Mary Meeker's 2017 Internet Report

Kleiner Perkins' executive, Mary Meeker presented her findings at the CodeCon this month.

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Mary Meeker, the infamous former-Wall-Street-analyst-turned-Silicon-Valley-venture-capitalist, published her much anticipated annual Internet report this past month. In a data-saturated 355 slide presentation, she undertook the immense task of analysing this year’s Internet trends. Here’s what you need to know of the nine major sections:

Global Internet Trends

Global internet trends are showing a solid user growth and a slowing of smartphone growth.

• There is a 10% flat growth of global internet users compared to the 10% y/y

• There is a slowing 3% growth in shipments of smartphones compared to the 10% y/y

• The typical American in 2016 spent 5.6 hours on the internet as opposed to the 2.7 in 2009

Online Advertising (+ Commerce)

Online advertising and commerce have become increasingly more measurable and actionable. The majority of ad growth is driven by mobile usage.

• Internet advertising in the US has grown from $23B to $73B from 2009–2016, with mobile advertising growing 20% ($37B)

Leading platform ad offerings are rapidly improving with backend data, front-end measurement tools, and targeted delivery of ads users increasingly want.

Image based platform front-ends include:

• Tap + Augment

• Pictures to replace typing

Image based platform back-ends include:

• Algorithms to infer user context from images which provide contextual relevance to advertisers

• Voice replaces typing (20% of mobile queries made by voice)

Social media drives accountability; it has pushed for product quality, customer support, and transparency bars to rise. In this evolution, e-commerce growth is accelerating. We are now living:

• Eating out becoming eating in

• Grocery shopping becoming personal, fast, and easy, using augmented reality to find products in store

• Brick-and-mortar-store closings breaking 20 year record

• Rise of subscription stores

Interactive Games

Interactive games have become the motherlode of tech product innovation, evolution, and modern learning. There is a shift from Moore’s Law, which emphasised processing and solo work, to Zuckerberg’s Law, which is based on the principles of online sharing.

In an era of perceived disengagement, engagement is actually rising, and so, gaming platforms are evolving at high speed. The interesting point to take note of is that gaming has created a set of tools for us. It has been found that gaming tools are foundational for internet services, as they are pervasive online and can optimise learning and engagement. They are also improving human performance through virtual and augmented reality, simulations, and real-time analytics.

Media

Meeker describes media as a “distribution disruption at a torrid pace”. She recognises that digital leaders are transforming media with better user experiences, lower prices, anddata and scale. This is evidenced by how:

• Most people cut pay-TV service because it’s too expensive (80%), and then because they use an internet streaming service (48%). Thus, streaming is increasing (Spotify and Netflix)

• Digital subscriptions are rising owing to massive user experience improvements such as on-demand, a la carte selection, personalisation, payment systems, mobile accessibility, and 2-way UGC

The Cloud

The Cloud has become a catalyst for change across enterprises. Most cloud apps are used by retail, restaurant, and hospitality, followed by financial services, banking, and insurance (vertical). However, even as Cloud adoption has lead to reaching of new heights and creating new opportunities, 94% of all apps are considered not enterprise ready, which can lead to serious security and compliance implications.The top 4 concerns were:

• Data security

• Uncertainty of costs and savings

• Compliance/governance

• Lock-in (ability to change vendors)

China Internet

China is in the midst of its golden age of entertainment and transportation.

• China Macros show positive trends. The China Consumer Confidence Index has reached an all time high this year. Regarding China internet users and usage, there is a healthy user growth but usage is outpacing users

• China entertainment is online innovation driving a robust user, usage, and monetisation growth. In the U.S., most of online entertainment user-pay revenue comes from digital music, and in China, it is online games

• China has a very strong on-demand transportation, and is the #1 global market for cars and bikes. Its bike sharing MAU has grown 110% in the past year

India Internet

In India, competition continues to intensify and, as it so happens, consumers come out winning. For example, India’s internet usage is rising owing to cheaper and faster access. Whereas global average of mobile share of web traffic is 50%, in India, it’s 80%. This internet innovation is primarily made of two factors: leapfrogging and re-imagining.

• Leapfrogging: mobility, identity, bandwidth, payments

• Re-imagining: entertainment, education, healthcare, marketplaces

It also helps that India’s leadership is focused on pro-digital policies.Narendra Modi, the elected Indian prime minister, has several key projects:

• “Banking for all”

• “Power for all” rural electrification

• Demonetisation

• Nationwide tax reform

• “Digital India”

• Skills & entrepreneurship support

• “Start-up India”

• Infrastructure enhancements

India’s main internet challenges lies in finding a fundraising environmentand language, because in India, there are 29 languages spoken, and 46% of internet users primarily consume content in their local language. Other challenges as identified by Meeker exist in job creation, business basics, education, logistics, and gender disparity.

Healthcare

Healthcare is at a digital inflection point. Typically, digitisation of healthcare works in a virtuous cycle of innovation consisting of digital inputs, data accumulation, data insight, translation, and outcomes.

• Digital inputs: rapid growth in sources of digital health data

• Data accumulation: proliferation of digitally-native data sets. This proliferation of health apps shows a rapid rise of empowering data in consumer hands

• Data insight: generated following accumulation and integration of data

• Translation: impact on therapeutics & health care delivery.

• Outcomes: measures outcomes and iterate, innovation cycle time compressing

Global Public/Private Internet Companies

Luckily for all of us, Meeker’s data analysis proves that it’s been a good time to be a leader/innovator. She finds that over time, the best rule of thumb for valuing companies is: value is present value of future cash flows.

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