Mary Meeker: Internet and smartphone user growth is slowing
Longtime Morgan Stanley analyst Mary Meeker has released her annual Internet Trends report. Meeker, who now leads growth-stage investments for venture capital firm Kleiner Perkins, presented the report at Code Conference in California.
Here a some of the key takeaways (slides embedded below):
Internet user growth is solid but slowing, as is smartphone user growth. Internet users only grew 8% in 2014, compared to 10% in 2013. India saw the biggest jump in addition of web users, at 33%. Smartphone subscription growth was up 23% in 2014 compared to 27% in 2013. Once again, India saw the highest jump in smartphone subscribers with a 55% increase followed by China at 21%.
Meeker is optimistic about mobile ad growth and sees a $25 billion opportunity for mobile ad spend in the U.S.
Mobile internet advertising is growing (+34% over the past year) while desktop advertising growth is stalling. The opportunity, reports Meeker, is in mobile-optimized ad formats such as Pinterest’s new scrolling ad, or Google’s (GOOG) local inventory ads, which shows if a product is available near a user’s location.
Meeker predicts that Buy buttons will take off, because they are optimized for frictionless shopping on mobile phones. Twitter (TWTR) introduced an in-stream Buy button last Fall, and Facebook (FB) and Pinterest are expected to follow suit with respective Buy buttons.
Mobile messenger apps, such as Snapchat and WhatsApp, are growing fast and will eventually evolve into global communication hubs, says Meeker. Asian messaging apps such as Chinas WeChat, and Japan’s Line, are currently creating the playbook for how to become these hubs, adding features like commerce, games, delivery and more. We can expect U.S. apps to use this strategy to grow their platforms.
User generated content is having a renaissance of sorts, thanks to social platforms like Facebook and Snapchat, where users are sharing videos at a growing clip. Meeker says this trend is only going to expand, and is already gaining speed in areas like consumer reviews and news.
Meeker slams the worker needs of the millennial generation, reporting that they are more narcissistic, and money-driven, and less confident and team oriented than previous generations.
The impact of the internet on the economy and consumers has been broad but in some ways it’s just beginning for some industries, reports Meeker. In education, healthcare, policy, and security, the impact has been lower, and there is more opportunity in these sectors.
Meeker addressed the ever growing on-demand economy, powered by companies like Uber and Lyft. Freelancers, she says, is a significant and growing part of the worker population, and now comprise 34% of the U.S. workforce. Many workers are using services like Airbnb and Uber to make money because of the flexibility. In fact, 25% of on-demand workers work for multiple services. And as consumers begin to expect goods and services to be delivered to them at a faster pace, this opens opportunity for these flexible workers.
The use of drones are growing fast, with shipments up 167%. What’s particularly promising for commercial drone use is that regulators are cooperating, with over 400 companies approved to operate droned commercially.
As for speculation that we are heading into a technology bubble, Meeker says that there are pockets of internet company over valuation, but there are also areas where there is under valuation. She writes, “There are few companies that will win- but those who do will win big.”