Wednesday, June 5, 2013

The Only Thing That Is Constant Is Change

Over the years there have been many enormous advances in technology that have changed the world and the way we live.

The printing press, railroads, the internal combustion engine, automobiles, electricity and the telephone are just a few examples.

We are still in the midst of the technological revolution that defines us today---the internet.

Mary Meeker and Liang Wu of Kleiner, Perkins, Caufield and Byers recently released their 2013 report on Internet Trends.  This has become an annual must-read for me over the last few years.  The current report contains 117 PowerPoint slides that provides an overview of what the internet is today and where it is going tomorrrow.

A few of the more interesting slides in the report.

Internet growth in 2012 was primarily driven by emerging markets like China, Iran, Indonesia, Argentina and India.  China has 564 million internet users (more than twice as many as the U.S.) but it still has only penetrated 42% of the population.

Smartphones usage is now at 1.5 billion but still is less than 1/3 of the 5 billion mobile phone users in the world (the world population is around 7 billion).  There is still a lot of room for this usage to expand.

The big story of the last two years in Smartphones has been the dominance of Apple and Samsung in this segment.  In particular, Samsung and its Galaxy Android phone---up 7x in a little over two years-WOW!

Speaking of WOW!, look at this change in the global market share of Smartphone operating systems since 2005.  Apple, Google and Microsoft are dominating this market that at one time was the domain of BlackBerry (Canada), Linux and Nokia (Finland).

You see the effects of Smartphones and the emergence of mobile usage in this slide that compares the % of time spent on various forms of media compared to the advertising spend in these segments.  This clearly shows the challenge to all forms of print advertising. 

Only 6% of time is now spent with print but it still is garnering 23% of ad dollars.  Old habits die hard.  However, the writing is on the wall for print advertising.  Many more dollars will come out of this segment to follow the eyeballs to where they are.  The beneficiary will be mobile advertising.  Meeker sees at least a $20 billion opportunity in mobile ads is on the horizon.  Who is going to capture these dollars?

We hear that we live in a world that is increasingly "connected".  We are also living in a "shared" world as this graph illustrates.  The amount of global digital information that is created and shared is truly astounding.  One example---BeeLine, created and shared digitally beginning in 2010.

Photos are on the top of the list for shared content.  On Facebook alone, over 300 million photos will be shared today!

Video sharing is on an explosive path upwards.  In six years YouTube uploads have gone from almost nothing to today where 300 hours of video content is being uploaded every minute.

Technology is disruptive.  Remember the Pony Express?  The U.S. Postal Service may some day have a similar story in our history books.  This chart compares the pieces of mail delivered to the net profit/loss of the Postal Service.  Look out below!

As the internet changes our world, the world's economy is also changing.  China and India are gaining more of the global economic pie. The U.S. and Europe are losing influence.  What is interesting is that China and India make up 21% of world GDP today.  In 1820, they made up 49% of the world economy.  Europe's share of the world economy has been cut in half in the last 50 years.  Is it a coincidence that this decline basically tracks the rise of liberal, socialist policies in Europe over the same period?

Immigration reform is in the headlines and it is imporant to remember that 99% of Americans are immigrants or descendants of immigrants.  I thought it was also interesting that Hispanics now make up 16% of the U.S. population.  Hispanics now exceed Germans (15%), Irish (11%), English (15%) and African Americans (13%). 

"The only thing that is constant is change."  ---Heraclitus

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