Mobile is eating the world
Benedict Evans
November 2013
www.ben-evans.com
Benedict Evans –– January 2020
2
Mobile is eating the world
!
November 2013
!
Benedict Evans
@benedictevans
Mobile scale
Tablets
Ecosystems
2
Mobile social &
discovery
The state of PCs
Global annual unit sales (m)
200
150
100
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Corporate PCs
Consumer PCs
Tablets
3
Source: Gartner, IDC, Enders Analysis
Smartphones are exploding
Global annual unit sales (m)
800
600
400
200
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Corporate PCs
Consumer PCs
Tablets
4
Smart phones
Source: Gartner, IDC, Enders Analysis
More mobile growth coming
Global annual unit sales (m)
1,800
1,350
900
450
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Corporate PCs
Consumer PCs
Tablets
5
Smart phones
All mobile phones
Source: Gartner, IDC, Enders Analysis
The future is mobile
Global annual unit sales (m)
1,250
1,000
750
500
250
0
1995
PCs
1997
1999
2001
2003
2005
2007
2009
2011
2013e
Smartphones and tablets
6
Source: Enders Analysis
The world in 2017
2017 forecast base (m)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Population
2012
Adults
Literate adults
Mobile
Smart phones
PCs
Tablets
Growth to 2017
7
Source: GSMA, World Bank, Enders Analysis
Growth in emerging markets
Global 3G/4G device unit shipments (m)
300
250
200
150
100
50
0
North America
2010
2011
Europe
2012
Japan/Korea
China/India
Latam
RoW
2013e
8
Source: Qualcomm
Fundamental change
• Mobile
was always much bigger than tech, but always separate
• Smartphones
• Internet
• Tablets
• This
mean the Technology and Mobile worlds merge
and Media are being dragged along
accelerate the change
is changing everything
9
Fundamental change in scale
Mobile industry
PC industry
• 350m
• 1.6bn
PCs sold in 2012
units in use
• Replaced
• 1.7bn
phones sold in 2012
• 3.2bn
mobile users
• Replaced
every 4-5 years
• One
• Shared
• Data
every 2 years
per person
plan penetration/pricing is
the only limit to growth
10
Fundamental change in use
Mobile internet
PC internet
• Shared, or
• Semi-portable
• Web
• Personal
used at work
• Taken
at best
everywhere
• Web, web
search, apps, social,
location, service integration,
prediction, APIs, image
recognition, local wireless…
and web search
11
What does mass mobile internet
use really mean? From this…
12
…to this
“I love reading about TV soaps
so I got the app on my phone”
13
Industry scale
2012 global revenue ($bn)
Mobile networks
Advertising
Mobile phones
PCs
Apple
Books
Online advertising
Amazon
Google
Watches
Recorded music
Facebook
0
250
500
14
750
1,000
1,250
Source: Zenith, Apple, Amazon, Google (excludes Motorola), Facebook, Enders Analysis, FSWI
Polarisation of manufacturers
Quarterly handset revenue, March 2011-Sept 2013 ($bn)
35
30
25
20
15
10
5
0
Samsung
Apple
Nokia
HTC
LG
15
Blackberry Moto
Sony
Other?
Source: Companies, Enders Analysis
The irrelevance of Microsoft
Microsoft share of connected device unit sales (%)
100
75
50
25
0
Mar-2009
Mar-2010
Mar-2011
16
Mar-2012
Mar-2013
Source: Enders Analysis
Scale at Samsung…
Samsung Electronics marketing budget ($bn)
4
3
2
1
0
Mar-2009
Advertising
Mar-2010
Mar-2011
Mar-2012
Mar-2013
Sales promotion
17
Source: Samsung
and scale at Apple
Daily visits to Apple retail stores (m)
1.50
1.25
1.00
0.75
0.50
0.25
0.00
Mar-2009
Mar-2010
Mar-2011
18
Mar-2012
Mar-2013
Source: Apple
Very different products
Global mobile handset industry, Q2 2013
200
Other Android
Units sold (m)
150
100
Samsung
Other feature
Nokia
50
0
Apple
LG, Sony, HTC, Moto
Blackberry
0
150
300
450
600
Average Selling Price ($)
Bubble area = revenue
19
Source: Companies, Enders Analysis
Apple sticking to the high end?
iPhone share of global mobile phone unit sales (%)
12
10
8
6
4
2
0
Jun-2007
Jun-2008
Jun-2009
Jun-2010
20
Jun-2011
Jun-2012
Jun-2013
Source: Apple, Enders Analysis
Scale
Tablets
Ecosystems
21
Mobile social &
discovery
Glass is eating the world
Global LCD screen sales (billion square feet)
4
3
2
1
0
2005
2006
2007
2008
2009
22
2010
2011
2012
2013e
Source: Corning
Tablets overtaking PCs
Global unit sales (m)
100
75
50
25
0
Jun-2010
Dec-2010
Tablets
Jun-2011
Dec-2011
Jun-2012
Dec-2012
Jun-2013
PCs
23
Source: Gartner, IDC, Enders Analysis
• Tablets
are not cannibalising PC sales yet - not
exactly
• However, tablets
and smartphones are crystalising
a rethink of consumer needs
• “Do
I really need to upgrade my PC? Do we
need another PC? Do I need a laptop as well?”
24
Tablet market splitting
Global unit sales (m)
60
45
30
15
0
Jun-2010
iPad
Dec-2010
Nexus
Jun-2011
Dec-2011
Other Android (activated)
25
Jun-2012
Dec-2012
Jun-2013
Android (unactivated)
Source: Apple, Google, Asus, Mediatek, Enders Analysis
iPad dominates use everywhere
Share of tablet web traffic, February 2013 (%)
100
80
60
40
20
0
US
iPad
UK
Android
Germany
France
Kindle Fire
Japan
China
Nook
26
Source: Adobe
Two distinct ‘tablet’ markets
The $100 generic
The ‘post-PC vision’
• Rich
• Black
apps and content
• $250+, 7” &
plastic no-brand
• Cheap
10”
7” $75-$125
• Massive
volume, but usage of
apps and web is near-invisible
so far
• Still
mostly iPad with some
Samsung - Nexus 7 sold
just 7m units in 12 months
• Mostly TV
27
& free games
Tablet dynamic quite different to
smartphones
Device prices ($)
700
600
500
400
300
200
100
0
Smartphone
iOS premium
Tablet
iOS mass-market
28
Good Android
Cheap Android
Tablet dynamic quite different to
smartphones
• Price
window underneath the iPhone is much larger than that
underneath the iPad
• Tablet
app gap is much larger - still very few premium apps
designed for Android tablet
• So
mid-range Android phones are much stronger propositions
than mid-range Android tablets
29
Source: Companies
Blurring definitions
Estimated Android user base, August 2013 (%)
Global
South Korea
0
20
Small (<3.5")
Small tablets (7-8.4")
40
60
Medium (3.5-4.9")
Large tablets (8.5"+)
30
80
100
Phablets (5-6.9")
Source: Flurry
Tablets in 2013
• Well
over 200m tablets will be sold in 2013
• Driven
by size and price - 7” screens, $300 and (far) below
•A
flood of cheap generic Chinese Androids - perhaps 125m
units in China alone this year, with prices under $150
• Apple
(and Nexus and Samsung) share falling fast - but really
there are two markets
31
Still lots of unknowns
• One
device per person or per household?
• Replaced
every 2 years? 5 years? • 10” tablets
mobile?
stay at home - will 7” ones? Will they become
• Will Android
break into the premium usage segment?
32
Scale
Tablets
Ecosystems
33
Mobile social &
discovery
‘Four horsemen’ driving the
agenda
Google
Apple
Facebook
34
Amazon
Ecosystem sizes
Active users (m)
900
600
300
0
Mar-10
Sept-10
Apple iOS
Mar-11
Google Android
Sept-11
Mar-12
Sept-12
Facebook mobile MAUs
35
Mar-13
Sept-13
Amazon accounts
Source: Apple, Google, Facebook, Amazon, Enders Analysis
Reach (≠ value)
Global internet audience, Q2 2013
9%
14%
47%
12%
18%
PC
Google Android
iOS
36
China PC
China Android
Source: ITU, CNNIC, Google, Apple, Enders Analysis
(Chinese Android isn’t Google)
Chinese Android app install vectors
7%
7%
6%
9%
73%
3rd Party store
OEM store
Play
37
Publisher
Other
Source: Umeng
Geographic variation
Facebook smartphone users by % of the base, November 2013
100
75
50
25
0
USA
iPhone
UK
Samsung Android
Spain
Indonesia
Other Android
38
Brazil
Blackberry
India
WP
Source: Facebook, Enders Analysis
Ecosystem is the key leverage
point
For Amazon, Google
and Facebook, the
experience on the
phone is what drives
engagement with all
their services
For Apple, the
ecosystem is what
sells hardware
39
People like apps
Stated cumulative app downloads (bn)
60
45
30
15
0
Jan-09
Jan-10
iOS
Jan-11
Jan-12
Jan-13
Dec-13
Android
40
39
Source: Apple, Google
Mobile platform wars over?
• Apple
and Google’s Android have won: unlikely that other
platforms will be relevant
• Apple
• But
camped out at the high end, Android taking the rest
Google’s control of Android is partial
• Facebook
and Amazon trying to extract value
• Samsung’s
position uncertain
41
Speed of innovation?
Active install base by operating system version, October 2013 (m)
400
300
200
100
0
Current (iOS7 / 4.3) Last Year (6 / 4.1 & 4.2) 2 years ago (5 / 4) 3 years or older (4 / 2.x)
iOS
Google Android
42
Source: Apple, Google, Enders Analysis
Different focus for innovation
Google
Apple
• Integrated
• Systemic
fragmentation, little
hardware control
hardware &
software
• Fingerprints, Bluetooth,
• Google
Now, Maps, Plus,
semantic search etc
Airdrop, 64 bit etc
• Move
innovation down the
stack (hard for Google)
• Move
innovation up the
stack (hard for Apple)
43
App engagement
iOS
Google Android
• 2bn
downloads and $1.1bn
gross revenue per month
• ~2-3bn
• Average
• Average
month
of 4-5 apps and
$2 spent per active device
per month
• Smaller, more
base
downloads per
of 3-4 apps
(perhaps) per active device
per month
engaged
• Much
lower payment rates
(but no data from Google)
44
Self-selection
• The
iPhone averages $575 and gets most of the high-end
• Android
sells at anything from $800 to $50, but averages $250-$300 • Apple
only sells to people with money to spend who (mostly) value
apps and a good experience - Android sells to everyone
• Hence
average engagement levels for iOS are far higher than
average for Android - but not all of Android is low
• Wide
geographic variation: a US $150 Android sees much lower
engagement than a Chinese or Indonesian one
45
Ecosystem cohorts
Value and engagement
High end devices, engaged
users. Mostly iPhone
Midrange Android,
some iPhone - engaged,
but spending less
Symbian, featurephones, much
low-end Android: little
engagement yet
User base
46
Ecosystem cohorts?
Active smartphones, Q2 2013
Often highly
engaged but hard
for foreigners to
address
2%
23%
Mostly highly
engaged and high
value
20%
12%
Lower average
engagement,
slowly increasing
iPhone
Android China
100-150m highly
engaged users value unclear
43%
Premium Android users
Windows Phone
47
Other Android users
Source: Apple, Google, Nokia, Enders Analysis
Future of Android
• ‘Android’ is
many things
• Forks, different
versions, Google layering tools on top, Amazon,
Xiaomi, Samsung playing with the value chain in different ways
• For
Google, Android began as ‘Webkit everywhere’ - a tool for
reach - which it gets on iOS and Kindle Fire as well
• So
how much control does it want? What happens to
Chrome? Where does Google want to sit in the stack?
48
Scale
Tablets
Ecosystems
49
Mobile social &
discovery
Mobile social scale
Mobile social messaging users (m)
800
600
400
200
0
FB WhatsAppWeChat Twitter
Monthly active
Line Instagram Skype
Viber
Kakao
Kik
Registered
50
Source: Companies
Mobile social scale
• Over
50 social messaging apps have had more than a million
downloads on Google Play
•A
dozen have had over 50m downloads
• Whatsapp
now sends 14bn messages/day: global SMS
volume is ~20bn
• 400m
photos/day shared on Whatsapp, 350m on Snapchat,
350m on Facebook, 55m on Intagram
51
Children’s use of messaging
UK 12-15 year old children’s messaging per week, 2013
300
250
200
150
100
50
0
Phone calls
SMS sent
52
App-based messages sent
Source: Ofcom
Smartphones are inherently
social, unlike the desktop web
• Smartphone
address book is a ready-made social graph that
all apps can tap into
• Photo
• Push
library is open to all apps
notifications remove the need to check multiple sites
• Home
screen icons are easier to switch between than
different websites
53
People happily abandon history
• Remember
Myspace, Bebo, Tuenti, Orkut...
• People
appear to regard almost all of what they share on a
social network as transitory - and not just for Snapchat
• People
walk away from the archive - social detox
• Perhaps
• This
social networks are sticky like nightclubs, not banks
makes mobile social potentially very volatile
54
• Vastly
less friction to adopt social apps on mobile
• People
jump from network to network and
abandon old ones
• All
that matters is what your friends use today
55
Facebook is one of many
UK 15-24 year old mobile users, May 2013
11%
21%
Two thirds are
using Facebook on
mobile…
10%
10%
48%
Facebook
No social apps
Facebook and other social apps
No smartphone
56
But half are using
other apps as well
Other social apps, no Facebook
Source: Enders Analysis
Facebook is doing well on mobile
Facebook revenue by source ($m)
2,500
2,000
1,500
1,000
500
0
Sep-11
Dec-11
Desktop ads
Mar-12
Jun-12
Mobile
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Payments
57
Source: Facebook
Half of DAUs are mobile-only
Facebook Daily Active Users - DAUs (m)
1,200
900
600
300
0
Sep-12
Desktop only
Dec-12
Mar-13
Mobile & desktop
Jun-13
Sep-13
Mobile only
58
Source: Facebook
Is the mobile opportunity so big
that it doesn’t matter to
Facebook if it isn’t dominant?
59
Unbundling
60
Source: Andrew Parker
The aggregation cycle
• Value
to aggregating all your needs/services/content/
messaging/friends in one place
• Over
time, the gravity well sucks in more and more
adjacencies
• Category
killers emerge, lock-ins turn out not to matter so
much and the aggregator is unbundled
• And
then the cycle repeats
61
Unbundling
Facebook
• Each
part of the Facebook
experience gets peeled away
on mobile
• Photos, text, music, video...
62
Unbundling functions or
unbundling friends?
• People
aren’t using Instagram for photos, WhatsApp for text,
Line for stickers...
• They’re
using everything for everything
• Overlapping Venn
social groups
Diagrams of networks, use cases and
• Not
really any different from choosing between SMS, email
and voice - just more options
63
Mobile social is still in flux
• Facebook
nailed the desktop social experience - no-one has
nailed it on mobile yet
• Start
with messaging & photos, but what then? • Searching
for new models of interaction
• Interconnect
with PSTN? Stickers? Disappearing photos?
Channel for brands? API? Payments?
• Embedded
content, sharing, discovery and distribution
64
There’s money in stickers
Line revenue ($m)
125
100
75
50
25
0
June 2012
Sept 2012
Dec 2012
65
March 2013
June 2013
Source: Naver
The real opportunity is creating
the next platform
• Role
of mobile social in discovery & distribution still undefined
• Line
and Wechat now mounting expensive marketing
campaigns - global and local
• Snapchat
• Building
attracting a $3-4bn valuation, Instagram looks cheap?
the next distribution and advertising platform
66
Cards as content packets - social
as discovery
67
Two trends for mobile content
Atomised content
App silos
• Split
content into individual
packets that can be routed
across multiple networks
• Tablet
apps can get 30 minute
sessions
• Very
tough to do SEO, SEM,
acquisition data, sharing, social
• Pinterest, Tumblr, Twitter
cards,
Line, Kik, Facebook embeds
• Deep
• Every
piece of content is the
home page
• Tough
linking in very early stages
acquisition but valuable
users once acquired
68
Again, all this is in flux
App silos
Atomised content
• Future
• App
role of Facebook?
• Consolidation?
Local winners?
discovery?
• Deep
• Simplicity
(Whatsapp) or rich
platforms (Line, Wechat)?
• OS
linking? integration? • HTML5/hybrid/native?
• Indexing?
Search? Deep
linking? Federation? APIs?
• Disaggregation
and return to
the web model?
69
Broader uncertainty and
opportunity
• The
basic interaction model of the web was set by the late 1990s web page linking to web page
• Mobile
isn’t nearly as clear yet: web, web apps, native apps, push
notifications, deep links, OS integration (Siri, Now, Maps etc) - and
much more to come
• Not
just apps - all mobile service discovery is in a pre-PageRank state
• Not
clear at all what mobile will look like in 5 years
• Very
likely social apps could be a major part of the glue
70
Blurring boundaries
• The
things that link and drive service use and discovery on
mobile are still evolving - but social will be an important part
• What
• Pay
is the identity platform - if any?
attention to things that act both as protocols and services
• Pay
attention to blank canvases, where users can create new
services
71
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Thank you
More:
@benedictevans
www.ben-evans.com
www.ben-evans.com/newsletter
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