Morgan: Mobile Internet to Be 2X the PC Internet

Morgan Stanley's Mary Meeker gave a mobile-centric Web 2.0 conference presentation that everyone was talking about several months ago. From our point of view there wasn't anything particularly new in her remarks but she put everything together into historical context. And the crowd there, which may not have seen mobile as "distruptive," was paying attention.

Now comes hundreds of pages and slides that everyone can download here

  1. “The Mobile Internet Report Setup” – a 92-slide presentation that excerpts highlights of the key themes from the report.
  2. “The Mobile Internet Report Key Themes” – a 659-slide presentation that drills down on thoughts covered in “The Mobile Internet Report.”
  3. “The Mobile Internet Report” – a 424 page report which explores 8 major themes in depth and includes the two aforementioned slide presentations + related overview text.

There's a ton of data and projections in these documents. Read them over the holiday or before bedtime. Perhaps the most interesting part (I haven't been through everything) is the historical analysis that talks about previous disruption cycles and predicts winners and losers in the future accordingly. 

The big themes are that the mobile Internet will be "at least" 2X the size of the PC Internet and that the whole thing is "ramping" much faster than the desktop did. The latter point we've made many times in the past. 

We are clearly in a kind of double-transition period: traditional media are contending with the fruits of massive consumer Internet adoption but the transition to mobile is happening simultaneously and perhaps a bit obscured as a result. But just as the Internet is "disruptive" of traditional media, mobile is also potentially disruptive of aspects of the Internet. Google has seen that perhaps better than any of its competitors and moved very aggressively as a result.

Many companies, analyst firms and media outlets tend to focus on ad revenues as a measure of whether a medium has "arrived." For example, many of the articles and even forecasts about mobile ad revenues tend to talk about how small they are relative to traditional Internet advertising. And when, oh when, will it be "the year of mobile"?

Dude this year already was. We're here. 

Whether ad networks and publishers can efficiently and effectively monetize the mobile Internet is not going to matter to consumers -- not going to matter. Consumers will be using the mobile Internet more and more and as a primary access point in an increasing number of situations. It will be preferred in a large number of cases. 

The smartphone is going to become "the remote control for your life," in the way that the iPhone or iPod Touch can literally become a remote control device for TV. People will want to access content that they've researched, saved, collected online (i.e., in the cloud) from the mobile device. But the future is not just about phones; it's about myriad mobile devices and Internet access points in the world against near-ubiquitous connectivity. 

The mobile Internet -- from a consumer perspective -- will get larger and larger. Ad revenues will come but consumers are way ahead. Millennial Media predicted that we'd see 100 million mobile Internet users in the US next year. I think that's nearly a slam dunk prediction. Frequency is another matter of course but it too will go up over time. Voice search on my handset may mean that I do as many or more searches there than on my PC.

I'm sitting on the couch and I want to know the answer to trivia question X. Do I get up and go into the other room? No, I take out the smartphone and speak the query: "Who was the 17th president of the US?" Done. Now back to the movie. 

Advertisers, agencies and publishers ignore the mobile Internet at their own peril.

If you thought that the PC Internet gave people control over which ads they consumed, you ain't seen nothing yet. Less inventory and consumer ambivalence about ads on their handsets means that advertising will really need to turn into "content" or be so viral or targeted that people will be motivated to respond. This despite the fact that mobile response rates are much higher than on the PC.

That's a bit of a paradox, I realize. 

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Source: Morgan Stanely research