" 2009" 2010" 2010" 2010" 2010" 2011" 2011" 2011" 2011" 2012" 2012" 2012" 2012" Source:(comScore,(Nielsen,(BI(Intelligence(es4mates(
  37. 37. But  globally,  it’s  still  early  days     Global!Smartphone!Penetra>on!Forecast! !2,500!! !2,000!! !1,500!! FeaturePhoneSalesGlobal!Mobile! Phone!Sales! (millions)! !1,000!! !500!! SmartphoneSales !"!!!! 2010! 2011! 2012! 2013! 2014! 2015! 2016!
  38. 38. In  the  developed  world,  the  focus  will  be  on  monetizing   users  
  39. 39. Over  50%  of  U.S.  mobile  consumers  have   downloaded  apps,  browsed  mobile  Web   U.S.%Mobile%Content%Usage% 80%# Sent%Text%Message% 70%# 60%#%%of%mobile%populaCon%that%has...% Used%Downloaded%Apps% 50%# Used%Browser% Accessed%Social%Network% 40%# %Or%Blog% Played%games% 30%# Listened%to%music%% 20%# 10%# 0%# Feb# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May#June#July# Aug# Sep# Oct# Nov# 10# 10# 10# 10# 10# 10# 10# 10# 10# 10# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12# Source:(comScore(
  40. 40. For  now,  U.S.  mobile  audiences  are  still  growing   Top(Mobile(Categories(By(Audience(Growth,(Oct.(2011(vs.(Oct(2012((U.S.)(( 40,000$ 35,000$ 30,000$ Audience(Size((thousands)( 25,000$ 60%$ 20,000$ 51%$ 56%$ 46%$ 15,000$ 46%$ 47%$ 62%$ 48%$ 10,000$ 53%$ 50%$ 5,000$ 0$ Books$and$ Retail$ Payments$ Lifestyle$ Credit$cards$ Mens$ Travel$Service$ Beauty$and$ Kids$and$ Shopping$ Magazines$ magazines$ fashion$ Family$ Guides$ Source:(comScore( Note:(Includes(both(mobile(web(and(app(audience( Oct.$2011$ Oct.$2012$
  41. 41. Even  among  the  largest  mobile  categories   Top(Mobile(Categories(By(Audience(Size,(Oct.(2011(vs.(Oct(2012((U.S.)(( 100,000$ 90,000$ 80,000$ 25%$ 70,000$Audience(Size((thousands)( 60,000$ 32%$ 30%$ 26%$ 50,000$ 26%$ 40,000$ 28%$ 40%$ 30%$ 30,000$ 37%$ 36%$ 20,000$ 10,000$ 0$ Weather$ Search$ Maps$ News$ Sports$ Entertainment$ Banking$ Movie$Info$ Tech$news$ Restaurant$ News$ Info$ Source:$comScore$ Note:$Includes$both$mobile$web$and$app$audience$ Oct.$2011$ Oct.$2012$
  42. 42. Mobile  consumers  glued  to  games,   entertainment,  and  social  networks   Global&iOS&&&Android&Time&Spent&Per&App&Category& Other& 11%& U<li<es& 10%& Games& 43%& Entertainment& 10%& Social&Networking& 26%&Source:  Flurry,  November  2012  
  43. 43. In  2013,  we’ll  top  1  million  apps  on   Android  and  iOS   Available(Apps,(iOS(vs.(Android((thousands)( 800" 700" 650" 600" 500" 425" 400" 350" 250" 250" 200" 160" 80" 28" 20" 2" Mar"09" Dec"09" Aug"10" May"11" Jul"11" Oct"11" Jun"12" Jan"13" Android" iOS"Source:(Apple,(Google,(Flurry,(news(reports"
  44. 44. Downloads  continue  to  grow  frantically   Apple%App%Store%Downloads%45,000,000,000"40,000,000,000"35,000,000,000"30,000,000,000"25,000,000,000"20,000,000,000"15,000,000,000"10,000,000,000" 5,000,000,000" 0" 7/1/08" 9/1/08" 1/1/09" 3/1/09" 5/1/09" 7/1/09" 9/1/09" 1/1/10" 3/1/10" 5/1/10" 7/1/10" 9/1/10" 1/1/11" 3/1/11" 5/1/11" 7/1/11" 9/1/11" 11/1/11" 1/1/12" 3/1/12" 5/1/12" 7/1/12" 9/1/12" 1/1/13" 11/1/08" 11/1/09" 11/1/10" 11/1/12"
  45. 45. And  time  spent  in  apps  continues  to  skyrocket   U.S.(Web(vs.(Mobile(App(Consump:on( 140# 120# 127# 100#Minutes(Per(Day( 94# 80# 70# 72# 70# 60# 66# 40# 20# 0# Dec#2010# Dec#2011# Dec#2012# Web#Browsing# Mobile#Apps# Source:(comScore,(Alexa,(U.S.(Bureau(Of(Labor(Sta7s7cs,(Flurry(Analy7cs(
  46. 46. Mobile  gaming  population  has  reached  ~35%   U.S."Mobile"Gaming"Popula-on" 40%#%"of"mobile"popula-on"that"has"played"a"game"on"their"phone" 35%# 30%# 25%# 20%# 15%# 10%# 5%# 0%# Feb# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May#June#July# Aug# Sep# Oct# Nov# 10# 10# 10# 10# 10# 10# 10# 10# 10# 10# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12# Source:(comScore(
  47. 47. (Games  suck  up  the  most  user  time)   Global&iOS&&&Android&Time&Spent&Per&App&Category& Other& 11%& U<li<es& 10%& Games& 43%& Entertainment& 10%& Social&Networking& 26%&Source:  Flurry,  November  2012  
  48. 48. (And  are  the  biggest  money  makers)  
  49. 49. But,  games  aside,  there’s  a   problem  with  the  whole  mobile  story  …  where’s  the   money?    
  50. 50. Mobile  app  revenues  are  smaller  than   you  think   Apple)App)Store)Revenues) $4,500# $4,000# $3,500# $3,000#(millions)) $2,500# $2,000# $1,500# $1,000# $500# $0# 2008# 2009# 2010# 2011# 2012# Source:(news(reports,(company(releases#
  51. 51. ~$4  billion  across  over  800,000  apps  is  significant  but   won’t  create  the  next  generation  of  Internet  giants  
  52. 52. Most  app  downloads  are  free   MobileAppStoreDownloads,Freevs.Paid:2011 TotalDownloads Free$Downloads$ 89%$Source:(Garner,(September(2012(
  53. 53. So  this  …   Instagram&Es5mated&Users& 100,000" 90,000" 80,000"     70,000" 60,000" Total&& Users& 50,000"(thousands)& 40,000" 30,000" 20,000" 10,000" 0" 3/2011" 4/2011" 5/2011" 6/2011" 7/2011" 8/2011" 9/2011" 10/2011"11/2011"12/2011" 1/2012" 2/2012" 3/2012" 4/2012" 5/2012" 7/2012" 7/2012" 8/2012" 9/2012" Source:(news(reports,(company(releases,(BII(Es6mates(
  54. 54. …  and  this  …   Foursquare+Users+ 20,000" 17,500" 15,000"   12,500"  (thousands)+ 10,000" 7,500" 5,000" 2,500" 0" Dec"09" Mar"10" Jun"10" Sept"10" Dec"10" Mar"11" Jun"11" Sept"11" Dec"11" Mar"12" Source:(news(reports,(company(releases(
  55. 55. Have  not  necessarily   translated  to  $$$    
  56. 56. The  mobile  platform  wars   play  a  role  in  the   monetization  gap  
  57. 57. In  terms  of  operating  systems,  mobile  is   a  two-­‐horse  race   GlobalMobilePla:ormMarketShare100%# 90%# Other 80%# 70%# 60%# 50%# Windows Blackberry 40%# Apple 30%# 20%# Android 10%# 0%# Q1#2009# Q2#2009# Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012# Source:(Gartner,(IDC,(Strategy(Analy5cs,(BI(Intelligence(es5mates,(and(company(filings#
  58. 58. Android  has  by  far  the  largest  platform   for  smartphones   SmartphoneMarketShareByOS(Global) 100%# Microso8 90%# Other 80%# Symbian 70%# 60%# Shareof 50%# BlackberryGlobalUnit Sales Apple 40%# 30%# 20%# Android 10%# 0%# Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012# Source:(Gartner(
  59. 59. Apple  dominates  the  tablet  market,  with   Android  making  a  run   Tablet%Market%Share%By%Pla9orm%100%# Blackberry% Nook% 90%# Kindle% Fire% 80%# Android% 70%# 60%# 50%# 40%# iPad% 30%# 20%# 10%# 0%# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012# Source:(Es+mates(based(on(informa+on(from(IDC,(Strategy(Analy+cs,(and(company(filings#
  60. 60. So  Apple  users  are  a  minority  …  but   its  platform  pays  4X  better   Cross%Pla)orm+Revenues:+iOS+vs.+Android+ iOS+ Android 24%Source:(Flurry(Analy/cs,(June(2012(
  61. 61. Which  is  why  it  has  developer’s  attention   DeveloperInterestInPlaBorms100%# iPhone 90%# iPad 80%# AndroidPhone 70%# AndroidTablet HTML5 60%# 50%# 40%# Windows8Tablets Windows 30%# Phone 20%# KindleFire 10%# Blackberry 0%# 1Q11# 2Q11# 3Q11# 4Q11# 1Q12# 2Q12# 3Q12# 4Q12# Source:(Appcelerator(
  62. 62. And  why  Apple  has  dominated  app   revenues   Mobile%App%Revenue%By%Pla<orm% $4,000# $3,500# Other% $3,000# Android%% $2,500#(millions)% $2,000# $1,500# $1,000# Apple%iOS% $500# $0# 2008# 2009# 2010# 2011# Source:(iSuppli,(Forrester(Research,(company(releases,(BII(es8mates(
  63. 63. And  has  the  most  new  project  starts   New&Project&Starts,&iOS&vs.&Android& 20$ 18$ 16$ 31%$ 14$ 27%$ 25%$ 12$ Total&New&Project&Starts& 10$ (thousands)& 27%$ 8$ 37%$ 69%$ 6$ 75%$ 73%$ 4$ 73%$ 63%$ 2$ 0$ 1Q11$ 2Q11$ 3Q11$ 4Q11$ 1Q12$ iOS$ Android$ Source:(Flurry(Analy/cs,(January(20116March(2012(
  64. 64. Android’s  lagging  monetization  has  partly  been  a  function  of  its  fragmentation  problem   AndroidPla+ormDistribu2on,September2012 Jelly&Bean& Donut& Eclair& 1%& 1%& 4%& Froyo& 14%& Ice&Cream&Sandwich& 21%& Honeycomb& 2%& Gingerbread& 58%& Source:(developer.android.com&
  65. 65. Android  can’t  get  its  users  to   update  to  more  modern   versions  of  the  system  
  66. 66. But  in  2013  Android  will  make  headway  on  this,   and  it  already  has   AndroidPla+ormDistribu2on,January2013 Jelly&Bean& Eclair& 10%& Donut& 2%& 0%& Froyo& 9%& Ice&Cream&Sandwich& 29%& Gingerbread& 48%& Honeycomb& 2%& Source:(developer.android.com&
  67. 67. Expect  the  Android/iOS  monetization  gap  to  narrow  
  68. 68. However,  because  of  Android’s  massive  audience  base,  revenue-­‐per-­‐user  will   still  be  low  
  69. 69. Mobile  advertising  will  grab  the  spotlight  in  2013  
  70. 70. Many  look  at  this   U.S.$Consumer$Media$Consump2on$Share$50%$ 45%$ 44%$45%$ 43%$ 42%$40%$35%$30%$ 26%$ 26%$ 26%$ 25%$25%$20%$ 17%$ 16%$ Tripled  since  2009   15%$ 14%$15%$ 12%$ 9%$ 9%$10%$ 8%$ 8%$ 7%$ 7%$ 7%$ 6%$ 6%$ 5%$ 4%$ 5%$ 0%$ TV$ Online$ Radio$ Mobile$ Print$ Other$ Source:(eMarketer,(October(2012( 2009$ 2010$ 2011$ 2012$
  71. 71. And  this       2011$U.S.$Ad$Spending$vs.$Consumer$Time$Spent$By$Media$ 42%$ 43%$ 25%$ 26%$ 22%$ 9%  gap   15%$ 11%$ 10%$ 7%$ 1%$ TV$ Print$ Web$ Radio$ Mobile$ Ad$Spend$Per$Media$ Time$Spent$Per$Media$Source:  Mary  Meeker  (KPCB),  eMarketer,  IAB  
  72. 72. And  assume  mobile  advertising  will  skyrocket  
  73. 73. But  it’s  been  slow  to  scale   Comparave*U.S.*Adversing*Media* Annual*$*Revenue*Growth*(First*5*Years)*$5,000% $4,621%$4,500%$4,000% $3,698%$3,500%$3,000%$2,500% $2,162% $2,162% $1,920%$2,000%$1,500% $1,171% $1,012% $907%$1,000% $806% $500% $358% $392% $267% $80% $55% $160% $0% Year%1% Year%2% Year%3% Year%4% Year%5% Broadcast%TV% Mobile% Internet% Source:((IAB,(McCann1Erickson,(BIA1Kelsey,(BII(es9mates( Note:(Adjusted(for(infla9on(
  74. 74. And  it’s  still  a  pretty  small  slice  of  digital   U.S.DigitalAdver7singRevenues $40# Mobile $35# $30# $25#(billions) $20# $15# $10# $5# $0# 2007# 2008# 2009# 2010# 2011# 2012E# Source:((IAB,(BIA-Kelsey,(BII(es2mates(
  75. 75. But  maybe  there’s  a  good  reason   for  that  revenue  gap  …      
  76. 76.  The  screen  is  really  small    
  77. 77. That  drags  on  mobile  ad  prices,  or  CPMs   Effec%veCPM,Desktopvs.Mobile $3.50& $0.75& Desktop&Internet& Mobile&Internet&Source:(comScore,(Vivaki,(Mobclix(Exchange(
  78. 78. The  ecosystem  is  confusing  
  79. 79. And  incredibly  fractured  
  80. 80. For  now,  the  lion’s  share  of  mobile  ad   spend  is  still  going  to  search   Es#mated)2012)Mobile)Ad)Spend)By)Format) Messaging 9% Search 49% Display 42%Source:(eMarketer,(September(2012(
  81. 81. (Which  means  Google  …  but  even  Google   has  mobile  headaches)   Global&Mobile&Search&Market&Share&100%# Google& 90%# 80%# 70%# 60%# 50%# 40%# 30%# 20%# 10%# bing& Yahoo!& 0%# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# 08# 09# 09# 09# 09# 10# 10# 10# 10# 11# 11# 11# 11# 12# 12## 12# 12# Source:(Global(StatCounter(
  82. 82. Year-­‐on-­‐year,  Google  CPC  growth  negative,   partly  because  of  cheap  mobile  clicks   Google&CPC&Growth& 15%% 10%% 5%% 0%% !5%%!10%%!15%%!20%% 4Q09% 1Q10% 2Q10% 3Q10% 4Q10% 1Q11% 2Q11% 3Q11% 4Q11% 1Q12% 2Q12% 3Q12% 4Q12% Source:(Company(data,(Evercore(Group(LLC(Research(
  83. 83. A  few  big  companies  with  good  mobile  ad   formats  can  make  mobile  ads  pay   FacebookAdRevenues $1,200# $1,000# $800# TotalAdRevenues $600#(millions) $400# $200# Mobile $0# 1Q10# 2Q10# 3Q10# 4Q10# 1Q11# 2Q11# 3Q11# 4Q11# 1Q12# 2Q12# 3Q12#
  84. 84. But  until  the  industry  streamlines   and  consolidates,  smaller  publishers  won’t  reap  the  benefits  
  85. 85. There  are  some  encouraging   signals  …  
  86. 86. Machine-­‐buying  and  automated  real-­‐time   bidding  may  help  mobile  advertising  scale   RTBDigitalDisplayAdSpendToHit$6BillionIn2015(PCandMobile) !$8,000!! !$7,000!! !$6,000!!MillionsOfUSD !$5,000!! !$4,000!! !$3,000!! !$2,000!! !$1,000!! !$#!!!! 2010! 2011! 2012E! 2013E! 2014E! 2015E! 2016E! Source:(eMarketer(
  87. 87. More  mobile  video  ads  and  location-­‐based   ads  will  lift  CPMs   CPMs%For%Selected%Mobile%Ad%Pla3orms% xAd!local! !$3.50!!LSN!Mobile!local!ads!! !$5.00!! Adsmobi!video!ads! !$5.00!! Flurry!video!ads! !$10.00!! !$(!!!! !$2.00!! !$4.00!! !$6.00!! !$8.00!! !$10.00!! !$12.00!!Source:(Ad(pla.orms,(BII(Research,(Greg(Sterling,(Opus(Research(
  88. 88. More  opportunities  for  TV-­‐style  video  ads  as   consumers  watch  more  and  longer  videos   TimeWatchedByVideoLengthAndDevice 100%$ 90%$ 80%$ PercentOfAllHoursWatched 70%$ 60%$ 50%$ 94%$ 40%$ 71%$ 30%$ 60%$ 48%$ 20%$ 10%$ 0%$ Desktop$ Smartphone$ Tablet$ Connected$TV$ VideoLength >$10$min$ 6$to$10$min$ 3$to$6$min$ 1$to$3$min$ <$1$min$ Source:(Ooyala,(Q3(2012(
  89. 89. Tablets  provide  a  boost  to  mobile  ad  prices   Tablets(Have(Edge(Over(Smartphones(on(CPC(For(Search(Ads( 100%# 90%# 80%# 70%# CPC#As#Percentage#of#Desktop## 60%# 50%# 40%# 30%# 20%# 10%# 0%# March# April# May# June## July# August# Source:(Performics(
  90. 90. Meanwhile,  the  mobile  ad   industry  is  just  starting  to  consolidate  and  simplify  …    
  91. 91. So,  in  revenue  terms,  “Freemium”  and  in-­‐app  commerce  remains  the   top  app  business  model  
  92. 92. But  advertising  is  now  the  most  popular   monetization  tool   %"Of"Developers"Who"Use"Following"Mone6za6on"Models" 40%# 38%# 35%# 34%# 33%# 32%# 30%# 26%# 25%# 25%# 20%# 19%# 18%# 15%# 12%# 12%# 10%# 5%# 0%# Adver1sing# Pay#Per#Download# In>App#Purchases# Freemium# Subscrip1ons# Jan>12# Jan>13# Source:(Developer(Economics(2013(
  93. 93. What  are  other  trends  to  watch  in   2013?  
  94. 94. Mobile  payments  are  growing  exponentially   PayPal&Mobile&Payments&Processed& $16,000# $14,000# $12,000# $10,000# Total&& Payment& $8,000# Volume& (millions)& $6,000# $4,000# $2,000# $0# 2008# 2009# 2010# 2011# 2012#
  95. 95. Now  10  percent  of  PayPal’s  payments  processed   PayPalPaymentsProcessed $150,000# Mobile $120,000# $90,000# Total Payment Volume (millions) $60,000# $30,000# $0# 2008# 2009# 2010# 2011# 2012#
  96. 96. Square  now  at  over  $25  million  a  day   Square(Es9mated(Daily(Payment(Volume(and(Revenues( $30,000# $25,000# $20,000# Payment(Volume((Thousands)( $15,000# $10,000# $5,000# Revenues( $0# 3/11# 4/11# 5/11# 6/11# 7/11# 8/11# 9/11# 10/11#11/11#12/11# 1/12# 2/12# 3/12# 4/12# 5/12# 6/12# 7/12## 8/12# 9/12# 10/12#11/12# Source:(news(reports,(company(releases#
  97. 97. Payments  should  get  a  boost  from  increased  mobile  traffic  to  ecommerce  sites   Ecommerce#Website#Traffic#By#Device#100%# Tablet# 90%# Smartphone# 80%# 70%# 60%# 50%# PC# 40%# 30%# 20%# 10%# 0%# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012# Source:(Monetate(
  98. 98. Tablet  shoppers  boost  ecommerce  because  they   tend  to  complete  purchases  on  their  device   MobileShoppers (Percentageofownersthathavemadeapurchaseontheirdevice) 55%# 28%# Tablets# Smartphones#Source:(Adobe,(Nov.0Dec.(2012(
  99. 99. And  Because  They  Are  Engaged  Shoppers   Tablet"Shoppers"Are"Looking"For"Bargains,"But"Also"Rich" Product"Images" 53%$%"Of"Shoppers"On"Tablet"Apps"Who"Think"Following"App"Characteris;c"Is"Important"" 52%$ 52%$ 51%$ 50%$ 49%$ 49%$ 48%$ 48%$ 47%$ 47%$ 47%$ 46%$ 45%$ 44%$ Support$for$loyalty$ Support$for$couponing$ Ability$to$purchase$directly$ Images$and$slideshows$of$ Money$saving$offers$ programs$ from$the$app$ products$at$different$angles$ Source:(Adobe,(Nov.0Dec.(2012((
  100. 100. Not  all  ecommerce  mobile  volume  is  cannibalized  from  desktop,  at  eBay  1/3  of  it  is   incremental   MobileTransac.onVolume*GrowsOneBayTo13%OfTotal 100%# 2%# 4%# 5%# 9%# 90%# 80%# 70%# 60%# 50%# 40%# 30%# 20%# 10%# 0%# 2011# 2012e# Desktop#Volume# Mobile#Volume#Cannibalized#From#Desktop# Incremental#Mobile#Volume# Sources:)eBay,)Morgan)Stanley)Research)*Volume)is)Gross)Merchandise)Value)(GMV),)or)value)of)all)merchandise)transacted)))
  101. 101. 2013-­‐  THE  BOTTOM  LINE  •  Tablet  sales  make  a  huge  leap  this  year,  driven  by   falling  prices  and  the  growth  of  mini-­‐tablets.  •  Smartphone  growth  slows  in  the  West  with  huge   consequences  for  platform  operators,  handset   manufacturers,  and,  eventually,  app  developers.    •  Mobile  apps  have  yet  to  effectively  monetize  a  huge   user  base  and  will  refocus  on  monetization  strategies.  •  Mobile  advertising  needs  to  consolidate  and   streamline  if  smaller  mobile  properties  are  to  rely  on   it.  
  102. 102. Thanks!  

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