Kleiner Perkins Mobile Trends

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<p>TOP MOBILE INTERNET TRENDSMatt Murphy / Mary Meeker 2/10/11http://www.slideshare.net/kleinerperkins/kpcb-top-10-mobile-trends-feb-2011</p> <p>Copyright 2011. All rights reserved. Duplication or redistribution of this presentation are prohibited without prior written authorization.</p> <p>1</p> <p>Mobile Trends Rapid Growth + Disruption</p> <p>1. 2. 3. 4. 5. 6. 7. 8. 9. 10.</p> <p>Mobile Platforms Hit Critical Mass Mobile is Global Social Networking Accelerating Growth of Mobile Time Shifting to Mobile Usage Mobile Advertising Growing Pains But Huge Promise mCommerce Changing Shopping Behavior Emergence of Virtual Goods &amp; In-App Commerce Not All Platforms Are Created Equal Change Will Accelerate, New Players Emerging Rapidly Summary Trends to Watch</p> <p>2</p> <p>MOBILE PLATFORMS HIT CRITICAL MASS</p> <p>iPods Changed the Media IndustryiPhones Ramped Even FasteriPad Growth Leaves its Siblings in the DustFirst 3 Quarters Cumulative Unit Shipments, iPod vs. iPhone vs. iPad16,000 iPad 14,000 iPhone iPod</p> <p>Global Unit Shipments (000)</p> <p>12,000 10,000 8,000 6,000 4,000 2,000 0 0 1 Quarters After Launch 2 3</p> <p>Source: Apple.</p> <p>4</p> <p>iTunes Changed the Media IndustryApp Store Growth Leaves it in the DustCumulative Number of Downloads, iTunes Music / Video / Movie vs. Apps, First 10 Quarters10 Apps iTunes</p> <p>8</p> <p># of Downloads (B)</p> <p>6</p> <p>4</p> <p>2</p> <p>0 0 1 2 3 4 5 6 Quarters After Launch 7 8 9 10</p> <p>Source: Apple.</p> <p>5</p> <p>Android has Hit Critical MassFirst 9 Quarters Cumulative Android Unit Shipments80 Android Global Units Shipped 70 60 50 40 30 20 10 0 0 1 2 3 4 5 Quarters After Launch 6 7 8 9</p> <p>Source: Gartner.</p> <p>Global Cumulative Unit Shipments (MM)</p> <p>6</p> <p>Smartphone + Tablet &gt; PC Shipments Since CQ4:10Global Unit Shipments of Desktop PCs + Notebook PCs vs. Smartphones + Tablets, 2005-2013E700,000</p> <p>CQ4:10: Inflection Point Smartphones + Tablets &gt; Total PCs</p> <p>600,000</p> <p>Global Unit Shipments (MM)</p> <p>500,000</p> <p>400,000</p> <p>300,000</p> <p>200,000</p> <p>100,000</p> <p>0 2005 Desktop PCs 2006 2007 2008 2009 2010 2011E 2012E 2013E</p> <p>Notebook PCs</p> <p>Smartphones</p> <p>Tablets</p> <p>Note: Notebook PCs include Netbooks. Source: Katy Huberty, Ehud Gelblum, Morgan Stanley Research. Data and Estimates as of 2/11</p> <p>7</p> <p>MOBILE IS GLOBAL</p> <p>5 Countries = 46% of Internet Users China, USA, Russia, Brazil, India2009 1.8B Global Internet Users, +13% Y/Y(1); 18.8T Minutes Spent, +21% Y/Y(2)</p> <p>Russia 60MM users; +31% Y/Y 42% penetration* USA 240MM users, +4% Y/Y 76% penetration*</p> <p>China 384MM users; +29% Y/Y 29% penetration*</p> <p>Brazil 76MM users, +17% Y/Y 39% penetration*</p> <p>India 61MM users; +18% Y/Y 5% penetration*</p> <p>Note: *Penetration is per 100 inhabitants. Source: 1) Internet user stats per International Telecommunications Union; pertime spent data per comScore global 12/09. time spent data per comScore global 12/09. Source: 1) Internet user stats 2) International Telecommunications Union; 2)</p> <p>9</p> <p>35% Y/Y Global Mobile 3G Subscriber Growth to ~726MM, CQ3CQ3:10 3G 3G Sub 3G Subs PenetraY/Y (MM) tion Growth 141 109 40 34 31 28 27 23 21 21 20 19 18 12 12 47% 95 79 40 41 28 48 50 11 33 2 10 66 50 5 27% 12 12 21 32 28 21 35 54 30 458 177 29 147 67 CQ3:10 3G 3G Sub 3G Subs PenetraY/Y (MM) tion Growth 11 9 8 7 7 6 6 6 6 6 5 5 4 4 4 42% 26 18 57 15 10 32 7 35 46 52 4 59 7 26 40% 23 50 43 36 160 27 98 8 30 18 707 48 34 28</p> <p>Rank Country 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 USA Japan Korea Italy UK Germany Spain Poland Indonesia France China Brazil Australia Canada Russia</p> <p>Rank 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30</p> <p>Country Taiwan Malaysia Saudi Arabia Sweden South Africa Turkey Netherlands Philippines Portugal Austria Israel Vietnam Singapore Egypt Greece</p> <p>Global 3G Stats:</p> <p>Subscribers = ~726MM</p> <p>Penetration = 14%</p> <p>Growth = 35%</p> <p>Note: *Informa reports a lower global 3G subscription # vs. Ovum due to the exclusion of 4G and the use of different sources. 3G includes CDMA 1x EV-DO and Rev. A/B, WCDMA, HSPA; Source: Informa WCIS+.</p> <p>10</p> <p>SOCIAL NETWORKING ACCELERATING GROWTH OF MOBILE</p> <p>Different Types of Platforms = Facebook + Apple + Google</p> <p>iPhone/iTouch/iPad</p> <p>SOCIAL</p> <p>662MM users +41% Y/Y 550K+ apps 500MM+ downloads</p> <p>130MM+ users +103% Y/Y 350K+ apps 10B+ downloads</p> <p>MOBILE</p> <p>* 972MM users +8% Y/Y CQ4: CPCs +4% Q/Q paid clicks +18% Y/YSource: Company data, comScore global 12/10. *Google Android momentum especially strong too.</p> <p>SEARCH</p> <p>12</p> <p>Emerging Types of Social NetworksMore to Come</p> <p>INFORMATION SHARING</p> <p>253MM unique visitors +85% Y/Y</p> <p>130MM+ monthly active users +15% Y/Y</p> <p>GAMING</p> <p>51MM subscribers +25x Y/Y</p> <p>Source: Groupon, Twitter, Zynga.</p> <p>COMMERCE13</p> <p>Zynga Proves that Great New Social Products for Old Users Can Ramp Extremely QuicklyDaily Active Users, FarmVille vs. CityVille, First 60 Days Since Product Launch</p> <p>20 FarmVille Daily Active Users (MM) 16 12 8 4 1 6 11 16 21 26 31 36 41 Days After Launch 46 51 56 CityVille</p> <p>Source: Zynga. Note that FarmVille launched in 6/09, CityVille launched in 12/10.</p> <p>14</p> <p>Real-Time Social Features Accelerating Mobile Usage Growth - Sharing + Location + Friending...</p> <p>Location SharingFourSquare Whrrl Twitter</p> <p>CommunicationTextPlus TextFree</p> <p>Music SharingShazam Spotify</p> <p>FB Connect for Mobile Built in Friend Connectivity, Share, ViralityInvite Friends Share Feed</p> <p>15</p> <p>KPCBs John Doerr Calls It SoLoMo</p> <p>So Lo MoSocial Local Mobile16</p> <p>TIME SHIFTING TO MOBILE USAGE17</p> <p>Japan Social Networking Trends Show Importance of Mobile Mixi Mobile Page Views = 85% vs. 14% 4.5 Years AgoMixis (Japans Leading Social Network) Monthly Page Views, Mobile vs. PC, CQ2:06-CQ4:10 Mobile Page Views Desktop Page ViewsCQ3:09 Platform opened to 3rd-party developers85%</p> <p>Monthly Page Views (MM)</p> <p>30,000 25,000 20,000 15,000 10,000 14% 5,000 86% 0 2Q06 4Q06 2Q07</p> <p>15% 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10</p> <p>Note: Mixi is one of Japans leading social networking sites on PC and mobile with 20MM registered users as of 12/31/10. It monetizes mobile usage via sales of avatars, customized homepages and other premium services. Source: Company reports, Naoshi Nema, Morgan Stanley Research</p> <p>18</p> <p>60% of Time Spent on Smartphones is New Activity for Mobile UsersAverage Time Spent on Various Mobile Functions, 1/11 10 minutes (12%) Web/Web Apps NEW ACTIVITY</p> <p>27 minutes (32%) Telephony Phone Skype Messages</p> <p>40 minutes (47%) All Other Maps Games Social Networking Utilities More 7 minutes (9%) Mail App</p> <p>Source: AppsFire, 1/11. Note that Android users show a higher % browsing activity.</p> <p>19</p> <p>Global Mobile Data Traffic Should Grow 26x Over Next 5 Years, ,</p> <p>Global Mobile Data Traffic, by Type 2008 2015ETotalM2M*</p> <p>2010-2015E CAGR5% 22% 92% 109%</p> <p>Total Mobile Data Traffic (Tetabyte per month)</p> <p>6,000,000 5,000,000</p> <p>6%4,000,000 3,000,000 2,000,000 1,000,000 0 2008 2009 2010 2011E 2012E 2013E 2014E 2015E</p> <p>Data</p> <p>80%</p> <p>File Sharing</p> <p>62%</p> <p>66%Video</p> <p>104%</p> <p>VoIP</p> <p>42%</p> <p>Source: Cisco Visual Networking Index (VNI) Global Data Traffic Forecast, 2010-2015</p> <p>20</p> <p>Strong Mobile Trends for Leading Social Companies</p> <p>200MM mobile active users vs. 50M in 9/09 2x more active than desktop-only users</p> <p>Mobile = 50% of total active users, vs. 25% Y/Y Mobile = 40% of all tweets</p> <p>Introduction of mobile product drove 2x conversion ratio from free to paying subscribers Mobile users = 25-30% total users in mature markets</p> <p>100MM mobile users vs. 50MM Y/Y</p> <p>Adding 3MM users per month 50% of all users subscribe on mobile21</p> <p>MOBILE ADVERTISING GROWING PAINS BUT HUGE PROMISE</p> <p>So Far, Difficult to Build Consistent Mobile Ad Revenue Owing to Lumpy Buys, Need for More Premium Advertisers</p> <p>2010 Mobile eCPMs for 4 KPCB Portfolio Companies $ 4 3 2 1 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSource: KPCB Companies23</p> <p>A B C D</p> <p>Yet the Efficacy of Mobile Ads vs. Other Media is CompellingRelative Efficacy of Mobile vs. Other Advertising Media, 1/11Reach Targeting90</p> <p>Engagement70 801 0</p> <p>Viral80 40</p> <p>Transaction80 60</p> <p>Mobile Internet TV Print Radio Outdoor</p> <p>100</p> <p>50</p> <p>50</p> <p>501 0</p> <p>30</p> <p>90</p> <p>201 0</p> <p>40</p> <p>20</p> <p>1 0</p> <p>60</p> <p>1 0</p> <p>401 0</p> <p>1 0</p> <p>20</p> <p>1 0</p> <p>Source: Chetan Sharma, January 201124</p> <p>Media Time Spent vs. Ad Spend Still Out of WhackInternet/Mobile (upside) vs. Newspaper/Magazine/TV (downside)</p> <p>% of Time Spent in Media vs. % of Advertising Spending, USA 2009 Time Spent% of Total Media Consumption Time or Advertising Spending</p> <p>Ad Spend</p> <p>50% 40% 39% 30% 20% 10% 0% Print Radio TV Internet 12% 26% 16% 9% 31% 28%</p> <p>~$50BGlobal Opportunity</p> <p>13%</p> <p>Note: Time spent data per NA Technographics (2009), ad spend data per VSS, Internet advertising opportunity assumes online ad spend share matches time spent share, per Yahoo!. Source: Yahoo! Investor Day, 5/10.</p> <p>25 25</p> <p>Advertising $s Follow Eyeballs Ad Revenue per User = $46 in 2009E vs. $0 in 1994E</p> <p>1995E</p> <p>2009E</p> <p>Global Internet Ad Revenue</p> <p>$55MM</p> <p>$54B $46 1.2B</p> <p>Ad Revenue per User</p> <p>$9</p> <p>Global Internet Users</p> <p>6MM</p> <p>Source: Global online ad revenue per Juniper Communications (1995), ZenithOptimedia (2009). Internet users per Morgan Stanley estimate (1995) and comScore (2009). We note that comScore reports a lower global Internet user # than International Telecommunications Union. Morgan Stanley Research.</p> <p>26 26</p> <p>Google Paid Clicks &amp; Cost-Per-Click Continue to AccelerateMobile Search as a Key Driver?</p> <p>CQ4:09 Gross Advertising Revenue ($MM) Y/Y Growth Q/Q Growth Aggregate Paid Clicks (MM) Y/Y Growth Q/Q Growth Cost per Click (CPC - $) Y/Y Growth Q/Q Growth $6,465 17% 12% 12,401 13% 9% $0.52 4% 3%</p> <p>CQ1:10 $6,475 21% 0% 12,909 15% 4% $0.50 6% (4%)</p> <p>CQ2:10 $6,562 23% 1% 12,651 15% -2% $0.52 7% 3%</p> <p>CQ3:10 $7,032 22% 7% 13,157 16% 4% $0.53 6% 3%</p> <p>CQ4:10 $8,167 26% 16% 14,669 18% 11% $0.56 7% 4%</p> <p>27</p> <p>New &amp; More Powerful Ad Units are Rolling Out Quickly in Mobile</p> <p>Disney Super Bowl Sunday takeover campaign -- All pages of textPlus, February 7, 2010</p> <p>28</p> <p>And Many Brands are Testing</p> <p>29</p> <p>Branded Virtual Goods &amp; Sponsorships are ImpactfulInterstitial Call to action click to mobile site, app, call, location, add to calendar, and more</p> <p>Source: Booyah and Shazam.</p> <p>30</p> <p>Smartphones Can Make TV InteractiveTV Action Via Mobile:Get coupons / offers Learn more about products Share content with friends</p> <p>31</p> <p>M-COMMERCE CHANGING SHOPPING BEHAVIOR32</p> <p>Online Commerce Gaining Share vs. Offline Online at ~5% of USA Retail, Mobile Should Get to Same Level Much Faster</p> <p>USA eCommerce % Share(1) of Total Retail Sales, CQ3:00-CQ4:12E7% 6% 5% 4% 3% 2% 1% 0% Q3:00 Q3:01 Q3:02 Q3:03 Q3:04 Q3:05 Q3:06 Q3:07 Q3:08 Q3:09 Q3:10 Q3:11 Q3:12eCommerce Penetration Linear Trendline (y=0.094x + 0.9895, R^2=0.9599)</p> <p>eCommerce as % of Total Retail Sales</p> <p>eCommerce Penetration 4% in CQ2:10</p> <p>Mobile eCommerce Penetration?</p> <p>Note: (1) Adjusted for eBay by adding back eBay US gross merchandise volume; Source: US Dept. of Commerce (CQ2:10), Morgan Stanley Research.</p> <p>33</p> <p>Mobile Revolutionizing Commerce With Constant Product Improvements Location-Based Services Enable real-time physical retail / service opportunities Transparent Pricing Instant local + online price comparison could disrupt retailers Discounted Offers Deep discounts drive foot traffic to local retailers Immediate Gratification OTA (over-the-air) instant digital product + content deliveryLocation-Based Services Shopkick iPhone App Finds deals and offers in your area Transparent Pricing ShopSavvy Android App Comparison shopping among online + local stores Discounted Offers Groupon iPhone App Local Services Up to 90% Off Immediate Gratification iTunes Store on iPhone Music / video / apps delivered wirelessly</p> <p>Source: Company Reports, Morgan Stanley Research.</p> <p>34</p> <p>Mobile Shopping Apps - Changing Behavior + Driving Revenue &amp; ROI For Retail PartnersShopkicks Daily Walk-Ins to Retail Partners, 11/15/10 12/6/10More shopkick walk-ins to a retail partner on Cyber Monday due to the 3x kickbucks promotion than on Black Friday</p> <p>3XCyber Monday</p> <p># of Daily Walk-Ins</p> <p>Black Friday These types of experiments have been repeated a dozen times at 5 different retailers: every time, 50-100% increase in foot traffic</p> <p>11/15</p> <p>11/18</p> <p>11/21</p> <p>11/24</p> <p>11/27</p> <p>11/30</p> <p>12/3</p> <p>12/635</p> <p>Source: Shopkick. Note Shopkick has 750K users in five months since launch.</p> <p>Mobile Devices + Services Driving New Ways to Shop</p> <p>Mobile is clearly becoming a new way people shop[eBay has] nearly tripled mobile GMV (gross merchandise value) year-over-year to nearly $2 billion, with strong holiday shopping momentum in Q4. In 2011, we expect Mobile GMV to double to $4 billion.John Donahoe, President &amp; CEO, eBay CQ4:10 Earnings Call</p> <p>36</p> <p>EMERGENCE OF VIRTUAL GOODS &amp; IN-APP COMMERCE</p> <p>Virtual Goods = $2B Market in USAU.S. Virtual Goods Revenue, 2008 2011E $2,500 U.S. Virtual Goods Revenue ($MM)</p> <p>$2,000</p> <p>$1,500</p> <p>$1,000</p> <p>$500</p> <p>$0 2008Source: Inside Virtual Goods: The US Virtual Goods Market 2010-2011.38</p> <p>2009</p> <p>2010</p> <p>2011</p> <p>What Are Virtual Goods Anyway?Average # of Transactions &amp; Annual Dollar Spent by Virtual Goods, 9/09 Average Monthly Revenue per User $60 $50 $40 $30 $20 $10 $0 7 5 5 $30 $20 5 $20 5 $20 $12 5 5 $11 $50 # of Transactions Gross Dollars Spent</p> <p>Source: Playspan survey of 1736 respondents in 9/09.39</p> <p>Monetization Shift From Paid Downloads To Virtual Goods Has Been Profound For Many DevelopersAverage Daily Revenue for a KPCB Portfolio Company Virtual Goods Introduction Drove 5x Revenue Increase</p> <p>Source: KP Portfolio Company 40</p> <p>Powerful Shift to Ad &amp; Virtual Good Monetization from Initial Pay per Download Models</p> <p>Revenue Composition for Pinger a KPCB Portfolio Company 12/2009 5% Paid Downloads Advertising 64% Affiliate 2% Virtual Goods 35% 63% 12/2010</p> <p>30%</p> <p>Source: Pinger.41</p> <p>Gaming Elements = Key to Success For Many Mobile / Social Applications</p> <p>Gamification of apps is the ultimate way to engage a new generation of audiences.</p> <p>Bing Gordon, KPCB Partner, AIAS* Hall-of-Famer</p> <p>Note: *AIAS is the Academy of Interactive Arts &amp; Sciences.</p> <p>42</p> <p>NOT ALL PLATFORMS ARE CREATED EQUAL</p> <p>Global Smartphones Huge Android + iPhone Growth</p> <p>Global Smartphone Market Share - Q4:10 vs. Q4:09Q4 2010 shipments (M) Q4 2009 shipments (M) Growth Q410/Q409</p> <p>OS vendor</p> <p>% share</p> <p>% share</p> <p>Total Google* Nokia Apple RIM Microsoft Others</p> <p>101 33 31 16 15 3 3</p> <p>100% 33% 31% 16% 14% 3% 3%</p> <p>54 5 24 9 11 4 2</p> <p>100% 9% 44% 16% 20% 7% 3%</p> <p>89% 615% 30% 86% 36% -20% 65%</p> <p>*Note: The Google numbers in this table relate to Android, as well as the OMS and Taps platform variants. Source: Canalys estimates, Canalys 2011</p> <p>44</p> <p>Differences in Platform Engagement Internet + App Usage Massively Higher on Android + iOSMobile Platform Installed Base vs. App Downloads per Day Installed Base (MM) 17 1,000 800 600 400 200 0 8 4 5 50% population in developed markets will have Smartphone SoLoMo Social /...</p>

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