KPCB Internet Trends (2011)

This week ex-Morgan Stanley research analyst, now at KPCB, Mary Meeker delivered her latest Internet Trends presentation. As always, Mary’s distillation of trends is always good value and genuine insights are peppered throughout.

For the time starved amongst you, here are some highlights:

World view:

• Though still with some ground to make up, it’s striking the number of Chinese and Russian internet companies popping into the global top 25.

• What’s more, between 2007 and 2010 China accumulated 246million new internet users – that is more than exist within the USA.

Mobilising the people:

• Mary notes that even in recessionary times breakthrough technology and services can breakout. One need only look at the extraordinary first weekend sales of Apple’s iPhone 4S to confirm this.

• 2010 QTR 4 saw more mobile devices (which includes Tablets) sold than PCs and signs that Smartphone sales outstripping feature phone sales in US/EU

• That said. still enormous unconverted user base with 835 million Smartphone users against 5.6 billion mobile device subscribers.

• Apple getting plenty of headlines right now, but it’s Android mobile devices with the remarkable quarter on quarter ramp up – jumping from 20million to 150million units shipped in between quarters 7 and 11 post-launch.

• Global mobile success story continues with app/ad revenue up by a factor of 17 between 2008 and 2011 to a figure of $12billion.

Touchy, feely:

• Meeker calls out the latest trend in the evolution of human computer interaction being from text command lines to graphical user interfaces (GUI) to natural user interfaces. Yes, Steve gets a name check too.

Cash is no longer king?:

• E-commerce story continues to be one of growth through tough economic times but plenty of room to grow.

• Again the big story is growth in mobile commerce with ebay and PayPal doubling or more their gross mobile sales/payments since 2010.

• The uplift in mobile e-commerce activity has been of particularly benefit to local commerce through the plethora of location aware discount offer aggregators.

Power to the people:

• Meeker identifies overarching mega-trend as the empowerment of people via connected devices.

• She references the Twitter traffic patterns post Japanese earthquake, the fact that 200million Indian farmers currently receive government subsidy payments via mobile devices and 85% of global population are now covered by commercial wireless signals versus 80% being on electricity grid.

The digital landscape across Asia-Pacific has seen significant change in recent months, with enthusiasm for social media driving the broader adoption of a wide range of connected services and tools.

Although Internet penetration levels remain low in many Asian countries, the sheer size of those countries’ populations means that the numbers must be seen in context; for example, internet penetration in China stands at just 34%, but the number of social media users in that country exceeds the total population of Russia.

It’s also critical to understand how people in the East access and use the web.

We know mobile phones are already an indispensable part of life throughout Asia, and given the faltering state of infrastructure in much of the region, these are often the predominant means of communication and entertainment. Digging into the latest numbers still has the power to give us pause for thought, however. In India, for example, Mobile penetration is 50% higher than TV penetration.

As a consequence, the Asian internet revolution is skipping a step, with many people accessing the web and web-powered utilities uniquely through mobile devices.

In many Asian countries, this entails access via basic ‘feature’ phones (i.e. non-smartphones), but as in so many other areas, Asians approach these devices with a remarkable sense of resourcefulness. Simple apps and hacks for social networks like Facebook, Twitter, and their local equivalents abound, and this simplified access is helping to fuel astonishing adoption rates across the region.

Importantly, many tracking studies miss this mobile-only behaviour – a reality borne out by the fact that the number of Facebook users in Indonesia appears to exceed the total number of internet users.

To help make sense of all this data and the broader Asian picture, BBH Asia-Pacific has been profiling the digital, mobile, and social media landscapes of a number of countries around the region.

You can see the latest China report above, while reports on India, South-East Asia, Indonesia and the Philippines are all available to view and download via SlideShare here.

For more info on any of these reports, please leave a comment here or get in touch (@eskimon).

The most provoking part of the presentation is the Disruptive Innovation slide. PSFK had a great blurb on describing the importance of this theory:

Disruptive Innovation is what’s to blame for the success of smaller, nimbler but sometimes cheaper products or services that manage to disrupt the success or complacency of larger, traditional brand players. Think of Amazon’s continued growth and eventual ‘breaking’ of Barnes & Noble, or Netflix’s killing of Blockbuster. Meeker’s presentation lays out two ways in which this disruptive innovation can happen

The two ways that Disruptive Innovation can happen. The first is a Low-End Segment Strategy by offering a product or service at a very low cost and then move up market. The second is called a Non-Consumption Strategy which basically means true innovation where consumption didn’t exist prior to the product being available.

We have the presentation embedded here for your enjoyment. Please tell us what you found interesting? What worries you about this data? What excites you about this data?

Slide 7 is especially impactful. I was born on the left hand side of the chart, probably around when there were 5 million computing-capable units globally. On the right, just ten years from today, the forecast is for 10 billion+ units. Extraordinary.

I’ve written about social media flings before, but all the recent buzz about privacy issues got me thinking about this subject again. Brands are obsessed with friends and fans in social media environments when a much more relevant (and achievable) goal would be a less committed relationship: a fling. Why ask so much from a consumer when most brands fail to deliver on expectations anyway? The number of brands I’ve met with an editorial calendar and iterative community management strategy is so few, I can count them on one hand. Yet, the gathering of fans / followers / cults prods aimlessly on, justified via the value of earned media. The idea of talking to a million people whenever you want — that’s just too good to not pursue, right?

I just don’t get it. Maybe I’m too demanding as a consumer, but I have a tough time with the “in or out” invitation posed by most brands. I was talking to @hashembajwa about this recently and he cited the following example: “I love and am loyal to Virgin Atlantic, but that doesn’t mean I want to hear from them at any point other then when I have London on my mind.”

That comment really struck me. For him, it was about context. And that’s really what a fling is. It’s like a camp friend— that kid you were super close with at camp. You couldn’t imagine a scenario at camp he or she wasn’t a part of. But, once you got back home,  regardless of promises to call and write, it didn’t happen. It just wasn’t relevant to stay in touch back in your normal life. But hey, next time you were at camp, you two picked up right where you left off, no? That’s the perfect camp friend.

So why aren’t brands OK with relationships like that? Context isn’t such a bad thing. It’s what good media planning is all about. And if the main arguments for these ludicrous fan numbers I hear brands chasing is rooted in earned media, it seems only rational they would evaluate said media based on quality, as they do with all media.

And that’s the rub.

You see, context of any kind is where brands face the privacy issue square in the face. They need to know as much about a person as possible to have these flings. Most brands on Twitter, for example, wait until you’ve called them out by name before @-replying because they fear otherwise their tweets will be viewed as spam. It’s the same expectation you’d have as a consumer in Facebook. What if a brand waited until your status was relevant to them to reach out to you? “@hashembajwa, I see you you’re excited about dinner in London, would you like some help planning your trip? – Love, Virgin.” Scary for many people. But enticing as a brand. And that’s why most brands are going to sit quietly while Facebook takes its lumps and sorts out privacy on their behalf. I guess they’ll depend on creating their own context via campaigns, but that’s pretty darn hard.

So, if you’re a brand with something at stake here, would you step in? I can’t imagine brand managers want any part of that conversation, but I think it’s important they have one. Without some understanding of what the pros and cons of the privacy issue are, Facebook is left alone as big, bad brother. In reality, lots of brands would help consumers tremendously if given the opportunity via this type of context. Yet no brands are stepping up, even as a collective, to help consumers understand if there is another side to the privacy issue. How can we expect consumers to make an objective decision about something when they aren’t hearing any upside?

Because, talking to a million fans about camp while they’re in school might feel like a relationship, but I’d argue making out with them while they’re at camp is a lot more social.

Or at the very least, it’s more fun.

We are so consumed by the communities that Facebook, Twitter, Foursquare (and our local knitting website) foster that we often forget to take a step back and think about the lessons to be learned from these communities. Within each of these online ecosystems, participants, aware of it or not, share some of their most intimate secrets with the world. Conversations about relationships, ridicule for certain social behavior from the night before, bragging about their new iPad, and most importantly simply being open all seem commonplace.

Coders admirably follow the same model however on a significantly different level. Most, I believe, have taken this notion of community and have truly found the value in it for what they do, and there is much we can learn from that. Coders who have affectionately adopted the open source mantra are out there sharing their code, encouraging others to take it and well pretty much do whatever they want. The idea is that by making the work available to be built upon and expanded, it will be built upon and expanded into something better and exponentially more worth sharing.

A piece of work created this way, where the sum of the parts is less meaningful than the work in its entirety, or gestalt, becomes very powerful when considered in the context of the open source philosophy. Projects made up of libraries, code blocks, classes, and ideas whose authors individually poured hours into creating are incomparably more notable than their preceding work which undoubtably made it possible. This is the key most important value in open source. And it is that value that can be translated to other media and have the same result.

Open source technology has given birth to a large array of projects, from everyday utilities to intricate and involved interactive art installations. Each has a narrative behind it that has an impact on its own.

Firefox and jQuery are wonderful examples of utility-based projects driven by the ideals of open source. Firefox, one of the leading web browsers, has a powerful community behind it, thousands-strong, and constantly pushing it forward. The source code and SDK are available to anyone who either wants to tinker with the core of the browser, or develop add-ons to be distributed throughout. jQuery is an example of a company whose purpose has made anyone using the Internet happier, conscience of it or otherwise. It is a Javascript framework which now has hundreds, if not thousands, of plugins creating rich Internet experiences for us all. It started with John Resig’s idea and has been progressed exponentially by the community that has organically grown around it.

The story of these projects are most relevant to us in understanding how to use the ideas of open source. The two projects below carry strong narratives of how they evolved, lending a learning experience on a much different level than the end product. Thinking about the path that these projects took and the backstories behind their creation is an exploration of the creative process that went into them; therein lies the most powerful ideas.

http://www.random-international.com/you-fade-to-light-philips-lum/

You Fade To Light is a beautiful project by rAndom International (with software created by Chris O’Shea), existing in large part because of people who understand the power of sharing their work and encouraging growth. This project was born out of projects before it, borrowing code, leveraging libraries and frameworks to bring it to life. Audience, a separate project also by rAndom International (in collaboration with Chris O’Shea) adds to the narrative and creates its own. Have a look at that here.

http://iwantyoutowantme.org/process.html; A wonderful exploration of the process of creating 'I Want You To Want Me' from start to finish

I Want You to Want Me (IWYTWM) by Jonathan Harris (http://number27.org) and Sep Kamvar (http://kamvar.org/) for the 2008 exhibit ‘Design and the Elastic Mind‘ at MoMA in NYC was created using OpenFrameworks, an open source framework in C++ for artists, interaction designers and creative coders. This beautiful work is in debt to all the work before it. Fortunately the IWYTWM team documented their process, their narrative. It is a prime example of the power that the evolution of these projects exemplify and the value in sharing them.

So, how can we leverage this power of sharing creativity in our business when we hold our ideas in such high regard and guard them so jealously? There is so much buzz around crowdsourcing at the moment because the ‘power of many’ has been proven. That is simply my argument. We need to adopt this powerful idea and understand how to make it relevant and practical for our work. How does the story behind the larger collaborative efforts fit into our business and make our work better?

The easy answer is it doesn’t. But it could.

We can open our ideas and leverage larger collaborative efforts. We need to start with sharing honest explorations of the process behind an idea. Again, IWYTWM illustrates this beautifully, and if we can embrace this idea and run with it we will come out with a whole new level of creative work – perhaps a new breed of creativity altogether.

We’d love to see more examples like the ones above. And we’re always keen to hear what you think.

Came across this today. Tweet-o-Meter (link) is the beta version of a platform created by University College London’s Centre for Advanced Spatial Analysis. The Tweet-o-Meter supposedly updates every ten seconds (not sure it does quite do that right now), showing the number of tweets in each city per minute. The ambition is to log and analyze all geo-located tweets in these major cities. Once logged, they will be used to show Twitter activity over time and space. Various kinds of maps will be the main output. I imagine a variety of delicious visualizations will be forthcoming.

We are possibly attracted partly by the simple analogue-feel, dial-based interface. But we’re also struck by yet another work-in-progress attempt to bring life to the data spawned by Twitter (see also Getting to Know Your Twitter Followers & Why that Matters from earlier this week).

Tweet-o-Meter is part of a broader project called NeISS (National e-Infrastructure for Social Simulation), another UK Government-funded project. Read more about it here.

And of course it also reminds us of of the work by Google’s Aaron Koblin on visualizing SMS messages sent on New Year’s Eve in Amsterdam in 2007 (see below). We imagine as Tweet-o-Meter moves forward through beta they’ll need to figure out how to marry Koblin-esque visualizations to their gushing pipe of data. Bringing magic to the mayhem.

Amsterdam SMS messages on New Years Eve from Aaron on Vimeo.

Amsterdam SMS messages on Queen’s Day from Aaron on Vimeo.

Last week Aaron Richard (@ralphthemagi) contacted us at BBH Labs with something pretty cool, and we wanted to share it.

Aaron was most recently a digital strategist at Big Spaceship in Brooklyn. A while back Aaron created a map showing where @bigspaceship’s many thousands of followers lived (or claimed to live). I contacted Michael Lebowitz at BS and asked how they’d done it . . . a few days later Aaron wrote to us with our very own version of the data, mapped and analyzed. Brilliant.

Aaron goes into great detail on his site about how he did this, the problems he encountered, the choices he made in filtering, and so on. In short, he used the publicly accessible Twitter API combined with cURL software to play around with the data shared by our c.12,600 followers on Twitter.

After some fairly smart sounding parsing of the follower base to weed out spammers (or at least people who looked most like spammers) and non-actives (see his post for the detail) Aaron pulled down the following public data on each of the remaining followers.

• ID
• Name
• Username
• Location
• Profile Bio
• Profile Picture
• Web URL
• Privacy Settings
• # of Followers
• # of Friends (“following”)
• Account Creation Date
• # of Favorites
• UTC Offest
• Time Zone
• Per-tweet Geolocation Status
• Verified User Status
• # of Tweets

He then used one of Google’s Lab projects, Fusion Tables, to geo-code the massive amount of information he had in CSV form.

The result was two forms of map. First, a fully interactive Google map (launch it and take a look, click on the dots for detail), and second a heatmap showing concentration of followers by major cities. With the interactive map it’s possible to click on a follower and see the data that Twitter holds for them (which is a little scary, but I guess comes with the territory).

Aaron also looked at our follower data and pulled put out some insight about our followers, which we found fascinating.

• Average # of followers: 1,746 | Median: 163
• Average # of friends: 982 | Median: 206
• Average # of tweets: 987 | Median: 247
• 6% of followers keep their tweets private
• 9% have per-tweet geolocation enabled
• 12 followers are “verified”

As Aaron notes, one can see by the deltas between means and medians, all followers are not created equal.

So all this is fascinating to us (for example, to learn that @bigspaceship and @BBHLabs share the same two followers in Iceland . . . hi Islenka and Finnur). But I wanted to see what additional uses might be made of this kind of data and insight. For example, for brands, or for non-profits, or just for individuals. I pinged Aaron a few questions on this theme:

BBH LABS: So Aaron, thanks for this – this is fantastic. But thinking more broadly of potential uses of this kind of insight for marketers, brands and individuals, how do you think this might be used in a more applied way?

AARON: I think this kind of information can be used for setting better goals. Asking better questions and finding better answers. I think a lot of brand teams have this preconceived notion that they are using social media effectively if they have a lot of fans, followers, etc … I just don’t think that’s true.

BBH LABS: Give us some examples of what you mean.

AARON: The particular data set I pulled for BBH could be used in a number of ways. For example, say you wanted to give away something to a few Twitter followers with the goal of growing your network. Send them an iPod Shuffle, get them to tweet about it, drive a little positive PR. But how would you decide who to give stuff to if you wanted to maximize every give away?  Well, with data like this you could easily find the top 20 people with the most followers and target them. Or look at the top 50 people with the most followers, then look at those with who have the least number of tweets (there’s something interesting about people with a lot of followers and few tweets, because when they do tweet their message tends to get retweeted a lot and cuts through the clutter).

BBH LABS: And for brands, can you give us an example of how they might make use of this? Maybe to make their stream more relevant? Maybe to get closer to their most valuable customers?

AARON: Sure. You can start to see how you might use this kind of information to challenge large incumbent brands. Imagine you wanted to take on Comcast as a small regional ISP. You could pull the data for everyone who follows Comcast Cares [on Twitter] then look at all the people in your region and start following them or sending them public messages. You could even target the people who are pissed off at Comcast and give them a special offer. Dell Outlet [on Twitter] has +1.5m followers. That’s 1.5m potential new customers for HP, if they provide the right incentive to get a customer to switch.

BBH LABS: This is only one particular series of API calls, as you point out. What else can you envisage coming out of the Twitter API?

AARON: Absolutely, this is really just one tiny piece of the data that’s available. I did this more for fun and to get a better idea of how to manage large API pulled data sets than I did to answer a specific question. Twitter has calls for search, tweets, retweets, lists, etc.. If, for example, you wanted to track something like brand mentions you could do that—and not just by using the regular old search.twitter.com or paying for something like radian6 (who’d never give you the raw data). You could look at all tweets by keyword, replies, retweets, etc., and then figure out who’s saying these things, where they live, and what (or who) they have in common.

I’m going to do a followup to this that talks about how to use API data in a more tactical way, using Facebook (and probably Coke) as an example to find the answer to things like, “What day of the week should I post something in order to maximize likes, comments, etc.?”

BBH LABS: Thanks again Aaron. Keep us in the loop. We’re keen to learn more as we go.

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If you have any questions for Aaron feel free to post them under this post, or on Aaron’s own blog.