KPCB's Mary Meeker: Internet Trends 2013

For technology buffs, find below the global internet trends as presented by the slideshow of KPCB's Mary Meeker and Liang Wu (courtesy of Slideshare.net)

KPCB Internet Trends 2013 from Kleiner Perkins Caufield & Byers

Mary Meeker on Global Internet Trends: Re-Imagination of Nearly Everything

KPCB's Mary Meeker shows us in the following deck of slides, the incredible developments and potentials of the internet and other technology trends.
KPCB Internet Trends 2012

Will Urbanization Save China’s Capital Spending Bubble?

Mr. Stephen Roach, Chairman of Morgan Stanley Asia, writing at the Project Syndicate thinks so,

Reports of ghost cities, bridges to nowhere, and empty new airports are fueling concern among Western analysts that an unbalanced Chinese economy cannot rebound as it did in the second half of 2009. With fixed investment nearing the unprecedented threshold of 50% of GDP, they fear that another investment-led fiscal stimulus will only hasten the inevitable China-collapse scenario.

But the pessimists’ hype overlooks one of the most important drivers of China’s modernization: the greatest urbanization story the world has ever seen. In 2011, the urban share of the Chinese population surpassed 50% for the first time, reaching 51.3%, compared to less than 20% in 1980. Moreover, according to OECD projections, China’s already burgeoning urban population should expand by more than 300 million by 2030 – an increment almost equal to the current population of the United States. With rural-to-urban migration averaging 15 to 20 million people per year, today’s so-called ghost cities quickly become tomorrow’s thriving metropolitan areas.

Shanghai Pudong is the classic example of how an “empty” urban construction project in the late 1990’s quickly became a fully occupied urban center, with a population today of roughly 5.5 million. A McKinsey study estimates that by 2025 China will have more than 220 cities with populations in excess of one million, versus 125 in 2010, and that 23 mega-cities will have a population of at least five million.

China cannot afford to wait to build its new cities. Instead, investment and construction must be aligned with the future influx of urban dwellers. The “ghost city” critique misses this point entirely.

All of this is part of China’s grand plan. The producer model, which worked brilliantly for 30 years, cannot take China to the promised land of prosperity. The Chinese leadership has long known this, as Premier Wen Jiabao signaled with his famous 2007 “Four ‘Uns’” critique – warning of an “unstable, unbalanced, uncoordinated, and ultimately unsustainable” economy.

I have deep respect for Mr. Stephen Roach but I think his “urbanization” argument hardly distinguishes from the other public work projects such as infrastructure and transportation. They are all anchored on justifications of centrally planned interventions that presupposes omniscience or the superiority of knowledge of political authorities, as well as, the incontrovertibility of such trends (which for me accounts as the folly of reading past trends into the future; or “fighting the last war”).

In short, urbanization, based on government design, seems like a lipstick on a pig.

Urbanization according to Wikipedia is closely linked to modernization, industrialization, and the sociological process of rationalization.

Urbanization is characterized by, again Wikipedia.org

Cities are known to be places where money, services and wealth are centralized. Many rural inhabitants come to the city for reasons of seeking fortunes and social mobility. Businesses, which provide jobs and exchange capital are more concentrated in urban areas. Whether the source is trade or tourism, it is also through the ports or banking systems that foreign money flows into a country, commonly located in cities.

Urbanization in reality are symptoms of the 20^th century model of intertwined centralized social activities based on mass production, mass media and markets which drew development and population to urban areas that paved way for the age of urbanization.

But are we still in the industrial age or are we shifting to the information age?

While Urbanization has still been an ongoing phenomenon, signs are that current centralized trends have been shifting.

For instance in China, demographic trends show that population and development has been moving inland. This may be partly due to government projects, China’s spontaneous economic response to the unfolding events around the world and the alleged reshaping or “rebalancing” of China’s economy (The Economist)

But what mainstream seem to ignore is that mass production has been transitioning towards specialization, which is why Asia became a supply chain network.

Moreover, future trends points to home based production for simple products (3-D printing anyone?)

Chart from KPCB’s Mary Meeker

Decentralized social media via the internet has also been challenging mass media. In terms of advertising, mobile and internet have been dramatically gaining at the expense of Radio and Print. Even revenue growth from ads on TV has been stagnating.

Also, mass markets are being turned into niche or specialty markets.

Specialization of production and niche markets has led to grassroots development.

Proof?

The expansion of the booming Business Process Outsourcing has not only been within cities but to secondary cities and to rural areas as well. This applies both to India and the Philippines.

As I previously wrote,

Also business focus will increasingly be directed to specific needs (niche marketing) rather than mass production and also on where the consumers and markets are.

In the Philippines, shopping malls have sprouted not only in major cities but also in capitals of provinces or secondary cities. Take for example the largest shopping mall chain the SM Group which has 43 malls nationwide and growing. This is a noteworthy example of the deepening dispersion trends, where facilities have been mushrooming outside of mega cities.

I might add that SM has reportedly been targeting rural or provincial areas for expansion due to a booming agricultural economy and has been on a land-buying binge in Bacolod, Tacloban, Baguio, Bulacan, and Laguna, Quezon and Pangasingan.

Of course the agriculture economy has been part of the boom, but as noted above, even BPOs are headed towards rural areas. There may also be other telecommuters or home based technology businesses, aside from the large informal economy and remittance based income.

What the point?

Decentralization is bound to upend centralized based social activities of the 20th century

As the prescient Alvin Toffler wrote in Third Wave (p. 298-299)

The Third wave alters our spatial experience by dispersing rather than concentrating population. While millions of people continue to pour into urban areas in the still industrializing parts of the world, all the high technology countries are already experiencing a reversal of this flow. Tokyo, London, Zurich, Glasgow, and dozens of other major cities are all losing population while middle-sized or smaller cities are showing gains…

This redistribution of and de-concentration of population will, in due time, alter our assumption and expectations about personal as well as social space about commuting distances, about housing density and many other things.

This has gradually been happening today.

Bottom line: Urbanization will unlikely save China’s Keynesian centrally planned capital spending boom from turning into a bust.

Mary Meeker on Global Internet Trends: Prepare for a Lift off!

Former Morgan Stanley's now KPCB's technology analyst Mary Meeker with her fabulous presentation of the current and prospective internet trends.

Notice how the deepening of penetration levels and the widening of connectivity has been changing people's lifestyles globally. Importantly trade and commerce is part of that trend (p.50).

Many analysts tend to underrate this ongoing seismic shift, we shouldn't.
KPCB Internet Trends (2011)

Technology Curve: Is Mobile Commerce The Future?

Morgan Stanley's Mary Meeker thinks so. She has convincing evidence to prove her case, as shown in the presentation below. (hat tip: Research Recap)

According to Cecilia Kang of the Washington Post,

``Among the factors that are driving the mobile Web, Meeker said, 3G wireless data networks rank most highly. All major carriers introduced 3G access for Android phones, the iPhone, Blackberry and Palm Pre this year, making mobile Internet use mainstream at 20 percent of all wireless users, Meeker said. There has also been an explosion of Wi-Fi connection hot spots.

``Advertising may finally be set to take off on the Internet, she said. People are spending more time on the Web – more than they do reading print publications or listening to the radio. (But not as much as TV, which still dominates.) But even as users spend 28 percent of total entertainment time on the Internet, advertisers only spend 13 percent of their budgets on the Internet. That represents a $50 billion opportunity, she said, that advertisers are starting to seize." (emphasis added)

In my view this is one of the positive forces, along with globalization, that counterbalances the risks of bubbles from government policies.

Internet Trends 2010 by Morgan Stanley Research

View more presentations from CM Summit: Marketing in Real Time.

Mary Meeker on Web 2.0: Bet On Mobile And Social Networking Trends

GIGAOM.com showcases the projections of “Queen of the Net” or Morgan Stanley's Internet guru Mary Meeker.

All the following quotes from GIGAOM.com

Ms. Meeker first predicts the major dynamic:

"Two overwhelming trends that will affect consumers, the hardware/infrastructure industry and the commercial potential of the web: mobile and social networking."

Next is the evolution of the technology cycle from the Desktop to Mobile.


"The Morgan Stanley analyst says that the world is currently in the midst of the fifth major technology cycle of the past half a century. The previous four were the mainframe era of the 1950s and 60s, the mini-computer era of the 1970s and the desktop Internet era of the 80s. The current cycle is the era of the mobile Internet, she says — predicting that within the next five years “more users will connect to the Internet over mobile devices than desktop PCs.”

In addition, internet take up will increasingly migrate to the mobile spectrum.

"Meeker says that mobile Internet usage is ramping up substantially faster than desktop Internet usage did, a view she and her team arrived at by comparing the adoption rates of iPhone/iPod touch to that of AOL and Netscape in the early 1990s"

And in terms of application, connectivity is now largely driven real time via social networking platforms as email is gradually being dislodged as the main instrument of communication.

"On the social networking side, Meeker’s report notes that social network use is bigger than email in terms of both aggregate numbers of users and time spent, and is still growing rapidly. Social networking passed email in terms of time spent in 2007, hitting about 100 billion"

Another feature of the rapid adaption of technology would be the "creative destruction" as toll carriers lose ground on the increasing use of data.

"But that mobile boom will take its toll on carriers, Meeker says, because mobile Internet use is all about data."

As you can see the next set of "industrial" wreckage (and job losses) is already becoming palpable, as people (consumers) speedily migrate to new technologies to 'enhance' their web 2.0 based lifestyles.

This also means business models will likewise be changing, where those attuned to these changes are likely to benefit, while those who can't cope up with the swiftly altering consumer demand are likely to perish.

This only implies a deepening transition to web based businesses as new industries are likely to be created.

"One of the implications of mobile access is a growth in ecommerce, says Meeker, featuring things such as location-based services, time-based offers, mobile coupons, push notifications, etc. In China, the success of social network Tencent proves that virtual goods can be a big business, she says — virtual goods sales accounted for $2.2 billion worth of the company’s revenue in 2009 and $24 in annual revenue per user. Online commerce and paid services made up 32 percent of mobile revenue in Japan in 2008, up from just 14 percent in 2000. Meeker’s report suggests that the rest of the world — which is still below the 14 percent-mark — could see much the same trajectory over the next 10 years.

Finally Ms. Meeker gives us where the revenue side is likely to emanate;

"Meeker says that users are more willing to pay for content on mobile devices than they are on desktops for a number of reasons, including:

* Easy-to-Use/Secure Payment Systems — embedded systems like carrier billing and iTunes allow real-time payment

* Small Price Tags -– most content and subscriptions carry sub-$5 price tags

* Walled Gardens Reduce Piracy -– content exists in proprietary environments, difficult to get pirated content onto mobile devices

* Established Store Fronts -– carrier decks and iTunes store allow easy discovery and purchase

* Personalization -– more important on mobiles than desktops

Read Ms. Meeker's presentation via GIGAOM.com

Ms. Meeker appears to be validating what we think as a massive shift in the wealth creating process, which had been predicted by Alvin and Heidi Toffler in Revolutionary Wealth,

The Tofflers: "Several forces have been converging to drive the acceleration needle of the gauge. The 1980s and '90s saw a global shift towards liberal economies and hypercompetition. Combine that with the eighteen-month doubling rate of semi-conductor chip power and you get near-instantaneous financial transactions. (Currency traders can find out about a trade within two hundred milliseconds of its completion.) Put differently, behind all these pressures is the historic move to a wealth system whose chief raw material-knowledge-can now move at nearly real-time speed. We live at a pace so hyper that the old law that "time is money" needs revision. Every interval of time is now worth more money than the last one because in principle if not practice, more wealth can be created during it."

Global Internet and Economic Trends in Charts by Mary Meeker

Check out the great stuff from Mary Meeker of Morgan Stanley, whose slide deck of charts deals with global technology and economic trends (hat tip Paul Kedrosky)

Just two examples...
Philippines leads in the technology usage of Microtransactions via SMS or text messaging...

as the industry is backed by a 57% Penetration level in mobile subscription

check out the rest of her interesting charts here...


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