2013 year in mobile

2013
-‐
The
Year
Ahead
In

Mobile

Alex
Cocotas

Research
Analyst,
Business
Insider
Intelligence

Now
that
the
year-‐end

2012
data
is
in,
where’s
the

mobile
industry
headed

this
year?

As
of
year-‐end
2012:
2.5+
billion
people
online

Global)Internet)Popula4on)
3,000"

2,500"

2,000"
(millions))

1,500"

1,000"

500"

0"
1990"1991"1992"1993"1994"1995"1996"1997"1998"1999"2000"2001"2002"2003"2004"2005"2006"2007"2008"2009"2010"2011"2012"
Source:(Interna-onal(Communica-on(Union,(Google,(Internet(World(Stats,(BI(Intelligence(es-mates(

~35%
of
global
population

Global&Internet&Popula*on&
8,000"

7,000"

6,000"

5,000"
(millions)&

4,000"

3,000" Global&Popula*on&

2,000"

1,000"
Internet&Popula*on&

0"
1990"1991"1992"1993"1994"1995"1996"1997"1998"1999"2000"2001"2002"2003"2004"2005"2006"2007"2008"2009"2010"2011"2012"
Source:(Interna-onal(Communica-on(Union,(Google,(Internet(World(Stats,(BI(Intelligence(es-mates((

Mobile
is
already
1/7
of

global
Internet
traﬃc
and

growing
its
share
quickly

Mobile
now
accounts
for
15%
of
global
Internet
traﬃc

Global(Internet(Traﬃc:(Mobile(vs.(Desktop(
100%#

90%#
Desktop(
80%#

70%#

60%#

50%#

40%#

30%#

20%# 15%(
Mobile(
10%# 4%(
1%(
0%#
Dec#08# Apr#09# Aug#09# Dec#09# Apr#10# Aug#10# Dec#10# Apr#11# Aug#11# Dec#11# Apr#12# Aug#12# Dec#12#
Source:(StatCounter(

Mobile
on
pace
to
top
25%
of
traﬃc
by
year-‐end
2013

Mobile#Internet#As#A#Percentage#Of#Total#Internet#Traﬃc#
100%#

90%#

80%#

70%#

60%#

50%#

40%#

30%#

20%#
15%#
10%#
4%#

0%#
Dec#10# Apr#11# Aug#11# Dec#11# Apr#12# Aug#12# Dec#12#
Source:(StatCounter(

Device
sales
are
pushing

people
onto
the
mobile

Internet

Smartphone
growth
continued,
while
PC

shipments
actually
declined
last
year

Global)Internet)Device)Shipments)
1,400,000,000"

1,200,000,000"

1,000,000,000"
Tablets)

800,000,000"

600,000,000"
Smartphones)

400,000,000"

200,000,000"
Personal)Computers)

0"
2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012"
Source:(Gartner,(IDC,(Strategy(Analy5cs,(company(ﬁlings,(BI(Intelligence(es5mates(

And
the
disparity
will
only
grow

Global)Internet)Device)Shipments)Forecast)
3,000,000,000"

2,500,000,000"

Tablets)
2,000,000,000"

1,500,000,000"
We
are
here

1,000,000,000" Smartphones)

500,000,000"

Personal)Computers)
0"
2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013E" 2014E" 2015E" 2016E"
Source:(Gartner,(IDC,(Strategy(Analy5cs,(company(ﬁlings,(BI(Intelligence(es5mates(

Tablets
are
poised
to
take

a
huge
leap
this
year

U.S.
tablet
penetration
now
~25%,
so
plenty
of

room
to
grow

U.S+Smartphone+and+Tablet+Owners+
140"

120"

100"
(millions)+

80"

60"
Smartphone+Owners+

40"

20"
Tablet+Owners+

0"
May+10" Aug+10" Nov+10" Feb+11" May+11" Aug+11" Nov+11" Feb+12" May+12" Aug+12" Nov+12"
Source:(Pew(Research(Center,(comScore,(U.S.(census(bureau(
Note:(Includes(smartphones(owners(over(age(of(13(and(tablet(owners(over(the(age(of(18(

But
…
unlike

smartphones,
tablet

sales
aren’t
usually

subsidized
by
carriers

That’s
why
current
owners
tend
to
be
moneyed

U.S."Tablet"Penetra6on"By"Household"Income"
50%#
47%#

45%#

40%#
36%#
%"of"U.S."adults"that"own..."

35%#
32%#

30%#
27%#

25%#
22%#
20%#
20%#
16%#
15%#
10%# 10%#
10%# 9%#
8%# 8%#

5%# 4%# 4%#
3%# 3%#

0%#
Nov#10# Dec#11# Jan#12# Aug#12#
Source:(Pew( <$30,000# $30,000<$49,000# $50,000<$74,999# $75,000+#

And
a
bit
older
…

U.S."Tablet"Penetra6on"By"Age"
35%#

31%#
30%#
27%# 27%#
25%#
%"of"U.S."adults"that"own..."

25%# 24%#

20%#

15%#
15%# 14%#
13%#

10%#
10%#
8%#
7%#
6%# 6%#
5%#
5%# 4%#
2%#

0%#
Nov#10# Dec#11# Jan#12# Aug#12#
Source:(Pew( 18829# 30849# 50864# 65+#

Thankfully,
tablets
and
mini-‐tablets
are

getting
cheaper
…
Even
Apple
is
price-‐cutting

iPad%Average%Selling%Price%
$700#

$600#

$500#

$400#

$300#

$200#

$100#

$0#
Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012# Q4#2012#

Lower
prices
will
help
tablet
sales
skyrocket

Tablet)Shipments)Forecast)
500"

450"

400"

350"

300"
(millions))

250"

200"
We
are
here

150"

100"

50"

0"
2010" 2011" 2012E" 2013E" 2014E" 2015E" 2016E"

And
tablet
sales
are
just
getting
started
globally

Global&Tablet&Shipments&
40"

35"

30"

25"
(millions)&

20"

15"
Global&

10"

5"

China&
0"
1Q11" 2Q11" 3Q11" 4Q11" 1Q12" 2Q12" 3Q12"
Source:(Analysys(Interna1onal,(iSuppli,(IDC,(BII(es1mates(

In
2013,
the
mobile
growth

story
will
shift
to
the

developing
world

Mobile
is
driving
Internet
penetration
in
China

Chinese'Internet'Users'
600"
Total'

500"

Mobile'
400"
(millions)'

300"

200"

100"

0"
June"06" Dec"06" June"07" Dec"07" June"08" Dec"08" June"09" Dec"09" June"10" Dec"10" June"11" Dec"11" June"12" Dec"12"
Source:(China(Internet(Network(Informa5on(Center(

(Which
stands
at
42
percent)

China&Internet&Penetra,on&
50%#

45%#
42%#
40%#

35%#

30%#

25%#

20%#

15%#

10%#
9%#
5%#

0%#
Dec#05#Jun#06#Dec#06#Jun#07#Dec#07#Jun#08#Dec#08#Jun#09#Dec#09#Jun#10#Dec#10#Jun#11#Dec#11#Jun#12#Dec#12#
Source:(CNNIC(

It
is
now
the
world’s
largest
smartphone

market

Global%Smartphone%Shipments%
!180,000!!

!160,000!!

!140,000!!

!120,000!!
(thousands)%

!100,000!!

!80,000!! Rest%Of%The%World%

!60,000!!

!40,000!!

!20,000!! China%

!"!!!!
1Q11! 2Q11! 3Q11! 4Q11! 1Q12! 2Q12! 3Q12!
Source:(Gartner,(IDC,(Strategy(Analy5cs,(Canalys,(BII(es5mates(

Android
is
winning
China’s
platform
race

Chinese'Smartphone'Market'Share'By'Pla9orm'
100%#
Other'
90%#

80%# Symbian'

70%# Apple'

60%#

50%#

40%# Android'

30%#

20%#

10%#

0%#
Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Analysys(Interna1onal(

Which
is
bad
news
for

Apple

Because
the
next
wave
of
adoption
will
come

from
countries
like
China

BRICs:)Mobile)and)Smartphone)Penetra:on)
1,400% 1,344%

1,241%
1,200%
1,090%

1,000%
1,090%

800%
(Millions))

600%

400%

259%
222% 228%
197%
200% 142%

48% 33% 14%
0%
China% India% Russia% Brazil%
Popula>on% Mobile%Phone%Subscrip>ons% Ac>ve%Smartphones%(YearJEnd%2012e)%
Sources:)Carriers,)governments,)Flurry,)TomiAhonen)Consul9ng,)Umeng,)Cybermedia)Research,)BII)Es9mates)

Large
populations,
low
penetration
…
but
less
money

BRICs:)Smartphone)Penetra'on)As)%)Of)Mobile)Subscrip'ons)
25%$
Penetra'on)As)%)Of)Mobile)Connec'ons,)Year7End)2012)Es'mate))

20%$
20%$

15%$ 14%$

10%$

5%$ 5%$
5%$

0%$
China$ Russia$ India$ Brazil$
Sources:)Carriers,)governments,)Flurry,)TomiAhonen)Consul9ng,)Umeng,)Cybermedia)Research,)BII)Es9mates)

And
iPhones
aren’t
getting
any
cheaper

iPhone'Average'Selling'Price'
$700$

$650$

$600$

$550$

$500$

$450$

$400$
Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$
2008$ 2008$ 2008$ 2009$ 2009$ 2009$ 2009$ 2010$ 2010$ 2010$ 2010$ 2011$ 2011$ 2011$ 2011$ 2012$ 2012$ 2012$ 2012$

Which
is
what
is
driving
this…

The
shift
to
low-‐end
emerging

markets
is
crucial
because
…

Technology
adoption
growth
slows
after

hitting
the
50%
penetration
tipping
point

Because
under-‐penetrated
segments
are
older

and
less
wealthy

Smartphone+Penetra-on+By+Age+And+Income+(U.S.)+
90%$
81%$
80%$ 76%$
74%$
72%$
70%$ 67%$

60%$ 61%$
59%$ 58%$
60%$
51%$
50%$ 47%$ 46%$
42%$
40%$
34%$
31%$
30%$ 25%$
22%$
20%$ 16%$

10%$

0%$
Ages$18$1$24$ Ages$25$1$34$ Ages$35$1$44$ Ages$45$1$54$ Ages$55$1$64$ Ages$65+$
<$50k$ 50k$1$100k$ 100k+$
Source:(Nielsen(Mobile(Insights,(Q1(2012(

Even
though
it
may
look
like
upside
is
still

huge
for
phone
manufacturers

U.S&Mobile&Market&Share&By&PlaAorm&
250"

200"

150"
Non8Smart&
Total&
Mobile&
Users&
(millions)&
100"

Android&
50"
Apple&

Blackberry&
0" Other& Microso,&
Q4"2009" Q1"2010" Q2"2010" Q3"2010" Q4"2010" Q1"2011" Q2"2011" Q3"2011" Q4"2011" Q1"2012" Q2"2012" Q3"2012" Q4"2012"
Source:(comScore(

(as$a$percentage$of$the$mobile$popula9on)$

0%#
10%#
20%#
30%#
40%#
50%#
60%#
Jan#10#
Feb#10#

18%$
Mar#10#
Apr#10#
May#10#

Source:(comScore(
Jun#10#
Jul#10#
Aug#10#
Sep#10#
Oct#10#
Nov#10#
Dec#10#
Jan#11#
Feb#11#
Mar#11#
Apr#11#
May#11#
Jun#11#
Jul#11#
Aug#11#
Sep#11#
Oct#11#
Nov#11#
Dec#11#
Jan#12#
U.S.$Smartphone$Penetra9on$

Feb#12#
Mar#12#
Apr#12#
May#12#
Jun#12#
Jul#12#
Aug#12#
Sep#12#
Oct#12#
The
U.S.
has
already
reached
that
point

53%$

Nov#12#

So
have
the
largest
European
markets

European)Smartphone)Penetra/on)
70%$ (%)of)mobile)phone)users,)age)13+))
63%$ 62%$
60%$
55%$
51%$ 51%$
50%$ 48%$ 48%$ 48%$

42%$ 42%$
40%$ 38%$ 38%$
34%$ 35%$ 34%$
31%$
30%$
26%$ 25%$

20%$

10%$

0%$
EU5$ Spain$ UK$ France$ Italy$ Germany$
Source:(comScore( Dec$10$ Oct$11$ Oct$12$

And
penetration
will
slow
as
a
result

U.S.%Smartphone%Market:%Year9Over9Year%Net%Adds%
40"

35"

30"

25"

Users%
Added% 20"
(millions)%

15"

10"

5"

0"
Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4"
2008" 2008" 2008" 2008" 2009" 2009" 2009" 2009" 2010" 2010" 2010" 2010" 2011" 2011" 2011" 2011" 2012" 2012" 2012" 2012"
Source:(comScore,(Nielsen,(BI(Intelligence(es4mates(

But
globally,
it’s
still
early
days

Global!Smartphone!Penetra>on!Forecast!
!2,500!!

!2,000!!

!1,500!! Feature'Phone'Sales'
Global!Mobile!
Phone!Sales!
(millions)!
!1,000!!

!500!! Smartphone'Sales'

!"!!!!
2010! 2011! 2012! 2013! 2014! 2015! 2016!

In
the
developed
world,
the

focus
will
be
on
monetizing

users

Over
50%
of
U.S.
mobile
consumers
have

downloaded
apps,
browsed
mobile
Web

U.S.%Mobile%Content%Usage%
80%#

Sent%Text%Message%
70%#

60%#
%%of%mobile%populaCon%that%has...%

Used%Downloaded%Apps%

50%#
Used%Browser%

Accessed%Social%Network%
40%# %Or%Blog%

Played%games%
30%#
Listened%to%music%%

20%#

10%#

0%#
Feb# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May#June#July# Aug# Sep# Oct# Nov#
10# 10# 10# 10# 10# 10# 10# 10# 10# 10# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12#
Source:(comScore(

For
now,
U.S.
mobile
audiences
are
still
growing

Top(Mobile(Categories(By(Audience(Growth,(Oct.(2011(vs.(Oct(2012((U.S.)((
40,000$

35,000$

30,000$
Audience(Size((thousands)(

25,000$

60%$
20,000$ 51%$
56%$

46%$
15,000$
46%$
47%$
62%$ 48%$
10,000$ 53%$
50%$

5,000$

0$
Books$and$ Retail$ Payments$ Lifestyle$ Credit$cards$ Men's$ Travel$Service$ Beauty$and$ Kids$and$ Shopping$
Magazines$ magazines$ fashion$ Family$ Guides$
Source:(comScore(
Note:(Includes(both(mobile(web(and(app(audience(
Oct.$2011$ Oct.$2012$

Even
among
the
largest
mobile
categories

Top(Mobile(Categories(By(Audience(Size,(Oct.(2011(vs.(Oct(2012((U.S.)((
100,000$

90,000$

80,000$

25%$
70,000$
Audience(Size((thousands)(

60,000$ 32%$

30%$
26%$
50,000$

26%$
40,000$ 28%$
40%$
30%$
30,000$ 37%$ 36%$

20,000$

10,000$

0$
Weather$ Search$ Maps$ News$ Sports$ Entertainment$ Banking$ Movie$Info$ Tech$news$ Restaurant$
News$ Info$
Source:$comScore$
Note:$Includes$both$mobile$web$and$app$audience$ Oct.$2011$ Oct.$2012$

Mobile
consumers
glued
to
games,

entertainment,
and
social
networks

Global&iOS&&&Android&Time&Spent&Per&App&Category&
Other&
11%&

U<li<es&
10%&

Games&
43%&
Entertainment&
10%&

Social&Networking&
26%&

Source:
Flurry,
November
2012

In
2013,
we’ll
top
1
million
apps
on

Android
and
iOS

Available(Apps,(iOS(vs.(Android((thousands)(

800"

700"
650"
600"

500"
425"
400"
350"

250" 250"
200"
160"
80"
28" 20"
2"

Mar"09" Dec"09" Aug"10" May"11" Jul"11" Oct"11" Jun"12" Jan"13"
Android" iOS"
Source:(Apple,(Google,(Flurry,(news(reports"

Downloads
continue
to
grow
frantically

Apple%App%Store%Downloads%
45,000,000,000"

40,000,000,000"

35,000,000,000"

30,000,000,000"

25,000,000,000"

20,000,000,000"

15,000,000,000"

10,000,000,000"

5,000,000,000"

0"
7/1/08"
9/1/08"

1/1/09"
3/1/09"
5/1/09"
7/1/09"
9/1/09"

1/1/10"
3/1/10"
5/1/10"
7/1/10"
9/1/10"

1/1/11"
3/1/11"
5/1/11"
7/1/11"
9/1/11"
11/1/11"
1/1/12"
3/1/12"
5/1/12"
7/1/12"
9/1/12"

1/1/13"
11/1/08"

11/1/09"

11/1/10"

11/1/12"

And
time
spent
in
apps
continues
to
skyrocket

U.S.(Web(vs.(Mobile(App(Consump:on(
140#

120# 127#

100#
Minutes(Per(Day(

94#
80#

70# 72# 70#
60# 66#

40#

20#

0#
Dec#2010# Dec#2011# Dec#2012#
Web#Browsing# Mobile#Apps#
Source:(comScore,(Alexa,(U.S.(Bureau(Of(Labor(Sta7s7cs,(Flurry(Analy7cs(

Mobile
gaming
population
has
reached
~35%

U.S."Mobile"Gaming"Popula-on"
40%#
%"of"mobile"popula-on"that"has"played"a"game"on"their"phone"

35%#

30%#

25%#

20%#

15%#

10%#

5%#

0%#
Feb# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May#June#July# Aug# Sep# Oct# Nov#
10# 10# 10# 10# 10# 10# 10# 10# 10# 10# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12#
Source:(comScore(

(Games
suck
up
the
most
user
time)

Global&iOS&&&Android&Time&Spent&Per&App&Category&
Other&
11%&

U<li<es&
10%&

Games&
43%&
Entertainment&
10%&

Social&Networking&
26%&

Source:
Flurry,
November
2012

(And
are
the
biggest
money
makers)

But,
games
aside,
there’s
a

problem
with
the
whole

mobile
story
…
where’s
the

money?

Mobile
app
revenues
are
smaller
than

you
think

Apple)App)Store)Revenues)
$4,500#

$4,000#

$3,500#

$3,000#
(millions))

$2,500#

$2,000#

$1,500#

$1,000#

$500#

$0#
2008# 2009# 2010# 2011# 2012#
Source:(news(reports,(company(releases#

~$4
billion
across
over

800,000
apps
is
signiﬁcant
but

won’t
create
the
next

generation
of
Internet
giants

Most
app
downloads
are
free

Mobile'App'Store'Downloads,'Free'vs.'Paid:'2011'

Total'Downloads'

Free$Downloads$
89%$

Source:(Garner,(September(2012(

So
this
…

Instagram&Es5mated&Users&
100,000"

90,000"

80,000"

70,000"

60,000"

Total&&
Users& 50,000"
(thousands)&

40,000"

30,000"

20,000"

10,000"

0"
3/2011" 4/2011" 5/2011" 6/2011" 7/2011" 8/2011" 9/2011" 10/2011"11/2011"12/2011" 1/2012" 2/2012" 3/2012" 4/2012" 5/2012" 7/2012" 7/2012" 8/2012" 9/2012"
Source:(news(reports,(company(releases,(BII(Es6mates(

…
and
this
…

Foursquare+Users+
20,000"

17,500"

15,000"

12,500"

(thousands)+

10,000"

7,500"

5,000"

2,500"

0"
Dec"09" Mar"10" Jun"10" Sept"10" Dec"10" Mar"11" Jun"11" Sept"11" Dec"11" Mar"12"
Source:(news(reports,(company(releases(

Have
not
necessarily

translated
to
$$$

The
mobile
platform
wars

play
a
role
in
the

monetization
gap

In
terms
of
operating
systems,
mobile
is

a
two-‐horse
race

Global'Mobile'Pla:orm'Market'Share'
100%#

90%#

Other'
80%#

70%#

60%#

50%# Windows'
Blackberry'
40%#
Apple'
30%#

20%# Android'

10%#

0%#
Q1#2009# Q2#2009# Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Gartner,(IDC,(Strategy(Analy5cs,(BI(Intelligence(es5mates,(and(company(ﬁlings#

Android
has
by
far
the
largest
platform

for
smartphones

Smartphone'Market'Share'By'OS'(Global)'
100%#
Microso8'
90%# Other'

80%#
Symbian'
70%#

60%#

Share'of' 50%# Blackberry'
Global'Unit'
Sales' Apple'
40%#

30%#

20%# Android'

10%#

0%#
Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Gartner(

Apple
dominates
the
tablet
market,
with

Android
making
a
run

Tablet%Market%Share%By%Pla9orm%
100%# Blackberry%
Nook%
90%# Kindle%
Fire%
80%#
Android%
70%#

60%#

50%#

40%# iPad%
30%#

20%#

10%#

0%#
Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Es+mates(based(on(informa+on(from(IDC,(Strategy(Analy+cs,(and(company(ﬁlings#

So
Apple
users
are
a
minority
…
but

its
platform
pays
4X
better

Cross%Pla)orm+Revenues:+iOS+vs.+Android+

iOS+

Android'
24%'

Source:(Flurry(Analy/cs,(June(2012(

Which
is
why
it
has
developer’s
attention

Developer'Interest'In'PlaBorms'
100%#
iPhone'
90%#
iPad'
80%#
Android'Phone'
70%#
Android'Tablet'
HTML5'
60%#

50%#

40%# Windows'8'Tablets'
Windows''
30%# Phone'

20%#
Kindle'Fire'

10%#
Blackberry'
0%#
1Q11# 2Q11# 3Q11# 4Q11# 1Q12# 2Q12# 3Q12# 4Q12#
Source:(Appcelerator(

And
why
Apple
has
dominated
app

revenues

Mobile%App%Revenue%By%Pla<orm%
$4,000#

$3,500#
Other%
$3,000#
Android%%
$2,500#
(millions)%

$2,000#

$1,500#

$1,000#
Apple%iOS%
$500#

$0#
2008# 2009# 2010# 2011#
Source:(iSuppli,(Forrester(Research,(company(releases,(BII(es8mates(

And
has
the
most
new
project
starts

New&Project&Starts,&iOS&vs.&Android&
20$

18$

16$ 31%$
14$ 27%$
25%$
12$
Total&New&
Project&Starts& 10$
(thousands)& 27%$
8$ 37%$
69%$
6$ 75%$ 73%$

4$ 73%$
63%$
2$

0$
1Q11$ 2Q11$ 3Q11$ 4Q11$ 1Q12$

iOS$ Android$
Source:(Flurry(Analy/cs,(January(20116March(2012(

Android’s
lagging
monetization
has
partly

been
a
function
of
its
fragmentation
problem

Android'Pla+orm'Distribu2on,'September'2012'
Jelly&Bean& Donut& Eclair&
1%& 1%& 4%&

Froyo&
14%&

Ice&Cream&Sandwich&
21%&

Honeycomb&
2%&

Gingerbread&
58%&

Source:(developer.android.com&

Android
can’t
get
its
users
to

update
to
more
modern

versions
of
the
system

But
in
2013
Android
will
make
headway
on
this,

and
it
already
has

Android'Pla+orm'Distribu2on,'January'2013'
Jelly&Bean& Eclair&
10%& Donut& 2%&
0%& Froyo&
9%&

Ice&Cream&Sandwich&
29%&

Gingerbread&
48%&

Honeycomb&
2%&

Source:(developer.android.com&

Expect
the
Android/iOS

monetization
gap
to
narrow

However,
because
of

Android’s
massive
audience

base,
revenue-‐per-‐user
will

still
be
low

Mobile
advertising
will

grab
the
spotlight
in
2013

Many
look
at
this

U.S.$Consumer$Media$Consump2on$Share$
50%$
45%$
44%$
45%$ 43%$
42%$

40%$

35%$

30%$
26%$ 26%$
26%$
25%$
25%$

20%$
17%$
16%$
Tripled
since
2009

15%$
14%$
15%$
12%$
9%$ 9%$
10%$ 8%$ 8%$
7%$ 7%$ 7%$
6%$ 6%$
5%$
4%$
5%$

0%$
TV$ Online$ Radio$ Mobile$ Print$ Other$
Source:(eMarketer,(October(2012( 2009$ 2010$ 2011$ 2012$

And
this

2011$U.S.$Ad$Spending$vs.$Consumer$Time$Spent$By$Media$

42%$ 43%$

25%$ 26%$
22%$
9%
gap

15%$
11%$ 10%$
7%$

1%$

TV$ Print$ Web$ Radio$ Mobile$
Ad$Spend$Per$Media$ Time$Spent$Per$Media$
Source:
Mary
Meeker
(KPCB),
eMarketer,
IAB

And
assume
mobile

advertising
will
skyrocket

But
it’s
been
slow
to
scale

Compara've*U.S.*Adver'sing*Media*
Annual*$*Revenue*Growth*(First*5*Years)*
$5,000%
$4,621%
$4,500%

$4,000%
$3,698%

$3,500%

$3,000%

$2,500%
$2,162% $2,162%
$1,920%
$2,000%

$1,500%
$1,171%
$1,012%
$907%
$1,000% $806%

$500% $358% $392%
$267%
$80% $55% $160%

$0%
Year%1% Year%2% Year%3% Year%4% Year%5%
Broadcast%TV% Mobile% Internet%
Source:((IAB,(McCann1Erickson,(BIA1Kelsey,(BII(es9mates( Note:(Adjusted(for(inﬂa9on(

And
it’s
still
a
pretty
small
slice
of
digital

U.S.'Digital'Adver7sing'Revenues'
$40#
Mobile'
$35#

$30#

$25#
(billions)'

$20#

$15#

$10#

$5#

$0#
2007# 2008# 2009# 2010# 2011# 2012E#
Source:((IAB,(BIA-Kelsey,(BII(es2mates(

But
maybe
there’s
a
good
reason

for
that
revenue
gap
…

The
screen
is
really
small

That
drags
on
mobile
ad
prices,
or
CPMs

Eﬀec%ve'CPM,'Desktop'vs.'Mobile'
$3.50&

$0.75&

Desktop&Internet& Mobile&Internet&
Source:(comScore,(Vivaki,(Mobclix(Exchange(

The
ecosystem
is
confusing

And
incredibly
fractured

For
now,
the
lion’s
share
of
mobile
ad

spend
is
still
going
to
search

Es#mated)2012)Mobile)Ad)Spend)By)Format)
Messaging'
9%'

Search'
49%'

Display'
42%'

Source:(eMarketer,(September(2012(

(Which
means
Google
…
but
even
Google

has
mobile
headaches)

Global&Mobile&Search&Market&Share&
100%#
Google&
90%#

80%#

70%#

60%#

50%#

40%#

30%#

20%#

10%# bing&
Yahoo!&
0%#
Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec#
08# 09# 09# 09# 09# 10# 10# 10# 10# 11# 11# 11# 11# 12# 12## 12# 12#
Source:(Global(StatCounter(

Year-‐on-‐year,
Google
CPC
growth
negative,

partly
because
of
cheap
mobile
clicks

Google&CPC&Growth&
15%%

10%%

5%%

0%%

!5%%

!10%%

!15%%

!20%%
4Q09% 1Q10% 2Q10% 3Q10% 4Q10% 1Q11% 2Q11% 3Q11% 4Q11% 1Q12% 2Q12% 3Q12% 4Q12%
Source:(Company(data,(Evercore(Group(LLC(Research(

A
few
big
companies
with
good
mobile
ad

formats
can
make
mobile
ads
pay

Facebook'Ad'Revenues'
$1,200#

$1,000#

$800#

Total'Ad'
Revenues' $600#
(millions)'

$400#

$200# Mobile'

$0#
1Q10# 2Q10# 3Q10# 4Q10# 1Q11# 2Q11# 3Q11# 4Q11# 1Q12# 2Q12# 3Q12#

But
until
the
industry
streamlines

and
consolidates,
smaller

publishers
won’t
reap
the
beneﬁts

There
are
some
encouraging

signals
…

Machine-‐buying
and
automated
real-‐time

bidding
may
help
mobile
advertising
scale

RTB'Digital'Display'Ad'Spend'To'Hit'$6'Billion'In'2015'(PC'and'Mobile)'
!$8,000!!

!$7,000!!

!$6,000!!
Millions'Of'USD''

!$5,000!!

!$4,000!!

!$3,000!!

!$2,000!!

!$1,000!!

!$#!!!!
2010! 2011! 2012E! 2013E! 2014E! 2015E! 2016E!
Source:(eMarketer(

More
mobile
video
ads
and
location-‐based

ads
will
lift
CPMs

CPMs%For%Selected%Mobile%Ad%Pla3orms%

xAd!local! !$3.50!!

LSN!Mobile!local!ads!! !$5.00!!

Adsmobi!video!ads! !$5.00!!

Flurry!video!ads! !$10.00!!

!$(!!!! !$2.00!! !$4.00!! !$6.00!! !$8.00!! !$10.00!! !$12.00!!

Source:(Ad(pla.orms,(BII(Research,(Greg(Sterling,(Opus(Research(

More
opportunities
for
TV-‐style
video
ads
as

consumers
watch
more
and
longer
videos

Time'Watched'By'Video'Length'And'Device'
100%$

90%$

80%$
Percent'Of'All'Hours'Watched'

70%$

60%$

50%$
94%$
40%$
71%$
30%$ 60%$
48%$
20%$

10%$

0%$
Desktop$ Smartphone$ Tablet$ Connected$TV$
Video'Length'
>$10$min$ 6$to$10$min$ 3$to$6$min$ 1$to$3$min$ <$1$min$
Source:(Ooyala,(Q3(2012(

Tablets
provide
a
boost
to
mobile
ad
prices

Tablets(Have(Edge(Over(Smartphones(on(CPC(For(Search(Ads(
100%#

90%#

80%#

70%#
CPC#As#Percentage#of#Desktop##

60%#

50%#

40%#

30%#

20%#

10%#

0%#
March# April# May# June## July# August#

Source:(Performics(

Meanwhile,
the
mobile
ad

industry
is
just
starting
to

consolidate
and
simplify
…

So,
in
revenue
terms,
“Freemium”

and
in-‐app
commerce
remains
the

top
app
business
model

But
advertising
is
now
the
most
popular

monetization
tool

%"Of"Developers"Who"Use"Following"Mone6za6on"Models"
40%#
38%#

35%# 34%#
33%#
32%#

30%#

26%#
25%#
25%#

20%# 19%#
18%#

15%#

12%# 12%#

10%#

5%#

0%#
Adver1sing# Pay#Per#Download# In>App#Purchases# Freemium# Subscrip1ons#

Jan>12# Jan>13#
Source:(Developer(Economics(2013(

What
are
other
trends
to
watch
in

2013?

Mobile
payments
are
growing
exponentially

PayPal&Mobile&Payments&Processed&
$16,000#

$14,000#

$12,000#

$10,000#

Total&&
Payment&
$8,000#
Volume&
(millions)&

$6,000#

$4,000#

$2,000#

$0#
2008# 2009# 2010# 2011# 2012#

Now
10
percent
of
PayPal’s
payments
processed

PayPal'Payments'Processed'
$150,000#

Mobile'

$120,000#

$90,000#
Total''
Payment'
Volume'
(millions)'
$60,000#

$30,000#

$0#
2008# 2009# 2010# 2011# 2012#

Square
now
at
over
$25
million
a
day

Square(Es9mated(Daily(Payment(Volume(and(Revenues(
$30,000#

$25,000#

$20,000#
Payment(Volume(
(Thousands)(

$15,000#

$10,000#

$5,000#
Revenues(

$0#
3/11# 4/11# 5/11# 6/11# 7/11# 8/11# 9/11# 10/11#11/11#12/11# 1/12# 2/12# 3/12# 4/12# 5/12# 6/12# 7/12## 8/12# 9/12# 10/12#11/12#
Source:(news(reports,(company(releases#

Payments
should
get
a
boost
from

increased
mobile
traﬃc
to
ecommerce
sites

Ecommerce#Website#Traﬃc#By#Device#
100%#
Tablet#
90%# Smartphone#
80%#

70%#

60%#

50%# PC#
40%#

30%#

20%#

10%#

0%#
Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Monetate(

Tablet
shoppers
boost
ecommerce
because
they

tend
to
complete
purchases
on
their
device

Mobile'Shoppers'
(Percentage'of'owners'that'have'made'a'purchase'on'their'device)'

55%#

28%#

Tablets# Smartphones#
Source:(Adobe,(Nov.0Dec.(2012(

And
Because
They
Are
Engaged
Shoppers

Tablet"Shoppers"Are"Looking"For"Bargains,"But"Also"Rich"
Product"Images"
53%$
%"Of"Shoppers"On"Tablet"Apps"Who"Think"Following"App"Characteris;c"Is"Important""

52%$
52%$

51%$

50%$

49%$
49%$

48%$
48%$

47%$ 47%$
47%$

46%$

45%$

44%$
Support$for$loyalty$ Support$for$couponing$ Ability$to$purchase$directly$ Images$and$slideshows$of$ Money$saving$oﬀers$
programs$ from$the$app$ products$at$diﬀerent$angles$
Source:(Adobe,(Nov.0Dec.(2012((

Not
all
ecommerce
mobile
volume
is

cannibalized
from
desktop,
at
eBay
1/3
of
it
is

incremental

Mobile'Transac.on'Volume*'Grows'On'eBay'To'13%'Of'Total'
100%# 2%# 4%#
5%#
9%#
90%#

80%#

70%#

60%#

50%#

40%#

30%#

20%#

10%#

0%#
2011# 2012e#

Desktop#Volume# Mobile#Volume#Cannibalized#From#Desktop# Incremental#Mobile#Volume#
Sources:)eBay,)Morgan)Stanley)Research)*Volume)is)Gross)Merchandise)Value)(GMV),)or)value)of)all)merchandise)transacted)))

2013-‐
THE
BOTTOM
LINE

•  Tablet
sales
make
a
huge
leap
this
year,
driven
by

falling
prices
and
the
growth
of
mini-‐tablets.

•  Smartphone
growth
slows
in
the
West
with
huge

consequences
for
platform
operators,
handset

manufacturers,
and,
eventually,
app
developers.

•  Mobile
apps
have
yet
to
eﬀectively
monetize
a
huge

user
base
and
will
refocus
on
monetization
strategies.

•  Mobile
advertising
needs
to
consolidate
and

streamline
if
smaller
mobile
properties
are
to
rely
on

it.

2013 year in mobile

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