Morgan Stanley Mobile Internet Research Summary
Mobile Internet research studies about the future of the mobile Web tend to cluster into two categories: “hard” research, such as the huge increase in mobile devices connected to the Web and “soft” research focused on mobile phone user engagement or social media preferences among smart phone users.
Both hard and soft research reveal important trends in mobile Internet usage, but rarely do you find comprehensive studies that combine both types of mobile research, conclusively showing how massively mobile is impacting global populations.
Morgan Stanley released a 92 slide presentation summary of its December, 2009 Mobile Internet Report that offers the most comprehensive, mind-blowing information about mobile growth I’ve ever seen. I urge you to download and read the PDF.
Below are some statistics and revelations found in this thorough, exhaustive study:
- The mobile Internet is growing faster and will be bigger than the desktop Internet did due to five converging technologies and social adoption trends: 3G, social networking, video, VoIP and impressive mobile devices.
- Use of the mobile Internet is driving mobile device growth exponentially faster that any previous computing technology. Mobile Internet devices (MID’s) could reach 10 (ten) BILLION units in 2010.
- New companies often win big as emerging technologies create wealth. For example, HP rose in the 70′s as mini-computers dominated; the same with Apple, Microsoft and Cisco when personal computers grabbed markets in the 80′s; and Google, Amazon and Baidu upon the appearance of desktop Internet computing in the 90′s. Who will be the rising stars as the mobile Internet crushes older technologies?
- They’re both opportunities and risks as mobile changes infrastructure, platforms and applications. Consumer hunger for wireless data and content is causing major concerns among mobile operators worldwide. Facebook is becoming a desktop and mobile “hub.” Demand for new mobile games or services, like Pandora Internet Radio, rise when consumers have 24X7 mobile wireless access, especially as 4G wireless broadband networks quickly deliver mobile content.
- Tower companies are well positioned to benefit from network expansion. Listen to my podcast interview with Scott Goodrich of CSI.
- Apple’s control of its hardware, software, content distribution through iTunes and its range of devices–iPhone, iTouch, Mac, iPod and soon-to-be-released iPad could achieve higher positioning with the mobile Internet than NTT docomo did as Japan’s platform leader. (Apple’s acquisition of Quattro Wireless further solidifies Apple’s potential dominance.)
- Likewise, some traditional Internet companies–Mixi in mobile social networking, Adobe in mobile content creation/delivery and, of course, Google in search and ad serving via AdMob are prominent in the mobile Internet landscape.
- You’ve heard this before and many in the developed world don’t believe it, but more users will connect to the Internet with wireless devices than desktop PC’s within five years. This is not hard to fathom if you include billions of e-reading and other wireless devices released daily by companies
- 3G subscriber penetration exceeds 20% in 2010 (the “sweet spot”) and grows to over 40% by 2014, concentrated in developed nations. U.S. has overtaken Japan in 3G user base.
- While 3G growth is substantial, other wireless technologies–GPS, Wi-Fi and Bluetooth–are growing at the same rate or faster than 3G.
- Social Media. Facebook user base has risen to 430 million year-over-year, roughly the same increase as QQ in China. Twitter, while sporting only 58 million users experienced a 1238% year-over-year growth rate. Facebook now dominates in chat, messaging, video sharing, games, VoIP and more.
- While consumers have preferred desktop video delivery, mobile usage will likely follow, as YouTube, Hulu and other Internet streaming devices, such as the Roku Video Player deliver video on increasingly faster wired and wireless networks. (I personally believe Internet streaming video is a direct threat to cable and satellite content delivery.)
- Incredible stat. “If VoIP leader Skype were a carrier, it would be the largest carrier in the world with 521 million registered users.
- iPhone and Android mobile usage share is much higher than shipment share due, mostly, to the growth of available applications, blowing apps for BlackBerry, Windows, Palm, Nokia, Samsung, LG and Sony Ericsson out of the water.
- Mobile phones are now all about data as voice usage drops: 70% voice for an average cell phone, 45% voice for the iPhone. This is true in most developed nations, including Japan, where voice traffic is declining 2% a year. Web browsing on the mobile Internet is highly bandwidth intensive.
- Carriers are struggling on both the mobile-to-tower and tower-to-Internet (backhaul) connections to move even incremental data traffic. Yet, according to Scott Goodrich of CSI in his podcast interview with me, remarked that 80% of all cell phone usage is within buildings. Both employees at work and consumers at home are using cellular networks in buildings and while commuting via rail when other alternatives, like Wi-Fi, exist to off-load traffic from carrier networks.
- Each new wireless technology innovation drives mobile data cost per bit down
- “Compelling opportunities” in emerging markets for mobile Internet use; carriers in emerging Asia and Africa better positioned than Eastern Europe and Middle East. Listen to my podcast interview with Herman Heunis of MXit in South Africa.
- New business models are created as technology changes. China, for example, is seeing huge increases in virtual item sales (paying games) which rose 65% in 2008 alone with continuing double-digit increases.
- Advertising and eCommerce have dominated the desktop Internet, while user-paid premium content is driving the mobile Internet. $37 billion was spent in 2008 for digital content (wallpaper, ringtones, downloadable games, music, video).
Reviewing the Morgan Stanley “Summary” is a vision into the future of mobile communications on the planet. Many challenges lie ahead. Innovative, emerging companies will thrive, while some established, complacent enterprises will withdraw.
In the end, however, the confluence of consumers, entrepreneurs, government leaders and others will determine the fate of mobile life in the age of the wireless Internet.
Update: Since summarizing the report, I came across the video below featuring Mary Meeker of Morgan Stanley. Well worth watching.
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