On "Internet Trends" by Mary Meeker and Team

Last week, the annual "Internet Trends Report" was released by Mary Meeker and her team. Her commentary is widely followed, since her first report in 1996 while she an analyst at Morgan Stanley. The following are selected highlights from the current 333-page report.

Global Views

  • Globally, there are 3.8 billion Internet users, which represents 51% of total global population 

  • North America is 89% penetrated, representing 9% of total

  • Europe is 78% penetrated, representing 15% of total

  • Asia Pacific region is 48% penetrated, representing 53% of total (leads in number of users and potential for growth)

  • Africa and Middle East is 13% penetrated, representing 32% of total

  • Latin America & Caribbean is 62% penetrated, representing 10% of total

  • By country, China is 21% of global penetration, India 12% and U.S. 8%

  • Smartphone growth has slowed, but cellular data use continues to increase, led by image sharing (a picture is worth 1,000 words)


Observations on the U.S. market include:

  • E-commerce represents 15% of retail sales and continues to gain market share from brick-and-mortar retailers.

  • Hours spent on mobile devices (226 hours) exceeded time spent watching television (216 hours). Leading these gains was the use of YouTube and Instagram

  • Podcast monthly active users grew to 70 million, up from 22 million in 2008

  • Wearable devices - there are now 52 million users, up from 25 million in 2014

  • Remote working continues to rise, representing 5% of total, up from 3% in 2000

  •  “On-demand” services (marketplaces, transportation, housing, food delivery, other) are used by 56 million consumers, up from 25 million in 2016 

  • On-line education continues to grow – over 50% of offerings focus on technology and data science topics

  • Digital health growth is driven by prescription delivery services, knowledge sharing, health insurance management, democratization of healthcare, and artificial Intelligence unlocking insights for practitioners


Strong growth by non-US players highlighted in the report include: 

  • Asia Pacific: Alipay – financial services, Meituan Dianping – connecting consumers to local merchants, Shoppee – social commerce, Reliance Jio - online content & services, Tokopedia – product delivery, Toss - digital payments, Grab – ride sharing  

  • LATAM: Rappi - delivery services, Nubank – banking/consumer credit, MercadoLibre – E-commerce

  • Europe: Revolut – personalized banking


Other Observations

  • Interactive gaming growth is strong, examples include Fortnite, Discord, Twitch

  • Data / artificial intelligence, when used properly, can improve customer satisfaction

  • Motivated bad actors can amplify ideologies, unintended bad actors can amplify misinformation, extreme views can amplify polarization

  • Cross-border trade, which is 29% of global GDP, is foundational to the global economy


OUR TAKE

  • The growth in wearables is indicative of the transition to the "Internet of Things", where connected devices and sensors facilitate opportunities in health/fitness/sports, transportation, construction, agriculture, smart cities and more

  • While North America/Europe are highly penetrated markets (based on users), the differences in per capita e-commerce spending in various regions should also be understood. According to some estimates (2017), per capita spending for U.S. was $157, Canada $137, France $124; among UK, Germany, and Japan -  spending is about $108. For China, it was $38, Brazil $30, India $8.

  • In addition to trade war dynamics, other factors that could reshape Internet use include privacy (encryption, facial recognition) the legitimacy of information (deep fake) and embedded services driven by artificial intelligence/machine learning.

Paul Dravis