KPCB Top 10 Mobile Trends

TOP MOBILE INTERNET TRENDS Matt Murphy / Mary Meeker – 2/10/11 http://www.slideshare.net/kleinerperkins/kpcb-top-10-mobile-trends-feb-2011

Copyright 2011. All rights reserved. Duplication or redistribution of this presentation are prohibited without prior written authorization.

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Mobile Trends – Rapid Growth + Disruption

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Mobile Platforms Hit Critical Mass Mobile is Global Social Networking Accelerating Growth of Mobile Time Shifting to Mobile Usage Mobile Advertising – Growing Pains But Huge Promise mCommerce – Changing Shopping Behavior Emergence of Virtual Goods & In-App Commerce Not All Platforms Are Created Equal Change Will Accelerate, New Players Emerging Rapidly Summary Trends to Watch

2

MOBILE PLATFORMS HIT CRITICAL MASS

iPods Changed the Media Industry…iPhones Ramped Even Faster…iPad Growth Leaves its “Siblings” in the Dust First 3 Quarters Cumulative Unit Shipments, iPod vs. iPhone vs. iPad 16,000 iPad

iPhone

iPod

Global Unit Shipments (000)

14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 0

1

2

3

Quarters After Launch Source: Apple.

4

iTunes Changed the Media Industry…App Store Growth Leaves it in the Dust Cumulative Number of Downloads, iTunes Music / Video / Movie vs. Apps, First 10 Quarters 10 Apps

iTunes

# of Downloads (B)

8

6

4

2

0 0

1

2

3

4 5 6 Quarters After Launch

7

8

9

10

Source: Apple.

5

Android has Hit Critical Mass First 9 Quarters Cumulative Android Unit Shipments 80

Global Cumulative Unit Shipments (MM)

Android Global Units Shipped 70 60 50 40 30 20 10 0 0

1

2

3

4 5 Quarters After Launch

6

7

8

9

Source: Gartner.

6

Smartphone + Tablet > PC Shipments Since CQ4:10 Global Unit Shipments of Desktop PCs + Notebook PCs vs. Smartphones + Tablets, 2005-2013E 700,000

CQ4:10: Inflection Point Smartphones + Tablets > Total PCs

Global Unit Shipments (MM)

600,000

500,000

400,000

300,000

200,000

100,000

0 2005 Desktop PCs

2006

2007

2008

Notebook PCs

2009

2010

Smartphones

2011E

2012E

2013E

Tablets

Note: Notebook PCs include Netbooks. Source: Katy Huberty, Ehud Gelblum, Morgan Stanley Research. Data and Estimates as of 2/11

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MOBILE IS GLOBAL

5 Countries = 46% of Internet Users – China, USA, Russia, Brazil, India 2009 – 1.8B Global Internet Users, +13% Y/Y(1); 18.8T Minutes Spent, +21% Y/Y(2)

Russia 60MM users; +31% Y/Y 42% penetration* USA 240MM users, +4% Y/Y 76% penetration*

Brazil 76MM users, +17% Y/Y 39% penetration*

China 384MM users; +29% Y/Y 29% penetration*

India 61MM users; +18% Y/Y 5% penetration*

Note: *Penetration is per 100 inhabitants. Source: 1) Internet user stats per InternationalSource: Telecommunications 2) time spent data per comScore global 12/09. 1) Internet userUnion; stats per International Telecommunications Union; 2) time spent data per comScore global 12/09.

9

35% Y/Y Global Mobile 3G Subscriber Growth to ~726MM, CQ3

Rank Country 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

USA Japan Korea Italy UK Germany Spain Poland Indonesia France China Brazil Australia Canada Russia

CQ3:10 3G 3G Sub 3G Subs PenetraY/Y (MM) tion Growth 141 109 40 34 31 28 27 23 21 21 20 19 18 12 12

Global 3G Stats:

47% 95 79 40 41 28 48 50 11 33 2 10 66 50 5

27% 12 12 21 32 28 21 35 54 30 458 177 29 147 67

Subscribers = ~726MM

Rank 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Country Taiwan Malaysia Saudi Arabia Sweden South Africa Turkey Netherlands Philippines Portugal Austria Israel Vietnam Singapore Egypt Greece

Penetration = 14%

CQ3:10 3G 3G Sub 3G Subs PenetraY/Y (MM) tion Growth 11 9 8 7 7 6 6 6 6 6 5 5 4 4 4

42% 26 18 57 15 10 32 7 35 46 52 4 59 7 26

40% 23 50 43 36 160 27 98 8 30 18 707 48 34 28

Growth = 35%

Note: *Informa reports a lower global 3G subscription # vs. Ovum due to the exclusion of 4G and the use of different sources. 3G includes CDMA 1x EV-DO and Rev. A/B, WCDMA, HSPA; Source: Informa WCIS+.

10

SOCIAL NETWORKING ACCELERATING GROWTH OF MOBILE

Different Types of Platforms = Facebook + Apple + Google

iPhone/iTouch/iPad

662MM users +41% Y/Y

130MM+ users +103% Y/Y

550K+ apps 500MM+ downloads

350K+ apps 10B+ downloads

SOCIAL

MOBILE

*

SEARCH

972MM users +8% Y/Y CQ4: CPCs +4% Q/Q paid clicks +18% Y/Y

Source: Company data, comScore global 12/10. *Google Android momentum especially strong too.

12

Emerging Types of Social Networks…More to Come

INFORMATION SHARING

253MM unique visitors +85% Y/Y

130MM+ monthly active users +15% Y/Y

GAMING

51MM subscribers +25x Y/Y

Source: Groupon, Twitter, Zynga.

COMMERCE 13

Zynga Proves that Great New Social Products for ‘Old’ Users Can Ramp Extremely Quickly Daily Active Users, FarmVille vs. CityVille, First 60 Days Since Product Launch

20 Daily Active Users (MM)

FarmVille

CityVille

16 12 8 4 1

6

11

16

21 26 31 36 41 Days After Launch

46

51

56

Source: Zynga. Note that FarmVille launched in 6/09, CityVille launched in 12/10.

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Real-Time Social Features Accelerating Mobile Usage Growth - Sharing + Location + Friending...

Location Sharing FourSquare

Whrrl

Communication Twitter

TextPlus

TextFree

Music Sharing Shazam

Spotify

FB Connect for Mobile – Built in Friend Connectivity, Share, Virality Invite Friends

Share

Feed

15

KPCB’s John Doerr Calls It “SoLoMo”…

So Lo Mo Social

Local

Mobile

16

TIME SHIFTING TO MOBILE USAGE 17

Japan Social Networking Trends Show Importance of Mobile – Mixi Mobile Page Views = 85% vs. 14% 4.5 Years Ago

Monthly Page Views (MM)

Mixi’s (Japan’s Leading Social Network) Monthly Page Views, Mobile vs. PC, CQ2:06-CQ4:10 Mobile Page Views Desktop Page Views

30,000

85%

25,000

CQ3:09 – Platform opened to 3rd-party developers

20,000 15,000 10,000 14% 5,000 86%

15%

0 2Q06

4Q06

2Q07

4Q07

2Q08

4Q08

2Q09

4Q09

2Q10

4Q10

Note: Mixi is one of Japan’s leading social networking sites on PC and mobile with 20MM registered users as of 12/31/10. It monetizes mobile usage via sales of avatars, customized homepages and other premium services. Source: Company reports, Naoshi Nema, Morgan Stanley Research

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60% of Time Spent on Smartphones is New Activity for Mobile Users Average Time Spent on Various Mobile Functions, 1/11 10 minutes (12%) Web/Web Apps

NEW ACTIVITY

40 minutes (47%) All Other • Maps • Games • Social Networking • Utilities • More…

27 minutes (32%) Telephony • Phone • Skype • Messages

7 minutes (9%) Mail App Source: AppsFire, 1/11. Note that Android users show a higher % browsing activity.

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Total Mobile Data Traffic (Tetabyte per month)

Global Mobile Data Traffic Should Grow 26x Over Next 5 Years ,

Global Mobile Data Traffic, by Type 2008 – 2015E

,

2010-2015E CAGR Total

92%

22%

M2M*

109%

6%

Data

80%

File Sharing

62%

Video

104%

VoIP

42%

5%

6,000,000 5,000,000 4,000,000 3,000,000

66%

2,000,000 1,000,000 0 2008

2009

2010

2011E 2012E 2013E 2014E 2015E

Source: Cisco Visual Networking Index (VNI) Global Data Traffic Forecast, 2010-2015

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Strong Mobile Trends for Leading Social Companies

200MM mobile active users vs. 50M in 9/09 2x more active than desktop-only users

Mobile = 50% of total active users, vs. 25% Y/Y Mobile = 40% of all tweets

Introduction of mobile product drove 2x conversion ratio from free to paying subscribers Mobile users = 25-30% total users in mature markets

100MM mobile users vs. 50MM Y/Y

Adding 3MM users per month 50% of all users subscribe on mobile 21

MOBILE ADVERTISING – GROWING PAINS BUT HUGE PROMISE

So Far, Difficult to Build Consistent Mobile Ad Revenue Owing to Lumpy Buys, Need for More Premium Advertisers…

2010 Mobile eCPMs for 4 KPCB Portfolio Companies $ 4 3 A B C D

2 1 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: KPCB Companies

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…Yet the Efficacy of Mobile Ads vs. Other Media is Compelling Relative Efficacy of Mobile vs. Other Advertising Media, 1/11 Reach

Targeting

Engagement

Viral

Transaction

Mobile

100

90

70

80

80

Internet

50

50

80

40

60

TV

50

30

90

Print

40

1 0

Radio

60

1 0

Outdoor

20

1 0

20

40

1 0

20

1 0

1 0

1 0

1 0

Source: Chetan Sharma, January 2011 24

Media Time Spent vs. Ad Spend Still Out of Whack Internet/Mobile (upside…) vs. Newspaper/Magazine/TV (downside…)

% of Time Spent in Media vs. % of Advertising Spending, USA 2009

% of Total Media Consumption Time or Advertising Spending

Time Spent

Ad Spend

50% 40% 39% 30%

31% 26%

20% 10%

Global Opportunity

16% 12%

~$50B

28%

13% 9%

0% Print

Radio

TV

Internet

Note: Time spent data per NA Technographics (2009), ad spend data per VSS, Internet advertising opportunity assumes online ad spend share matches time spent share, per Yahoo!. Source: Yahoo! Investor Day, 5/10.

25 25

Advertising $s Follow Eyeballs – Ad Revenue per User = $46 in 2009E vs. $0 in 1994E

1995E

2009E

$55MM

$54B

Ad Revenue per User

$9

$46

Global Internet Users

6MM

1.2B

Global Internet Ad Revenue

Source: Global online ad revenue per Juniper Communications (1995), ZenithOptimedia (2009). Internet users per Morgan Stanley estimate (1995) and comScore (2009). We note that comScore reports a lower global Internet user # than International Telecommunications Union. Morgan Stanley Research.

26 26

Google Paid Clicks & Cost-Per-Click Continue to Accelerate…Mobile Search as a Key Driver?

CQ4:09

CQ1:10

CQ2:10

CQ3:10

CQ4:10

$6,465

$6,475

$6,562

$7,032

$8,167

Y/Y Growth

17%

21%

23%

22%

26%

Q/Q Growth

12%

0%

1%

7%

16%

12,401

12,909

12,651

13,157

14,669

Y/Y Growth

13%

15%

15%

16%

18%

Q/Q Growth

9%

4%

-2%

4%

11%

$0.52

$0.50

$0.52

$0.53

$0.56

Y/Y Growth

4%

6%

7%

6%

7%

Q/Q Growth

3%

(4%)

3%

3%

4%

Gross Advertising Revenue ($MM)

Aggregate Paid Clicks (MM)

Cost per Click (CPC - $)

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New & More Powerful Ad Units are Rolling Out Quickly in Mobile…

Disney Super Bowl Sunday takeover campaign -- All pages of textPlus, February 7, 2010

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…And Many Brands are Testing

29

Branded Virtual Goods & Sponsorships are Impactful Interstitial

Call to action – click to mobile site, app, call, location, add to calendar, and more

Source: Booyah and Shazam.

30

Smartphones Can Make TV Interactive TV Action Via Mobile: -

Get coupons / offers

-

Learn more about products

-

Share content with friends

31

M-COMMERCE – CHANGING SHOPPING BEHAVIOR 32

Online Commerce Gaining Share vs. Offline – Online at ~5% of USA Retail, Mobile Should Get to Same Level Much Faster

USA eCommerce % Share(1) of Total Retail Sales, CQ3:00-CQ4:12E

eCommerce as % of Total Retail Sales

7%

eCommerce Penetration 4% in CQ2:10

6% 5% 4%

Mobile eCommerce Penetration?

3% 2% 1%

0% Q3:00 Q3:01 Q3:02 Q3:03 Q3:04 Q3:05 Q3:06 Q3:07 Q3:08 Q3:09 Q3:10 Q3:11 Q3:12 eCommerce Penetration

Linear Trendline (y=0.094x + 0.9895, R^2=0.9599)

Note: (1) Adjusted for eBay by adding back eBay US gross merchandise volume; Source: US Dept. of Commerce (CQ2:10), Morgan Stanley Research.

33

Mobile Revolutionizing Commerce – With Constant Product Improvements • Location-Based Services – Enable real-time physical retail / service opportunities • Transparent Pricing – Instant local + online price comparison could disrupt retailers • Discounted Offers – Deep discounts drive foot traffic to local retailers • Immediate Gratification – OTA (over-the-air) instant digital product + content delivery Location-Based Services Shopkick iPhone App Finds deals and offers in your area

Transparent Pricing ShopSavvy Android App Comparison shopping among online + local stores

Discounted Offers Groupon iPhone App Local Services Up to 90% Off

Immediate Gratification iTunes Store on iPhone Music / video / apps delivered wirelessly

Source: Company Reports, Morgan Stanley Research.

34

Mobile Shopping Apps - Changing Behavior + Driving Revenue & ROI For Retail Partners Shopkick’s Daily Walk-Ins to Retail Partners, 11/15/10 – 12/6/10

# of Daily Walk-Ins

More shopkick walk-ins to a retail partner on Cyber Monday due to the 3x kickbucks promotion than on Black Friday

11/15

3X Cyber Monday

Black Friday These types of experiments have been repeated a dozen times at 5 different retailers: every time, 50-100% increase in foot traffic

11/18

11/21

11/24

11/27

11/30

12/3

12/6

Source: Shopkick. Note Shopkick has 750K users in five months since launch.

35

Mobile Devices + Services Driving New Ways to Shop

Mobile is clearly becoming a new way people shop…[eBay has] nearly tripled mobile GMV (gross merchandise value) year-over-year to nearly $2 billion, with strong holiday shopping momentum in Q4. In 2011, we expect Mobile GMV to double to $4 billion. -

John Donahoe, President & CEO, eBay CQ4:10 Earnings Call

36

EMERGENCE OF VIRTUAL GOODS & IN-APP COMMERCE

Virtual Goods = $2B Market in USA U.S. Virtual Goods Revenue, 2008 – 2011E

U.S. Virtual Goods Revenue ($MM)

$2,500

$2,000

$1,500

$1,000

$500

$0 2008

2009

2010

2011

Source: Inside Virtual Goods: The US Virtual Goods Market 2010-2011. 38

What Are Virtual Goods Anyway?

Average Monthly Revenue per User

Average # of Transactions & Annual Dollar Spent by Virtual Goods, 9/09 $60 # of Transactions

$50

$50

Gross Dollars Spent

$40 $30

$30

$20

$20 $10

$20

$20 $12

7

5

5

5

5

5

$11 5

$0

Source: Playspan survey of 1736 respondents in 9/09. 39

Monetization Shift From Paid Downloads To Virtual Goods Has Been Profound For Many Developers Average Daily Revenue for a KPCB Portfolio Company Virtual Goods Introduction Drove 5x Revenue Increase

Source: KP Portfolio Company 40

Powerful Shift to Ad & Virtual Good Monetization from Initial Pay per Download Models

Revenue Composition for Pinger – a KPCB Portfolio Company 12/2009 5%

12/2010 Paid Downloads Advertising

30%

35% 63%

64% Affiliate 2% Virtual Goods

Source: Pinger. 41

Gaming Elements = Key to Success For Many Mobile / Social Applications

’Gamification’ of apps is the ultimate way to engage a new generation of audiences.

Bing Gordon, KPCB Partner, AIAS* Hall-of-Famer

Note: *AIAS is the Academy of Interactive Arts & Sciences.

42

NOT ALL PLATFORMS ARE CREATED EQUAL

Global Smartphones – Huge Android + iPhone Growth

Global Smartphone Market Share - Q4:10 vs. Q4:09

OS vendor

Total

Q4 2010 shipments (M)

% share

Q4 2009 shipments (M)

% share

Growth Q4’10/Q4’09

101

100%

54

100%

89%

Google*

33

33%

5

9%

615%

Nokia

31

31%

24

44%

30%

Apple

16

16%

9

16%

86%

RIM

15

14%

11

20%

36%

Microsoft

3

3%

4

7%

-20%

Others

3

3%

2

3%

65%

*Note: The Google numbers in this table relate to Android, as well as the OMS and Taps platform variants. Source: Canalys estimates, ©Canalys 2011

44

Differences in Platform Engagement – Internet + App Usage Massively Higher on Android + iOS

Installed Base (MM)

1,200

20 17

1,000

16

800

11

12

600 400

8 4

5

200

50% population in developed markets will have Smartphone • “SoLoMo” – Social / local / mobile converging • “Gamification” – Ultimate way to engage a new generation of audiences • Empowerment – impact of empowering billions of people around the world with real-time connected devices has just begun...

It's going to be a fascinating decade 54

Big Changes Ahead

We’re at the beginning of a new era for social Internet innovators who are re-imagining and reinventing a Web of people and places, looking beyond documents and websites. -

John Doerr, Partner, KPCB

55

Contacts, Presentation

Matt Murphy

Mary Meeker

[email protected]

[email protected]

twitter: @mmurph http://www.kpcb.com/team/index.php?Matt Murphy

http://www.kpcb.com/team/index.php?Mary Meeker

http://www.slideshare.net/kleinerperkins/kpcb-top-10-mobile-trends-feb-2011

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