We believe more users will likely connect to the Internet via mobile devices than desktop PCs within the next 5 years.
The Mobile Internet Report
Morgan Stanley
Apple’s launch of the iPad last month provides a catalyst to look at the implications that the broadly-defined term Mobile Computing has for the interplay of Media and Marketing. Clearly we are at a critical inflection point.
Broadly defined, the mobile Internet market includes a broad range of devices, like Smartphones, E-readers and cell phones, that can access applications and content over the web. (The category doesn’t include portable computers and netbooks.
Right now, the scale of the mobile computing market is relatively small. While 92% of Americans own a mobile phone, only 17% of them used their phone to conduct a mobile banking transaction in 2009, for instance. And, according to Comscore, only 27.5% of Internet users used a mobile web browser in the last three months of 2009. There are probably just over 10 million iPhones active in the U.S., a fraction of the 208 million users reported by Comscore in January.
The current scale of the mobile web is easy to marginalize as an early-adopters paradise. That would be a mistake. The rate of mobile web usage has accelerated rapidly over the past six months, and the configuration and usage of the mobile web has significant implications for those us of who are media and marketing professionals.
The Scale & Velocity of the Mobile Internet is of Consequence
Over the past six months, mobile data bandwidth worldwide has increased by more than 70%, with streaming video driving a significant portion of the demand. According to forecasts from Cisco, mobile data traffic will grow 40% from 2009 to 20014. By that time, mobile bandwidth will be equivalent of 249 years of DVD quality feature-length films.
The quote at the opening of this post, comes from Morgan Stanley’s report on the Mobile Internet, where Mary Meeker smartly frames the scale and impact of this inflection point .
The size of the mobile web is going to dwarf the size of the wired web by a factor of 10, Morgan Stanley projects. Already, the mobile internet, as measured by the iPhone and iTouch, has achieved scale at a faster rate than any other transformative technology.
Device Usage Changes on the Mobile Internet
The mobile device has become the hub of user’s digital activity executed off the backbone of the Internet.
Only 45% of the time spent on an iPhone is dedicated to talking on the phone. Texting and doing e-mail make up 26% of the activity, while listening to music and playing games make up 18% of the activity. Surfing the web makes up another 9% of the activity.
Emarketer shared some ComScore research recently that captured how diverse the web-based activity of smartphone users was. 94% of the respondents that used an iPhone consumed mobile media; 80% accessed news; 58% participated in mobile networking.
This new mobile user is markedly different from the traditional cell phone users, only 26% of whom consumer mobile media on their device, and only 14% who accessed news.
The best lens on the evolution of Internet habits is gained by looking at the behavior of young adults, for whom using digital devices of all kinds is second nature. ComScore’s recent study on wireless internet usage by Gen Y paints a picture of a wireless cohort who are leveraging targeted applications that are built on the backbone of the Internet. The portrait is very different from the accepted notion of Internet users browsing the web.
- 81% of adults between the ages of 18 and 29 are wireless internet users. By comparison, 63% of 30-49 year olds and 34% of those ages 50 and up access the internet wirelessly.
- Roughly half of 18-29 year olds have accessed the internet wirelessly on a laptop (55%) or on a cell phone (55%), and about one quarter of 18-29 year-olds (28%) have accessed the internet wirelessly on another device such as an e-book reader or gaming device.
- The impact of the mobile web can be seen in young adults’ computer choices. Two-thirds of 18-29 year olds (66%) own a laptop or netbook, while 53% own a desktop computer. Young adults are the only age cohort for which laptop computers are more popular than desktops.
The un-wiredness of Gen Y is a driver of the success of the iPhone and Facebook’s Mobile app. This early-mover position should have long-term benefits for both companies. Morgan Stanley report believes that Apple and Facebook have created dominant market positions in the early Mobile Internet ecosphere.
Of Facebook, the report says:
We believe Facebook has the potential to serve as a communications platform/engine of the one-to-one, one-to-some and one-to-many (and vice versa) for the Mobile Internet.
As for Apple, Morgan Stanley points out that “in technology, the product with the most/best apps usually wins.” Apple’s 100,000+ application universe dwarfs that of the next-closest competitor, Google’s Android platform. Apple’s mobile ecosystem is generating more than $4 billion a quarter in revenues; a combination of paid apps, subscriber fees and phone sales. The more-than 100,000 applications in Apple’s Apps Store had been downloaded more than 2 billions times, as of September 2009.
Facebook already is the most popular Mobile web site. According to ComScore, 4.9 million web users viewed the site using mobile handsets in December. The usage was frequent and intense: those 4.9 million users viewed more than 2.6 billion pages for more than 2.2 billion minutes.
High-Level Implications of the Un-Wiring of the Internet
The two most obvious implications of the explosion of the Mobile Internet are anytime, anywhere access to web content by a much bigger universe of users.
That kind of shift in scale gets the blood rushing.
The urgency that accompanied the launch of the iPad is an indicator, however, that this expansion of web access isn’t going to be a simple matter of taking the current business models and pushing them forward. In the iPad, many of us in media and marketing are looking for a mobile mass media device. Basically, a future with a iPad-like device as the dominant platform gives the current ecosystem of media and marketing models — content supported by advertising, with advertising becoming more deeply embedded in terms of relevance and utility — a richer, more accessible distribution point to consumers.
That’s not going to be the dominant model, however attractive it might be.
The model of Internet design that drives the current paradigm for media and marketing is a multi-function, data-processing device — the computer — connecting to a group of inter-connected networks — the Web — through a single point of entry — the browser.
Media, marketing, communications, interaction, storage all happen through this point of entry, creating a vast Swiss Army knife of utility.
Look at the way that computing and communications habits shift among Gen Y, according to the research.
Networking and communications becomes the core feature of their cellular device. Their web-based behavior shifts towards those applications that create utility and connectedness. Their “content” time — consumption and creation of edited content — is typically isolated to their computer. As the utility of their primary communications device expands, their usage of their primary computing device declines.
There isn’t going to be a seamless melding of these two environments. Computing and communications devices will have common attributes and functionality, but each will have their unique emphasis and usefulness. (Where does the iPad sit? As a tremendous media device. But that will be a subset of two larger markets — computing and communications.)
The shift towards unwired connectedness driven by communications-focused devices has a big impact on those of us in media and marketing.
The first shift is to begin thinking about our web assets in terms of defined applications rather than as content-publishing systems. The mobile Internet turns web assets into the backbone of targeted patterns of usage by consumers. They want to find a thing, learn a thing, do a thing, within the constraints of the device.
The second shift is to rethink mobile as a media platform. While there will be a much larger addressable market, the traditional inventory of advertising is going to shrink. As a result, more emphasis than ever will be put on integration of marketing messages into content and on the conversion of users into some measurable business activity.
The third shift is ownership. How do you get to a unique identifier for a consumer? How do you generate a relationship with the consumer that is not wholly gated by the cellular provider or the device provider?
The fourth shift is sustainability. The switching cost of applications on a mobile device are minimal. Apps downloaded on Apple’s platform have a remarkably short half-life.
We’re entering a new generation of connected content and communications, driven by a new set of devices that have a different topography than traditional web development. While it’s exciting, it will be a mistake to believe that the transition will be orderly, and it presents a new challenge that only the most creative and persistent media and marketing brands will solve.
Here is another link to the Morgan Stanley summary of The Mobile Internet Report.
