Partner of venture Fund Kleiner Perkins Caufield & Byers (KPCB) Mary Meeker
Partner of venture Fund Kleiner Perkins Caufield & Byers (KPCB) Mary Meeker, presented the annual report on the state of Affairs in the Internet business and market trends. Since the 1990-ies it is considered one of the most influential analysts in the industry magazine Barron’s in 1998, even titulov Meeker “Queen of the Internet”, and in Forbes latest ranking of the most influential women in the world 2015 has put it on 77-th place.
Meeker at the time of the first predicted boom of the “dot-com”, and soon became famous for being a visionary investor and a close adviser to leading Silicon valley entrepreneurs. Her regular reports on the development of the Internet and technology are considered to be the highest quality on the market dimension and often anticipate the main trends of the next year.
RBC has studied a new report Meeker and chose the 10 most important theses (the full version of the document can be found here).
1. The Internet is slowing down.
Over the past two decades, the Internet audience has experienced explosive growth — from 35 million users in 1995 to 3 billion in 2015. However, the pace of development of the network has been stabilized for several years in the world of Internet users is about 9% more. If “global offset” to subtract India, the pace does slow down.
Internet penetration has stalled because of the situation: the emerging economies have suspended growth or even began to decline, the birth rate in developed countries is stagnating, the consumer market has exhausted the reserves. On the General background of India shows the opposite trend: a year ago, the Internet audience in the country grew by 33%, in 2015 — already on 40%, reaching 277 million users. This has enabled India to surpass USA and become the second largest after China’s Internet market in the world.
2. Android comes.
The smartphone market, as Internet penetration slows down growth. In 2015 the number of users of such mobile devices has increased by 21%, while in 2014 the growth was 31%, writes Meeker. “Dramatic” fall and the growth rate of smartphone shipments in retail — from 28% in 2014 to 10% in 2015. At the beginning of 2016 for the first time since 2003, declined iPhone sales: from January to March Apple sold 16% fewer devices than a year earlier.
Apple is inferior to competitors and market share: the share of smartphones based on operating system (OS) iOS in 2016 will fall to 11%, the device running the Android OS from Google, by contrast, will increase market share by 7%, predicts Meeker. The dominance of Android provide low average price of smartphones with this OS and attractive conditions for developers of applications under it. From 2009 through 2015, the share of Android in the smartphone market increased from 4% to 81%, while iOS 14% to 16%.
3. Advertising goes to mobile devices.
The market of online advertising grows, although it still accounts for a much smaller marketing budgets than TV (23% vs 39%, respectively). In 2014 the advertising market in the Internet grew by 16%, in 2015 — by 20%. While the main growth was in mobile advertising (66%), desktop ads grew by only 5%. The entire market of Internet advertising in the United States Meeker estimates at $60 billion, $21 billion comes from mobile advertising.
Advertisers still underestimate the rate of migration of audiences to mobile devices: the share of advertising in such units account for only 12% of total advertising spending. The major platforms in the market are Google and Facebook, they account for a total of 76% of the revenues of the American online advertising. And Facebook advertising revenue is growing at a faster market pace of 59% year-on-year. For comparison: Google — 18%, other companies in the market — on average by 13%.
Meeker also notes the rapid growth in popularity of applications that block advertisements on the Internet, — AdBlock. The number of users, including AdBlock on desktops, in 2015 increased by 16% — to 220 million on mobile devices — almost by half — to 420 million Trend contributes to the development of new advertising formats and creating more interesting ads in the first place — videos adapted for mobile devices.
4. The visual social network win text.
Mobile applications based on sharing photos and videos has been growing in recent years faster than competitors that rely on textual information. This is due to the growth of the audience of the so-called generation Z (born after 1996), who used to communicate using images, stickers and other visual elements. Over the past two years, the number of photos that users daily exchanged in applications like Facebook Messenger, WhatsApp, Instagram and etc. have nearly tripled to 3.3 billion a day. The leader of the “photobomb” among the visual social networks Meeker calls messenger Snapchat in 2014 through the app was poisoned less than 1 billion photos per day, in 2015 — more than 2,2 billion
In addition, visual social networks and the pictures they gradually become a new channel of distribution of goods. So, 55% of Americans that use Pinterest fotootchet, looking at the services and buy the same goods. Among other social networks the figure below: from Facebook and Instagram — 12%, Twitter text — only 9%. However, in some countries the whole process of purchasing the product already happening in social networks, explains Meeker on the example of Thailand, where the customer can choose a thing in instagram shop, from there go to its page in the messenger Line, to view the assortment and then in the service to make a payment and to arrange delivery.
5. Video “come alive”.
The trend of recent years — broadcast video in real-time by the users themselves through the services Periscope, and Facebook is Live. “Live” broadcasts continued the tradition of live broadcasts, the inherent television, but also combines the possibility of inclusion in the preview video at any time and broadcast on a wide, but self-selected audience (e.g., to the user’s friends in the social network), writes Meeker.
The number of video views per day Facebook has grown from 1 billion in the third quarter of 2014 to 8 billion over the same period in 2015. Snapchat has increased this figure to 2 billion per day in the first quarter of 2015 up to 10 billion in the first quarter of 2016. Such dynamics contributes to the development of native, that is embedded in the functional applications of advertising. For example, Snapchat allows advertisers to produce their own filters that users impose on their images and videos within the service.
6. Instant messengers have become a new ecosystem.
Messengers demonstrate intense growth in both the number of users and functionality of use. The audience is the largest in the world messenger — WhatsApp — with 2013 increased by 2.5 times and exceeded 1 billion users. Grow and competitors: launched in 2011, Facebook Messenger over the past two years has increased four times — up to 800 million “users”, Chinese WeChat (No. 3 in the world) over the same period has grown up by 1.5 times — up to 700 million users. The company Facebook now actually owns three of the leader — WhatsApp, bought in February 2014, she also owns Facebook Messenger and 4th in popularity in the world messenger Instagram. New players difficult to enter the market, says Meeker.
In recent years, has changed the essence of communication by messengers. it became more emotional to the plain text correspondence added visual images (emoticons, stickers, filters, masks, etc.), applications have been increasingly used for business communications. Complicated and the functionality itself of messengerof: trends in this direction, asking the Asian leaders (Korean KakaoTalk, WeChat, the Chinese and Japanese Line), which, in addition to communication, provide the user with services such as online gaming, banking services, taxi call, delivery of products and goods from online stores.
7. Technology creates a new industry.
A new paradigm in the relationship between human and computer, according to Meeker, are cars. This is manifested, on the one hand, the growing popularity of electric vehicles, on the other hand, the concept of complete failure of the driver behind the wheel. In the development of a new type of transport Meeker identifies two approaches: the creation of a fully Autonomous car from scratch in the lab, as does Google, and a gradual transition to a hybrid model with testing in “real” terms, which professes Tesla. And if Google has tested its self-driving cars on the 1.5 million miles of roads, the Tesla customers in the “autopilot” has traveled 100 million miles.
Another sign of autoevolution” Meeker called the rejection of personal ownership of the vehicle. Private car is often synonymous with inefficiency, its cost and maintenance are expensive, while most of the time the machine is “idle”, moreover, fewer people get driver’s licenses (in the United States — 77% in 2015 vs 92% in 1982, among the population aged 16 to 44 years).
More and more representatives of young generation — “Millennials” — want to use the car “chipped” with the help of car-sharing services: in the Asia-Pacific region, as the poll showed people under 30 years of collective car use personal prefer 50%, in North America — 20%. A pioneer of this trend Meeker calls Uber: in addition to the promotion of the abandonment of personal transport, the service offers the possibility of joint trips on the same route via UberPool, which already accounts for 40% of all trips in San Francisco. The Fund KPCB, partner of Meeker, is one of the investors in Uber.
8. New technological business outshines the competition.
A new generation of companies leading the Internet market is growing faster than their predecessors, and this applies to all sectors — from transport to retail. While Apple, Google, Amazon and Facebook remain inaccessible in terms of capitalization, growth in the value of the young market leaders — Uber JD.com, Slack, etc. — ahead of the “senior” competitors. To maintain leadership, companies “previous generation” remains aggressively buy startups, Meeker says.
In addition, companies from the traditional sectors of the economy try to acquire technology or businesses to invest in them, and it has also become a trend. The volume of such M&A deals grew from $11 billion in 2012 to $29 billion in 2015. the Trend is evident across all industries — from media, where Axel Springer has acquired the Business Insider, to transport, where General Motors has invested in taxi service Lyft, and Finance, where Visa has become the owner of the payment system Square.
9. The structure of the mobile consumption is shrinking.
The average mobile device user installed approximately 33 apps, 12 of which he uses daily. However, regularly, that is, 80% of the time, people spend just three mobile services. In USA this set consists of social network Facebook, Chrome browser and YouTube video sharing. Worldwide YouTube from the “triad” replacing the WhatsApp messenger. At the same time us users spend “arm in arm” with the phone 5 hours a day, “average” — about 3 hours.
10. Voice rules the Internet.
Voice interface is the next stage in the development of forms of human interaction with the computer, says Meeker. The accuracy of voice recognition from Google will increase with 70% in 2010 to 90% in 2016. the voice Communication faster and more convenient than typing on the keyboard: people being able to speak 150 words per minute, and the print — only 40. This year every fifth request to Google on devices with Android operating system in the United States was a voice, by 2020 the share of voice search or search by using images (not text) will reach 50%, is given in the report analysts forecast the Chinese search engine Baidu.
In addition to Internet search, voice assistants will help a person in interaction with smartphones (for example Apple’s Siri), cars and other devices equipped with built-in computer.