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Stanford: Internet Trends

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  • 1. INTERNET TRENDS@ STANFORD - BASES KICK OFF12/3/2012Mary Meeker

2. Outline1) Basic Stats Internet Growth Remains Robust, Rapid Mobile Adoption Still in Early Stages2) Re-Imagination of Nearly Everything3) Asset-Light Generation From Hand to Cloud & BackRise of the Sharing Economy4) USA, Inc. A Lot to be Excited About in Tech, a Lot to be Worried about in Other Areas 2 3. BASIC STATS INTERNET GROWTHREMAINS ROBUST, RAPID MOBILEADOPTION STILL IN EARLY STAGES 3 4. INTERNET USERS 4 5. 2.4B Global Internet Users in 2012* 8% Y/Y Growth*, Driven by Emerging Markets 2008-2012 Internet User 2012 Internet Population Rank Country Adds (MMs) Users (MMs)Y/Y Growth Penetration 1China 282538 10% 40% 2India88137 26 11 3Indonesia395558 23 4Iran 3542 205 55 5Russia 3370 6 49 6Nigeria314815 30 7Philippines283432 35 8Brazil 2788 6 45 9Mexico 1942 9 3710USA182443 7811Argentina172857 6812Egypt173011 3813Colombia 142539 5414Turkey 133517 4715Vietnam1231 7 35Top 156731,447 15%34%World 9022,4068%34%Note: *Data as of 6/12, 2.4B global Internet users and 8% Y/Y growth rate based on the latest available data. Source: United Nations / International Telecommunications Union, internetworldstats.com. 5 6. MOBILE USERS 6 7. 1.1B Global Smartphone Subscribers, 42% Growth, Q4:12 @ Only 17% of Mobile Subscribers Q4:12 Smartphone Smartphone Q4:12 Smartphone SmartphoneSmartphone as % ofSub Y/Y Smartphone as % ofSub Y/YRank Country Subs (MM) Total Subs GrowthRank Country Subs (MM) Total Subs Growth1 China27024%50% 16Saudi Arabia 15 31%38%2 USA17248 5017Philippines15 14 383 Japan*7865 1118Mexico 15 14 554 Brazil5520 3519Thailand 14 17 435 India 44 4 5220Turkey 13 19 526 UK3545 3121Malaysia 12 32 237 Korea 3259 3522South Africa 11 18 268 Indonesia 27 9 3623Argentina11 19 559 France2638 3324Netherlands 9 47 37 10 Germany 2523 1925Poland9 16 30 11 Russia22 9 4426Sweden8 54 24 12 Spain 1830 1427Egypt 78 40 13 Italy 1619 2828Iran78 53 14 Australia 1650 4429Taiwan7 24 80 15 Canada1555 3830Hong Kong 6 48 48Global Smartphone Stats: Subscribers = 1,142MM Penetration = 17%Growth = 42% Note: *Japan data per Morgan Stanley Research estimate. Source: Informa. 7 8. MODERN MOBILE DEVICE EVOLUTION 8 9. iPods Changed Media IndustryiPhones Ramped EvenFasteriPad Growth (3x iPhone) Leaves Siblings in Dust First 10 Quarters Cumulative Unit Shipments, iPod vs. iPhone vs. iPad 40,000 4,000 100,000 iPadiPad iPad iPhone iPhone iPhoneiPodiPodiPod 35,000 3,50080,000 30,000 3,000Global Unit Shipments (000)Global Unit Shipments (000)Global Unit Shipments (000) 25,000 2,50060,000 20,000 2,00040,000 1,500 15,000 1,000 10,00020,000 5005,000000 000 111 2223 33 4 445 5667 7 8 899 1010Quarters After LaunchQuarters After Launch Quarters After Launch Source: Apple, as of CQ3:12 (10 quarters post iPad launch). 9 10. Android Phone Adoption Has Ramped Even Faster Nearly 6x iPhoneFirst 16 Quarters Cumulative Global Android & iPhone Unit Shipments700AndroidiPhone600Global Cumulative Unit Shipments (MM)500400300200100 00 12 3 4 5 67 8910 11 12 13141516Quarters After Launch Source: Gartner, Morgan Stanley Research, as of Q3:12. 10 11. Despite Tremendous Ramp So Far,Smartphone User Adoption Has Huge UpsideGlobal Smartphone vs. Mobile Phone Users, 2012E6,0005B Mobile Phone Users5,000Global Users (MM)4,0003,0002,000 1BSmartphoneUsers1,000 0Smartphone Mobile PhoneSource: Morgan Stanley Research estimates.Note: One user may have multiple devices. Therefore the number of actual smartphone and mobile phone devices in use is likely higher than 11 the user data shown here. 12. Impressive 29%+ of USA Adults Own Tablet / eReader,Up from 2% Less Than Three Years Ago% of USA Adults Who Own Tablet Computers or eReaders, 4/09 1/1235% USA Adults that own tablet computers29%30%25% or eReaders (%)20%15%10%5% 2%0%4/09 9/095/10 9/10 11/10 5/11 8/1112/111/12 Source: Pew Research Center, 1/12.12 13. iPad = 48% of American Kids Want One for ChristmasWhile 36% Want a Mini Interest in Buying in Next 6 Months Among USA Kids Ages 6-12 iPad 48% Nintendo Wii U 39% iPad Mini36% iPod Touch 36% iPhone 33%Kinect for Xbox 360 31% Computer 31% Nintendo 3DS / 3DS XL 29%Tablet Computer other than iPad29% Nintendo DS / DS Lite / DSi / DSi XL 28% Sony Playstation 326%Microsoft Xbox 36025% E-Reader21%Nintendo Wii20%Smartphone other than iPhone20%Kindle Fire19% Smart TV19% PlayStation Portable18% Android Smartphone16%PlayStation Vita 14%PlayStation Move 14%Samsung Galaxy (Note or Tab)9%Other Mobile Phone 8%Microsoft Surface 6%Apple TV 4%0% 10%20% 30% 40% 50% 60% Source: Nielsen, 11/12 13 14. MOBILE MOJO14 15. Global Mobile Traffic Growing Rapidly to 13% of Internet TrafficGlobal Mobile Traffic as % of Total Internet Traffic, 12/08 11/1215% 13% in 11/12% of Internet Traffic10%4% in 12/105% 1% in 12/090%12/08 6/09 12/09 6/1012/106/11 12/11 6/12Source: StatCounter Global Stats, 11/12 15 16. In India, Mobile Internet Traffic Surpassed Desktop Internet Usage inMay, 2012 - Other Countries to Follow India Internet Traffic by Type, Desktop vs. Mobile, 12/08 11/12100%80%% of Internet Traffic60% Desktop InternetMobile Internet40%20% 0% 12/08 6/09 12/09 6/10 12/10 6/11 12/11 6/12Source: StatCounter Global Stats, 11/12 16 17. Mobile Monetization Growing Rapidly (67% Apps, 33% Ads) Global Mobile App + Advertising Revenue, 2008 vs. 2012E $25Mobile Apps $19BMobile Ad + Apps Spending ($B) $20Mobile Advertising $15 $10 $5$0.7B $0200820092010 2011 2012E Source: Gartner, eMarketer, Strategy Analytics. CAGR is compound annual growth rate. Note: Apple has paid >$6.5B $s to developers as of 9/12, implying gross app market revenue of >$9B in 4 years; Google indicated during CQ3 earnings call that it expects $8.0B mobile ad revenue in 2012E, up from $2.5B in 2011. 17 18. Mobiles + Tablets = 24% of Online Shopping on Black Friday in 2012(vs. 6% Two Years Ago), iOS 4x > than Android% of USA Black Friday Internet Shopping Traffic From Mobile + Tablet Devices, 2010 201224% % Share of All Internet Shopping Traffic25%20%14%15%10%6%5%0% 2010 20112012iPhone iPadAndroidKindle and Nook Galaxy Tab Other Note: Black Friday (11/23/12) is the day following Thanksgiving Day in USA, traditionally the beginning of the Christmas shopping season. On this day, most major retailers open early and offer promotional sales to kick off the18 holiday shopping season. Source: IBM Digital Analytics Benchmark 19. Material Upside for Mobile Ad Spend vs. Mobile Usage% of Time Spent in Media vs. % of Advertising Spending, USA 2011Time Spent Ad Spend 50% % of Total Media Consumption TimeInternet AdMobile Ad or Advertising Spending 40% 43% 42% = $30B* = $1.6B* 30% 25% 26%~$20B+ 20%22%Opportunity in USA15% 10% 11% 10% 7%1% 0%PrintRadio TV Internet MobileNote: *Internet (excl. mobile) advertising reached $30B in USA in 2011 per IAB, Mobile advertising reached $1.6B per IAB. Print includes newspaper and magazine. $20B opportunity calculated assuming Internet and Mobile ad spend share equal their respective time spentshare. Source: Time spent and ad spend share data eMarketer, 12/11, Internet and mobile ad dollar spent amount per IAB.19 20. RE-IMAGINATION OF NEARLYEVERYTHING POWERED BY NEW DEVICES +CONNECTIVITY + UI + BEAUTY WHERE WE ARE NOW 20 21. Re-Imagination of a Big Idea We hope to rewire the way people spread and consume informationWe think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services. - Mark Zuckerberg, Founder / CEO, FacebookLetter to Potential Shareholders, May 2012 21 22. Re-Imagination of Computing DevicesTHEN NOW (Desktops / Notebooks) (Tablets / Smartphones)22 23. Re-Imagination of User Interfaces THEN NOW(Keyboard + Mice =(Touch + Voice + Gesture =Graphical User Interface) Natural User Interface) 23 24. Re-Imagination of Computing Operating Systems -iOS + Android = 45% Share vs. 35% for WindowsGlobal Market Share of Personal Computing Platforms by Operating System Shipments, 1975 2012E 19831998 2005 2012EWintel - 25% Wintel 96% Wintel 35%100%Market Share of Personal Computing Platforms by90%80%70% Operating Systems (%)60% Atari TRS-80WinTel50%40% Apple30%20% Other10%AmigaCommodore Android 0% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Source: Asymco.com (as of 2011), Public Filings, Morgan Stanley Research, Gartner for 2012E data. 2012E data as of Q3:12. 24 25. Global Smartphone + Tablet Shipments Exceeded PCs in Q4:10 Global Unit Shipments of Desktop PCs + Notebook PCs vs. Smartphones + Tablets, 2005-2015E 1,800 1,600 1,400 Global Unit Shipments (MMs) 1,200Q4:10: Inflection Point 1,000 Smartphones + Tablets > Total PCs 800 600 400 200 0 2005 2006 2007 200820092010 2011 2012E 2013E2014E 2015E Desktop PCsNotebook PCs Smartphones TabletsNote: Notebook PCs include Netbooks. Source: Katy Huberty, Ehud Gelblum, Morgan Stanley Research. 25 Data and Estimates as of 9/12. 26. Global Smartphone + Tablet Installed Base Should ExceedPC Installed Base in Q2:13E Global Installed Base of Desktop PCs + Notebook PCs vs. Smartphones + Tablets, 2009-2015E 3,000Q2:13E: Projected Inflection Point Smartphones + Tablet Installed Base > 2,500 Total PCs Installed Base Global Installed Base (MMs) 2,000 1,500 1,0005000 20092010 2011 2012E2013E2014E 2015E Desktop PCs Notebook PCs SmartphonesTabletsNote: Notebook PCs include Netbooks. Assumes the following lifecycles: Desktop PCs 5 years; Notebooks PCs 4 years; Smartphones 2 years; Tablets 2.5 years. Source: Katy Huberty, Ehud Gelblum, Morgan Stanley Research. Data and Estimates as of 9/12. 26 27. Re-Imagination of ConnectivityTHEN NOW 27 28. 125 Years In, Landlines Were Surpassed by Mobiles in 2002 Global Fixed Telephone Lines vs. Mobile Subscriptions, 1994 - 2009 5,000 Global Installed Base (MMs)Fixed Telephone Lines 4,000Mobile Subscriptions 3,0002002 2006 2,000Mobiles > LandlinesLandlines

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