GGV Q4 2011 Mobile Internet Discussion
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The document discusses the mobile internet and summarizes key trends: 1) Mobile internet usage is shifting massively to smartphones and tablets, driven initially by games and social media. 2) China is emerging as the new center of global mobile activity with over 900 million subscribers and rapid adoption of smartphones and mobile internet. 3) Venture investment in the mobile internet has grown dramatically to over $1 billion since 2010, correlated with the rise of smartphones, with over 70% invested in the last 9 months.
GGV Q4 2011 Mobile Internet Discussion
- 1. Q4 CEO Dinner 2011 A Discussion on the “Mobile Internet” December 1st, 2011 @ggvcapital CONFIDENTIAL 1 CONFIDENTIAL ©2011 GGV CAPITAL
- 2. A Massive Shift Underway… CONFIDENTIAL 2
- 3. “First Inning” Driven By Games and Social CONFIDENTIAL 3
- 4. Where the Time is Being Spent • Significant time spent on “existing” brand names from the PC web, with notable exceptions in games and mCommerce Top Free iOS Apps by Category (9/2011) Top 10 Most Used Android Apps (7/2011) Social Android Market • Facebook Google Maps • Twitter Entertainment Gmail • Skype • Crackle Facebook • LinkedIn • Netflix Google Search • FB Messenger • Redbox YouTube News • IMDb Adv Tak Killer Free • CNN • HBO GO Angry Birds • Fox • Hulu+ QuickOffice Pro • ABC Pandora Radio • Yahoo News • CNN Int‟l CONFIDENTIAL 4
- 5. iOS / Android Comparison iOS Android Sales to date (all 265m 200m Devices devices, oct 2011) • Apple has larger ecosystem, but has not matched Daily new ~400k ~550k the growth of android lately. sales/activations (nov • Key drivers of this blockage for apple have been 2011) carrier exclusivity (now solved), pent up demand for new models, and consumers‟ price sensitivity. US Smartphone Share 27.7% 43.7% (aug 2011) iPhone 4S, Tablets • iOS has always held strong in tablets and is UK Oct S.Ph. Sales 42.8% 35% expected to continue • The iPhone 4S and low cost 4, 3GSs have turned Tablet Sales 80%+ <15% around sales leaderboards for now; wait to see if it Device configs 7 1000s lasts # of Apps >500k >300k Monetization and Other Android Issues • Developers find it cumbersome to work with % of Free Apps 37% 60% android Downloads (cum, 18Bn 6Bn • many device configs, OS versions Q32011) • Despite strong device sales, android users are not monetizing very well: Share of monetization $1.7Bn $102Mn • piracy (53% devs say it‟s a big problem) „10 • malware • crapware (crowding out good apps) • Low WTP of users • Poor payment systems) CONFIDENTIAL 5
- 7. Mobile Device/OS IP Wars: The Basics Event Impact March 2006: NTP settle with RIMM to pay $612m for infringement. This distraction is largely credited with the slowing down of innovation at RIMM and the missing of the smartphone movement. April 2010: HTC signs licensing deal with MSFT. It will pay a per phone This was a defensive move that proved very smart as MSFT has royalty. $5/phone is rumored. gone after samsung in a big way. June 2011: Apple settles with Nokia to pay ongoing royalty. Shows that the two agree android is enemy #1. And that even apple can be humbled in this war. July 2011: Nortel Patents Sale to Rockstar Bidco for $4.5Bn Allows all who are not winning from Android to go to OEMs and extract a per device licensing fee, which may make Android 6k patents spanning mobile, search and social. AAPL, MSFT, RIMM unprofitable for OEMs and push other OS options. MSFT (770m), ERIC (340m), SNE, EMC. Google bid $900m, but pulled : “no value reportedly demanding $15/phone from Samsung. if all would have access.” Disputes over whether GOOG was bullied. July 2011: Google buys 1030 IBM patents Unknown. Specifics not disclosed. Aug 2011: Google buys MMI for $12.5Bn Largely understood to be a way to beef up the patent portfolio for defensive purposes. Ongoing: Apple and HTC sue each other for infringement Apple showing that it intends to flex muscle and trying to slow -july: apple wins in ITC first round vs HTC adoption of android if possible. Result of an ITC finding can -Aug: HTC counter sues with 3 infringement claims block imports to the US, which can be devastating. -Aug Apple gets Samsung tablets banned in EU, Australia requests sales Counter-suits goal is likely for cross-licensing. figures. Japan in process. Sep 2011: Google gives HTC access to patents to counter sue apple. Google posturing that it will not allow it‟s OEMs or its OS to be bullied out of the game. Q4 2011: Apple and Samsung face off in Germany, NZ, AUS over right to sell 10” tablets. Varied results. Note: Nortel patents said to span “wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patent portfolios. The extensiveI patentT I A L touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking.” C O N F D E N portfolio 7
- 8. Global Market: Center of Gravity is Changing Fast CONFIDENTIAL 8
- 9. China is leading the Change CONFIDENTIAL 9
- 10. China By The Numbers 900m wireless subscribers 250m Weibo (twitter) users 350m mobile internet users 812m QQ (chat) users 250m new devices per year 200m Tudou monthly actives 100m Smartphone sales in 2011 120m Combined fans of top 10 weibo users 19% 2011 smartphone penetration 10 Minimum number of SNS sites with 46% >100m users Netizens who access 39% internet ONLY via Users who click on mobile mobile ads 32% Users who‟ve made a mobile purchase CONFIDENTIAL 10
- 11. Where the Money Is (Revenue / 2014) CONFIDENTIAL 11
- 12. Where the Investment $’s Have Gone Many unfunded players here Sector $$MM advertising 33 (+ 200) apps general 160.2 Enterprise apps 30 b2b mdm 48.2 backend/platform 138.7 devices 253 digital media 92 gaming 85.2 network equipment 33.5 pymts/commerce 185.3 sms 24.4 voice/data service 56.1 Grand Total 1139 CONFIDENTIAL 12
- 13. $1.1Bn Invested Since 2010Q1, 70% in the Last 9 Mos. CONFIDENTIAL 13
- 14. Financing Highly Correlated with Rise of Smartphones CONFIDENTIAL 14
- 15. Where Do We Go From Here? • Continued rise / impact of Android • Importance of iOS / the App Store / etc. • Geolocation • China / Brazil / India • Security / Identity • iPad / tablet cannibalizing PC + Internet browser • Monetization CONFIDENTIAL 15