Talk on Mobile Eating The World Benedict Evans, Strategy Consultant, Enders Analysis at the ArabNet Digital Summit 2013, June 24-26, Dubai, UAE

1. MOBILE IS EATINGTHE
WORLD
June 2013
Benedict Evans
@benedictevans

2. 0
50
100
150
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Global annual unit sales (m)
Corporate PCs Consumer PCs Tablets
The state of PCs
Source: Gartner, IDC, Enders Analysis2

3. 0
200
400
600
800
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Global annual unit sales (m)
Corporate PCs Consumer PCs Tablets Smart phones
Smart phones are exploding
3 Source: Gartner, IDC, Enders Analysis

4. 0
500
1,000
1,500
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Global annual unit sales (m)
Corporate PCs Consumer PCs Tablets Smart phones All mobile phones
4
More mobile growth coming
Source: Gartner, IDC, Enders Analysis

5. 0
250
500
750
1,000
1,250
1,500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e
Global annual unit sales (m)
PCs Smartphones and tablets
Source: Enders Analysis5
The future is mobile

6. The world in 2017
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Population Adults Literate adults Mobile Smart phones PCs Tablets
2017 forecast base (m)
Source: GSMA,World Bank, Enders Analysis6
2012 Growth to 2017

7. Industry scale
Mobile networks
Advertising
Mobile phones
PCs
Apple
Books
Online advertising
Amazon
Google
Recorded music
Facebook
0 250 500 750 1,000 1,250
2012 global revenue ($bn)
Source: Zenith,Apple,Amazon, Google (excludes Motorola Mobility), Facebook, Enders Analysis7

8. • Mobile was always much bigger than tech, but always separate
• Smartphones mean theTechnology and Mobile worlds merge
• Internet and Media are being dragged along
• Tablets accelerate the change
• This is changing everything
Fundamental change
8

9. Fundamental change in scale
PC industry
• 350m PCs sold in 2012
• 1.6bn units in use
• Replaced every 4-5 years
• Shared
Mobile industry
• 1.7bn phones sold in 2012
• 3.2bn mobile users
• Replaced every 2 years
• One per person
9

10. Fundamental change in use
PC internet
• Shared, or used at work
• Semi-portable at best
• Web and web search
Mobile internet
• Personal
• Taken everywhere
• Web, web search, apps,
social, location, service
integration, prediction,APIs,
image recognition, NFC...
10

11. 0
25
50
75
100
Mar-2009 Sep-2009 Mar-2010 Sep-2010 Mar-2011 Sep-2011 Mar-2012 Sep-2012 Mar-2013
Microsoft share of connected device unit sales (%)
Source: Enders Analysis11
The irrelevance of Microsoft

12. 0
25
50
75
100
Units Revenue Operating Profit
Global handset industry share, Q1 2013 (%)
Apple Samsung All other
Source:Apple, Samsung, Enders Analysis12
Dominance of Apple & Samsung

13. 0
15
30
45
60
Jun-2010 Dec-2010 Jun-2011 Dec-2011 Jun-2012 Dec-2012
Global unit sales (m)
Laptops Desktops Tablets
Tablets overtaking PCs
13 Source: Gartner, IDC, Enders Analysis

14. 0
10
20
30
40
50
Jun-2010 Dec-2010 Jun-2011 Dec-2011 Jun-2012 Dec-2012
Global unit sales (m)
iPad Branded Android Kindle Fire Nexus
120m tablets in 2012 - 66m iPads
Source:Apple, Google,Asus, Enders Analysis14

15. iPad dominates use everywhere
0
20
40
60
80
100
US UK Germany France Japan China
Share of tablet web traffic, February 2013 (%)
iPad Android Kindle Fire Nook
Source:Adobe15

16. • Well over 200m tablets will be sold in 2013
• Driven by size and price - 7” screens, $300 and (far) below
• A flood of cheap generic Chinese Androids - perhaps 125m
units in China alone this year, with prices under $150
• Not clear these compete directly with Apple, Samsung &
Google
Tablets in 2013
16

17. ‘Four horsemen’
Google Apple Facebook Amazon
17

18. 0
200
400
600
800
Mar-10 Sept-10 Mar-11 Sept-11 Mar-12 Sept-12 Mar-13
Active users (m)
Apple iOS Google Android Facebook mobile users Amazon accounts
18 Source:Apple, Google, Facebook,Amazon, Enders Analysis
Ecosystem sizes

19. • Apple and Google’s Android have won
• Unlikely that other platforms will be relevant (Windows
Phone, Blackberry, other newer efforts)
• But share of value and use between Apple and Android is fluid
• Google’s control of Android is partial - Amazon Kindle,
Chinese Android, Samsung intentions unclear
• Facebook and Amazon trying to extract value
19
Platform wars

20. 20
For Apple, the
ecosystem is what
sells hardware
For Amazon, Google
and Facebook, the
experience on the
phone is what drives
engagement with all
their services
Ecosystem is the key leverage
point

21. • Content is a commodity, but any ecosystem needs it - table
stakes but no more
• Apple, Google, Microsoft and Amazon all run music,TV and
movie stores at close to cost to support their platforms
• Pandora and Spotify trying to build sustainable indie offerings,
but little scope for others
• Ebooks were a late addition to Apple’s plan for the iPad
21
Content as a competitive weapon

22. 0%
1%
2%
4%
5%
6%
7%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Ecommerce as % US retail revenue
The real prize: ecommerce
Source: BLS, Enders Analysis22

23. 5%
15%
3%
11%
18%
49%
Global internet users, Q1 2013
Global PC internet Global Android iOS
Nokia & RIM China PC internet China Android
Source: ITU, CNNIC, Google,Apple, Nokia, RIM, Enders Analysis23
Google - all about reach

24. 0
5
10
15
20
25
Phones 3G phones Contract phones Smart phones
iPhone market share (%)
2007 2008 2009 2010 2011 2012
Source:Apple, Qualcomm, Enders Analysis24
Apple - qual versus quant

25. 11%
10%
10%
48%
21%
UK 15-24 year old mobile users, May 2013
Facebook Facebook and other social apps Other social apps, no Facebook
No social No smartphone
Source: Enders Analysis25
Facebook: the great unbundling

26. Amazon
-10
0
10
20
30
40
50
60
70
1995 1997 1999 2001 2003 2005 2007 2009 2011
Annual results ($bn)
Revenue Net income
Source:Amazon26

27. 0
2
4
6
8
10
Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13
Amazon North American revenue ($bn)
Media revenue General merchandise & other revenue
Source:Amazon27
21st Century Sears Roebuck

28. 28