Mary Meeker says mobile is keeping tech party roaring
The tech analyst's report on Internet Trends for 2014 shows a slowdown in Internet growth but strong potential for mobile.
Analyst turned venture capitalist Mary Meeker says it's OK to party like it's 1998. Today's technology boom is nowhere near a bust thanks to robust growth in mobile.
This is good news for investors and entrepreneurs alike. And it should surprise no one that growth in the mobile Internet is outpacing that of traditional Internet usage.
Indeed, in Meeker's Internet Trends 2014 report published Wednesday and presented at Recode's Code Conference in Rancho Palos Verdes, Calif., mobile data traffic rose 81 percent compared with the previous year. And mobile Internet usage was up 25 percent. Meanwhile, Internet growth worldwide slowed to less than 10 percent a year.
Meeker, a partner at venture capital firm Kleiner Perkins Caufield & Byers, knows a bit about technology booms and busts. As a highly regarded analyst at Morgan Stanley, she lived through the tech boom and bust of the late 1990s and early 2000s, documenting the industry's rise and fall.
But in this report, she is very optimistic about the future as she outlines some of the trends she sees for the coming year.
One of the key messages is that investors and entrepreneurs have plenty to be excited about. And she dampened concerns that the party may be reaching its end. Instead, she provided an optimistic view of positive trends in mobile Internet usage.
She said investment metrics in 2013 look nothing like they did during the big tech crash in the early 2000s. For instance, initial public offerings in 2013 were 73 percent below levels in 1999. And the venture financings were 77 percent below the peak level they reached in 2000.
Stock valuations of technology companies were also more in line in 2013 than they were during the heyday of the early Internet bubble. Tech companies today compose about 19 percent of the S&P 500, while technology companies represented 35 percent of the stock index of March 2000.
The 164 slide presentation published today and discussed at the conference outlines these trends and more. In addition to her analysis of the growing mobile market and strong prospects for continued investment in new companies, here are some other highlights from the report.
-Smartphone usage is still growing, but tablet usage is growing even faster. In fact, she noted that tablets are growing faster than PCs ever did. Shipments were up 52 percent compared with the previous year.
- Google Android and Apple iOS account for nearly 97 percent of the world's market mobile operating systems in 2013. Eight years ago, "US-developed mobile OSes" accounted for only 5 percent.
-The growth in the number of devices sold is exploding, as more consumers opt for mobile gadgets. With each new computing cycle, whether it's smartphones, tablets, or wearables, the installed base is 10 times bigger than the last one.
-Internet advertising is up 16 percent in 2013. Google still rules the roost in terms of ad revenue. But others, such as Facebook are also seeing growth.
-Print advertising is still overvalued, but big opportunities remain in mobile. Mobile apps still generate most of the revenue compared with mobile advertising.
-Cybersecurity remains a big concern. Attacks are on the rise. And vulnerable systems are compromised on average within 15 minutes of going online. Mobile is increasingly becoming a target of these attacks.
- Digitization is happening in education and health care and will help stem rising costs in these industries.
-Messaging and social sharing apps are growing. Global messaging services have reached 1 billion users in five years. This is the new way of social interaction as people choose smaller niche audiences and direct connections to interact instead of primarily broadcasting their lives via traditional social media like Facebook and Twitter.
-People use apps to access things, such as other people, food, transportation, lodging, and so on. And some standalone apps with no relevance are disappearing.
-There's a real interest to change how we pay for things as people reimagine the concept of money. The fact that Bitcoin has 5 million users shows there is huge interest in "cryptiocurrencies."
-The amount of data that is being uploaded, stored, and mined in the "cloud" is exploding. Two-thirds of all the digital content around the world is consumed and created by consumers. The trends of uploading and sharing data are driving this growth. Compute, storage, and bandwidth costs are all declining, which makes this possible. While the proliferation of more data in the cloud can be beneficial, Meeker notes a potential cost to personal privacy.
-It's still early days for Internet video services. But more screens are proliferating; apps are replacing channels; and linear viewing is going the way of the dinosaur. Smartphone and tablet sales are five times greater than sales of TVs and PCs.
-Most people around the world are using their smartphones to watch Internet TV.
-Consumers actually view and consume more content the more screens they use.
-Social TV is real and it's growing. Online video audiences are trumped by "fans" of individuals and programs. Internet viewers also want more personalization.
-An age gap exists today in terms of online video viewing: Millennials spend 34 percent of their TV viewing time online. Only 12 percent of other age groups watch TV online.
-In aggregate TV viewers have learned to time shift viewing, with 23 percent viewing on-demand or DVR'ed content. Viewing on mobile devices is also up 22 percent year over year.
-China is still a market on the rise with 80 percent of its Internet users on mobile devices.
The entire report has been published online. An archive of Meeker's older reports is also available online.