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Global internet trends you should know: From the Meeker Files

[1]“Queen of the Net” and acclaimed web analyst Mary Meeker [2] delivered one of her landmark presentations on worldwide internet trends at a recent Web 2.0 Summit [3] in San Francisco. When Meeker speaks, people listen. They listen very carefully. Meeker has become famous for her incisive presentations on the state of the internet, bringing it all together in a way that makes sense.

In “Ten Questions Internet Execs Should Ask & Answer [4]“, Meeker touches on the state of the web worldwide and how the net is evolving, analysing how the global internet order is changing with some new emerging market challengers. Meeker looks at the unrelenting pace of mobile (what presentation is complete without mobile hyperbole?), and what to expect in tech. Here are the key points:

1. Globality

The growth in internet usage is incredible with 18.8-trillion minutes spent online collectively in 2009. China and the US both lead in terms of absolute numbers of internet users, but phenomenal mobile internet growth is happening in Brazil, as well as in China, with 941% year on year growth. China and the US are also both homes to the largest social networks, Facebook and Tencent, the Chinese IM based social network with 637-million active users (currently larger than Facebook).

top internet markets [5]

2. Mobile (As if you hadn’t guessed)

Morgan Stanley projects that smartphone shipments will be greater than PC shipments within two years. You can take a moment to digest that. The iPhone, iPod Touch and iPad alone have experienced rates of adoption which far out-scale desktop internet adoption rates. The relative new kids on the block in the world of mobile operating systems, Apple and Android, are eating away at market share voraciously.

In Japan, social networking trends show how quickly mobile useage can overtake that of traditional desktop useage. The country’s leading social network Mixi [6] has shown a dramatic change in user behaviour, evolving from being essentially a desktop web site to a mobile-based site. In 2006 17% of Mixi’s page views were mobile based, now in 2010, an astounding 84% of all page views emanated from mobile only, with just 16% of page views from the desktop web.

Note: While these figures are indicative, it must be pointed out that page impression counts per user tend to be higher in the world of mobile. Note to Ms Meeker: It may be more useful to show unique user/readership counts than page impressions to demonstrate relative mobile vs desktop growth.

Mobile OS [7]

top mobile internet markets [8]

Smartphone vs PC Global Shipments [9]

3. Social Ecosystems

Facebook, Google and Apple are identified as the current and future masters of the universe, and their rapid innovation and strategic maneuvering will surely keep us all constantly guessing at their next moves. They have different approaches and different platforms, and the three key areas of Search, Social Networking and Mobile will be the battlegrounds in which they fight for dominance. These three companies touch all digital business globally, large and small, and are either unwittingly hurting or helping your business. They are in many senses determining the future of the net.

Facebook/Apple/Google [10]

4. That thing that makes the web spin – Advertising

Despite great gains in advertising spend, corresponding with the growth in total ad revenue over the past 15 or so years (a thousand fold, with U$54-billion generated in 2009) there still appears to be massive potential. Facebook and Twitter provide audiences as large as that of television in some developed countries, yet advertising spend on television is still much higher than in online advertising.

Relative to traditional media spend, there is still a disjunct between time spent vs advertising spent on internet channels. Meeker identifies a US$50-billion global online advertising opportunity. Meeker in fact identifies overspend in TV and print relative to time vs advertising budget spent. It will be interesting to see whether this will result in an advertising pullback in these mediums.

Meeker hints that there isn’t enough innovation in advertising, and that in fact the digital advertising space is “ripe for innovation”.

Media Time vs Ad Spent [11]

Ad Revenue Statistics [12]

5. Commerce!

The upward trend in US e-Commerce is steady and strong, but once again it is on mobile platforms that the hockey sticks start coming out. The innovation in mobile technologies, and in particular location-based services, is enabling companies to do business in ways and in scales previously unavailable.

6. Media

There has been a staggering increase in the amount of video content online, with of course YouTube accounting for the vast majority (unimaginable stat warning: 35 hours of content added every minute). Not only this – it has been at the expense of time spent on other forms of media, a fact sure to show significance across a variety of industries.

7. Internet company leadership evolution: Hello emerging markets

According to Meeker there have been “shocking” changes over just six years. And they will be even more shocking in the next six to come.

In the short period between 2004 and 2010, the rankings of the companies with the highest market value have seen substantial change. In fact two of the largest twelve in 2010 (Alibaba [13] and Baidu [14], both Chinese in origin) only went public after 2004. In total there are three Chinese internet companies in the top 15, six years ago there were none.

Among the losers were: Monster, WebMD, Shanda, NCSoft and Index. The winners are: Tencent, Baidu, Priceline.com, Salesforce.com, Alibaba.com, Akamai and Netflix. But one individual internet company leader inspired individual mention: Steve Jobs, head of Apple — now considered the top tech company by market valuation in the world.

Global Public Internet Companies [15]

level of global innovation [16]

8. Mr Steve Jobs

The legend in a black turtle neck is identified as having the “…mind of an engineer and the heart of an artist…”. He personifies some of the ingredients of the “secret sauce” of success in tech and digital: The artful blending of great technical and functional design with aesthetic beauty. Companies are going to be constantly challenged to innovate and excel at this blending of skills.

apple product growth [17]

9. Ferocious pace of change – What’s next in tech?

Mobile, mobile, mobile: It’s all happening right in your cellphone, with the parallel advances in internet-based and mobile phone engineering technologies creating new business possibilities by the day. There are uncommonly high levels of innovation occurring in companies with sizes and market dominance that usually affords a more relaxed pace to research and development. Think iPads, iPhones, Android, Search, Social and all good things mobile.

10. Mary provides a bitter-sweet ending

On the positive side, there are clear indications that the trends in innovation, revenue growth and company worth are upward and unrelenting amongst the industry giants. This stands in contrast to some worrying predictions about the future of the US economy.

The message from the US investment bank is clear — you need to be investing cash in digital by the wheelbarrow load, and not only will you stand in good stead to enjoy immense gains in this industry, but you may well just be saving the world from further economic collapse as well.

Numbers, of course, do not lie, and there are undeniably exciting statistics describing an area of intellectual, commercial and economic growth that is unprecedented. The proof is all around us all day long, and it’s a fair bet that a central component of that proof is, right this second, sitting quietly, powerfully and brimming with potential… in your pocket.