Futurist: The rise of China and other mega-trends from Mary Meeker

By Rowan Puttergill: Columnist
November 02, 2011


Queen of the Net, Mary Meeker, presented her “Internet Trends” for the year at the Web 2.0 Summit 2011 in San Francisco earlier this month. Meeker’s vision has not changed radically from last year, with an increased emphasis on how much of the tech market is now driven by users outside of the United States. In this article, I’d like to take a look at some of her key points and investigate what they mean for emerging markets, especially within the BRICS countries.

Before we dive into the nuts and bolts of her presentation, it is worth keeping in mind that Meeker is a partner at the Silicon Valley venture capital firm of Kleiner Perkins Caufield & Byers. She opens her talk with a slide showing the brand names for many of the bigger projects that her company has invested in. With this in mind, one needs to remember that the hype and predictions surrounding anything she says from this point on will also be geared toward the success of the businesses that she has investment in. That said, Meeker has generally been hailed as an internet visionary by much of the financial press, and people tend to listen when she talks. You can find her slides here, and you can watch her talk on Youtube.

Globality
From market values, Meeker shows that while America still has a strong hold on the market, new mega-leaders from China and Russia are creeping up the leaderboard. She also points out that 81% of all internet users who make use of the top ten global internet properties are actually outside of the US.



While this should be a logical conclusion, since the US population comprises only around five percent of the total global population, it does indicate that internet representation is starting to become more proportional. The interesting point here is that the countries that are adding users to the internet most quickly are China, India, Russia and Nigeria.



This reiterates the point that the BRIC countries and other emerging markets are ultimately going to become the big driving forces on the internet.

For people looking for investment for their projects, Meeker gives a quick tip: Prove yourself in one market, and then show how you can expand to offer the same service in other markets.

She gives the examples of UK-based, Shazam (a sound recognition and music discovery service); Sweden’s Spotify, Israel’s Waze (a GPS or driving navigation tool), and SoundCloud.





This reminds me of a sentence in Erik Hersman’s recent article, where he says: “Instead of thinking of Africa as a place that needs to be more like the West, we’re now looking at Africa and realising the West need to be more like Africa.” The point to take from this is that if you can nail your local market properly to the floor, moving your idea out into a more global market is going to be a whole lot easier.

Mobile
With regard to the Mobile internet, Meeker points out that there is huge room for growth. In fact, much of her talk from this point onward is really focussed on the Mobile market, where she feels that the large majority of opportunity actually exists. That’s not surprising. Only 17% of all mobile subscribers globally are making use of 3G at this point.





Furthermore, the sale of smartphones in the US only gained a lead on feature phones at the end of the last quarter of 2010, and the rest of the world has some catching up to do. This means that the entire mobile market is still a very fertile ground for innovation, especially with regard to the internet.



In fact, her slides showing the uptake of the iPad over the iPhone during its first quarter on the market, and then the uptake of Android phones over the iPhone, both go to show that there is an increasing interest in having smartphone and tablet technologies.



Later in her presentation, Meeker shows how smartphones and tablets outshipped personal computers in the final quarter of 2010, and how Microsoft Windows fell to below 50% of all internet connected devices.

Here, she points out that America is leading the market by dominating the operating systems that are installed on various devices. But it is clear from statistics like the 60% of Pandora users and 55% of Twitter users who access these services using a mobile phone, that users are starting to use their phones as their main gateway onto the internet.



It is worth reflecting that tools like MPesa, which provides a mobile payment service, are finding their success in developing countries. It is these emerging markets that are likely to be the most innovative as the mobile internet opens up to them.

User Interface
Meeker is a huge fan of Steve Jobs. Interestingly, she incorrectly asserts that “one guy brought us graphical user interfaces” and attributes all of the recent user interface innovations, including touchscreens, sound and drag-and-drop all to Steve Jobs.

Despite this little gaffe, she goes on to say that the next biggest area of innovation and market development will be in Audio. In the hardware market, she still believes that Bluetooth has a lot to offer, and that noise-cancelling headsets and compact wireless speakers are improving quickly.



She nods her head at new sound-recognition technologies like Siri and Shazam, and then goes on to quote Alexander Ljung who states that ‘Sound is going to be bigger than video… “Record” is the new QWERTY’.

Commerce
eCommerce is continuing to gain on offline shopping modes. Currently at eight percent, Meeker feels that there is a lot of room to go. But the thing that is driving ecommerce seems to be the mobile phone.

eBay, PayPal and Amazon are all finding huge increases in the number of purchases that actually happen using mobile devices.



Meeker points out that companies involved in ecommerce, such as magazines and catalogues are benefitting from gearing their content toward mobile phones and tablets in order to offer “click and buy” products. This helps to capture impulse buying.



That’s really important in an increasingly mobile world. The number one reason for users backing out of an in-store purchase, is that they find the same product online for a better price. This means that pricing really matters, and now that shoppers can carry the Internet in their pockets, the market is getting increasingly competitive. For store owners it is critical to ensure that pricing is competitive and that online options are available.

Advertising
Advertising is booming on the internet at the moment and, if Meeker is right, there should still be a US$20-billion opportunity in the US alone. With her previous slides in mind, this opportunity in emerging markets must be significantly bigger. In the third quarter of this year, Google saw 28% growth in paid clicks through its advertising service. Meeker points out that social networks were previously underindexed in terms of their cost per thousand views.

In June this year, users were finally spending more time on social network sites than portals on the Internet, and this has changed the game for advertisers, with social networks now pushing forward as the primary space for advertising.

Mega-Trend of the 21st Century
Meeker believes that the biggest trend in the 21st Century is that mobile devices have changed our ability to perform social networking activities. This is because they provide us with realtime abilities to communicate events on a global scale.



To put that into some perspective, she shows how 85% of the world’s population has access to some form of commercial wireless signal, while only 80% have access to an electrical grid.

Over 200-million farmers in India are receiving government subsidies and payments via mobile devices. This shows that once again in emerging markets where infrastructure is often underdeveloped, the mobile is king because it allows people to connect in ways that they were unable to before.

Image: dfarber

Source: http://memeburn.com/2011/11/the-rise-of-china-and-other-mega-trends-from-mary-meeker/