As we pointed out last year, Mary Meeker is an Internet oracle those in the business take seriously.
Her 2015 report is out. You can and should read it [PDF also available at that link]. It is, though, 197-slides-long, so in case you’re pressed for time, here are a few points from it that caught my attention.
Meeker starts by looking back over the last 20 years.
• 1995 saw global Internet penetration 35 million users, around 0.6% of the population. In 2015, 39% of us are online, around 2.8 billion.
On to today’s world:
• 51% of today’s Internet users are from Asia (with China at 23%), 19% from Europe, 10% from the USA, and 21% from the rest of the world.
• In 1995, 1% of the world (80 million people) used mobile phones. Today, 73% (5.2 billion) of us do. And 40% of that number use smartphones.
• Both Internet usage and smartphone subscriptions continue to grow, but the rate of growth has been slowing down. (India has been doing more than fine, with 33% more internet users and 55% more smartphone subscriptions in 2014.)
• Of the top 15 publicly listed global public internet companies of 1995, only one is still on the list in 2015: Apple, which was #2 then and is #1 now.
• Apple stays at the top of the chart of publicly listed global internet market leaders, with a market value (22 May 2015) of $764 billion and revenues of $199,800 million. Google is #2 ($373 b). China breaks in at #3: Alibaba is valued at $233 b. Facebook ($226 b) and Amazon ($199 b) round off the top five. The market, value of the top 20 companies is $2,1513 b.
• 11 of the top 20 are US companies. China has 6, Japan 2 and Korea 1. No Indian companies in the top 20.
• Print advertising in the USA is way over-indexed (18% of US ad spend, but only 4% of time spent in media. Radio and TV are about par spend vs time. Internet ad spend is 23%, but time spent is 24%. And mobile offers huge opportunity: just 8% of spend but 24% of time spent. Meeker sees this as a $25 billion opportunity. [Food for thought for us in India.]
• Things that both brands and consumers should be excited about: Ad formats and ‘buy’ buttons optimised for mobile. Notably, content spent on vertically-oriented screens as on mobiles, is now a healthy 29% of total time spent viewing screens of any kind.
• Rather than reimagining the enterprise, entrepreneurs are changing segments of business processes. For instance: communications (Slack), payments, both offline (Square) and online (Stripe), analytics, customer communication and service, HR processes, and so on.
• Messaging is seeing a lot of change, improvements and growth, with multiple platforms seeing rapid growth. Aside from the ones we in India experience — Whatsapp, Snapchat — apps that cater to single geographies, like WeChat (China), Line (Japan) and Kakao Talk (Korea), are not just pulling in large user bases, they’re also earning revenue in the high nine-figure range. These earnings come from the apps offering paid services, as well as being hubs for services like taxis and food delivery. Global mobile messaging leaders are following this example now, and if the trend holds, Meeker sees some of these leaders evolving into central communications hubs.
• The next chunk of new internet users are likely to be feature-phone users currently, and are likely to first get online via messaging platforms.
• Content is increasingly user-generated or user-curated. Pinterest, Snapchat, Facebook video, audio on Soundcloud, text on Wattpad, reviews, even content like streamed live gaming, are growing at double-digit rates.
• Users are increasingly the first source for news.
• With young Americans (12 – 24), the use of Facebook, Twitter, Google+ is declining dramatically. What’s growing? Visual-oriented networking via Pinterest, Instagram, Snapchat and the like. Millenials love their smartphones and 44% use the camera or video functions daily.
• Just-in-time services enabled by mobiles with sensors — driving directions, breaking news, emergency services, etc — are big drivers of mobile usage.
• The USA is seeing a lot of innovation in high-spend categories like housing, transport and food.
• Consumers are buying lots of drones! Some countries are opening up this market.
• Cyber attacks are growing in size, complexity, and risk.
Meeker’s section on the changing US work environment, with emphasis on the Millennials, and how they differ from Gen-Xers and Baby Boomers, studies a scenario significantly different from India’s reality, but do read those. Slides 91 to 148.
China and India
• China is the largest Internet market in the world, with 629 million users by the end of 2014, and ranked second in new user additions: 31 million in the same period.
• India, with 232 million users, is the third-largest market, and top in new user additions, with 63 million new users (up 37% YoY).
• Mobile accounts for 65% of India’s Internet traffic, a percentage only exceeded by Nigeria (76%). Mobile also accounts for 41% of our ecommerce, ahead of every other country.
• Digital innovation in China is rapid. Social commerce is building community and revenue.
• Lots of industry consolidation in China.
• China’s ‘Internet of Things’ is doing very well indeed.
• India is often #1 or #2 market for the Internet majors. We’re Facebook’s and LinkedIn’s second-largest market, WhatsApps’ largest, Twitter’s fastest-growing, and 7% of YouTube’s users are from India.
• Top Android apps for India in Jan-Mar 2015 were WhatsApp, Facebook, MX Player, Messenger (Facebook), and Truecaller. The first desi entrants on the list were Hike Messenger at #7 and Cricbuzz at #10. (This ranking excluded commonly pre-installed apps, including Google’s apps.)
Which companies are going to be India’s catalyst companies? Will it be like China, with home-grown heroes like Flipkart taking on the mantle? Could a Hike Messenger ascend to this category? Are there other credible contenders? Or will global majors like Amazon, eBay, Google and Facebook be able to use their weight to push India past the tipping point?
Here’s the full Internet Trends 2015 slide-show.
Correction: This post originally referred to one of Ms Meeker’s slides about mobile wallet usage in India, with Mobikwik’s market share being shown as below 10%. Mobikwik’s representative contacted us to point out that this was inaccurate, that the source of the data was Paytm, a mobile wallet provider itself, and that KPCB had been informed of this and KPCB had removed the slide from the online deck. We have removed that point from this post.