The Mobile Opportunity Is Greater Than You Imagined

Before you go, we thought you'd like these...
Before you go close icon

This past week at the All Things Digital conference in California, Mary Meeker -- a partner at Kleiner Perkins Caufield & Byers -- presented her long-awaited slideshow, "Internet Trends." If there was one big takeaway, it was this: The opportunity in mobile computing is enormous, and companies that learn how to monetize it most effectively will be the biggest winners.

Growing fast, with a long runway
The overall pie of Internet users continues to grow at a steady pace, up 8% globally last year. Overall, 2.4 billion people on the planet have regular access to the Internet, equating to a 34% penetration rate. With two-thirds of the world still not familiar with the World Wide Web, elevated levels of growth could continue for more than a decade.

More important, however, is the fact that the percentage of Internet use taking place on mobile devices has shown astonishing growth over the past four years.

Sources: "Internet Trends," StatCounter, and Global Stats. 

This underscores just how important Google's Android operating system is to the company. While some scoff at the fact that Android is an open-source platform that Google essentially gives away for free, Android helps ensure that Google will remain relevant.

Instead of allowing upstarts to develop their own mobile search platform, Android users have Google embedded as their automatic search tool. This simple (yet incredibly powerful) fact means that Google will continue to dominate the search market via both desktop and mobile computing.

Meanwhile, there's a reason Chinese search engine Baidu is spending so much money right now to develop an effective mobile strategy. Mimicking global trends, Chinese Internet users are now more likely to access the Internet via their mobile devices than a desktop computer. Though Meeker's data is more detailed, the general trend lines look like this:

Sources: "Internet Trends" and CNNIC. 

Baidu has agreements in place with China TelecomChina Unicom and China Mobile to have Baidu's mobile search engine embedded within the carriers' 3G phones, helping it, too, retain market share. 

Monetizing the trend
But gaining market share alone isn't enough.  Take a look at the mismatch between the amount of time we spend on different types of media, and the percentage of advertising dollars devoted to each category.

Sources: "Internet Trends" and eMarketer. 

In my opinion, both Google and Baidu are still only in the beginning stages of optimizing their monetization strategies for mobile.  This -- more than anything else -- is the variable that investors should keep an eye on.

Are there other ways to play this trend?
Mobile phone makers have a huge opportunity as well.  If the developing world wants to gain access to the Internet, smart phones are far more practical than desktop computers, as they are both cheaper, and serve dual purposes.

Currently, Samsung is winning the battle, as 44% of all Android phones shipped in mid-2012 were from Samsung. Coming in second, and still holding a significant share, is Apple, whose iOS claims a 17% market share.  

Rounding out the bottom are Research in Motion's Blackberry and Nokia, the primary manufacturer of Microsoft's Windows smart phones.

Source: IDC.

Though you can't invest in Samsung (except for OTC markets), Apple is clearly the most investable of these four companies when it comes to the smartphone trend. Microsoft's Windows 8 has not shown as much promise as management had hoped for. And surveys show that BlackBerry 10, RIMM's new operating system that is supposed to save the company, isn't even on the radar of most potential buyers.

Who will win this war?
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

The article The Mobile Opportunity Is Greater Than You Imagined originally appeared on

Fool contributor Brian Stoffel owns shares of Apple, Google, and Baidu. The Motley Fool recommends Apple, Baidu, and Google. The Motley Fool owns shares of Apple, Baidu, China Mobile, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading