The biggest changes happening in the internet space are those which affect more that one industry at a time. These changes alter the basic economic dimensions across industry. In 2014, what looks to be is that 4 trends that could alter the economic landscape across industries are
1. Digitization of content, communication, services, identities
2. Internet as an enabler, provider and connector
3. The sensor network that links up “all things” to internet
4. Algorithms and cognitive programs which build intelligence across a standard unit of everything
If there is anything static about the evolving technology paradigm today, it is the regularity of disruptions.Nicholas Taleb christened such disruptions as Black swans – We could look at naming it Thunderstorms.Technology disruption trends are driven by ‘thunderstorms’. Everything seemed calm and static, then suddenly the Web comes and changes the rules. The cellphone business appeared static and then the iPhone changed the dynamics.
Some trends are predictable: like the power of processors doubles every 18 months or storage capacity doubles every 12 months. Some are unpredictable: like growth of mobility and Web.For example, we had smartphones long before iPhone. But they were difficult to use devices and not accepted until Steve Jobs made an easy-to-use device in 2007.Today, the mobile handset is in flux. Microsoft has bought Nokia. Earlier, Google bought Motorola. Huawei and lenovo almost bought over Blackberry. The key here is that convergence of solutions, internet and mobile is driving the Applications based internet as the next thunderstorm.
Web is dying. It’s like AM radio of the digital era. Web will be here, but that’s not where major commerce will happen. Smartphones are becoming so powerful that to use them as just file viewers makes no sense. The future architecture will be one where there are very powerful apps, connected to resources in the cloud, and this connection is the future architecture.
The dominant players in the tech industry will have an app Internet ecosystem — a phone, tablet, PC, app architecture and a group of partners. Now, who will dominate it? One is obviously Apple, which has 30 billion app downloads; Android has 27 billion downloads, but 80% money is made on iOS.
It wasn’t a surprise when Google bought Motorola, or when Microsoft bought Nokia, as they needed a phone to complete the ecosystem. Amazon could well be a very important app Internet ecosystem player. There are feelers that within 12 months, maybe six months, Amazon will have a phone. They already have a tablet, an operating system called Silk, and they might have a PC as well. Amazon buying Dell is an interesting possibility. As a trends, every 10 years in the tech industry, one big player, who looks like dying, comes back. In the 1980s, it was Intel. In the 1990s, it was IBM. In the 2000s, it was Apple and now it could be Amazon. Having said that Apple, Android and Amazon, Microsoft, Facebook are possibilities in phone business – making the mobile scene shift extremely.
Two of those five — Apple and Amazon — have a big advantage. They have customer credit card details. Apple has 450 million credit cards, Amazon has 220 million, Microsoft has 50 million via Xbox. Google and Facebook have zero. That’s the thunderstorm — in terms of a loyal user base — one can expect here. Every company in the world, selling insurance, tyres, banking will have to be a software company, via apps.
A recent report released by IAMAI and IMRB estimates 243 million internet users in India by June 2014 there by overtaking US(200 million users) and putting India at no.2 Internet population globally, behind China at 300 million. This study also states that the internet population in India would cross 200 million by October 2013 (exact number 205 million). The caveat served is that while all the 205 million may not be active internet users currently, but they would become “active” soon.
Internet in India took more than a decade to move from 10 million to 100 million and only 3 years from 100 to 200 million. From here on, we can hope to develop a robust Internet ecosystem with a multitude of local and global players and a thriving Internet economy. Internet is now, clearly, mainstream in India. the number of Computer Literates in rural India by June 2013 has risen nearly two-fold to 125 Million. The number of internet users in urban India is 137 Million in October 2013 and is estimated to touch 141 Million by December 2013. In Rural India, there are 68 Million Internet users in October 2013 and will reach 72 Million by December 2013. Mobile Internet, too, has garnered a huge base among the Active Internet Users. This is a 18%+ jump over the June 2013 numbers, when there were 59.6 Million users in Rural India who have accessed internet at least once in their lives. Although this number is witnessing a steady growth, the penetration of 6.7% among the total rural population is still very low considering the huge rural population of 889 Million.
Mobility driving Internet
The number of mobile internet users has also witnessed a steady rise, with 110 million mobile internet users in October, and is estimated to reach 130 million by the end of December. In June, there were 91 Million users accessing the Internet on mobile devices, with 70.2 million users in urban India. This number rose to 85 million in October and is estimated grow by 47% and reach 103 Million by December 2013. Rural India is not that far behind in this regard with a base of 21 Million Mobile Internet Users in June 2013. It reached 25 Million in October 2013 and will touch 27 Million by December 2013. Mobile usage and hence, mobile internet usage has seen huge jump from the 2012 penetration levels. Compared to the 0.4% mobile internet users in 2012, the penetration has grown to 2.4%, indicating a substantial growth in the mobile internet user penetration levels.
While Indians primarily use the internet for communication, largely in the form of email, social media is also an important driver of internet use in India. This facet of the IMAI report can be corroborated with data from other sources such as Facebook, according to which India had 82 million monthly active users by June 30, 2013, the second largest geographical region for Facebook after the US and Canada. Facebook does not operate in China.
Internet penetration in India is driven largely by mobile phones, with some of the cheapest and most basic hand-sets today offering access to the internet. India has 110 million mobile internet users of which 25 million are in rural India. The growth of internet penetration in rural India is driven largely by the mobile phone; 70% of rural India’s active internet population access the web via mobile phones. This may have to do with the difficulty in accessing PCs.
While the IMAI report paints an optimistic picture of internet use in the country, another report by the Broadband Commission for Digital Development, ranked India 145 of around 200 countries for the percentage of individuals using the internet.
What this means for service providers, handset OEMs and the VAS eco-system?
1. 42% of rural India’s internet users prefer using the internet in local languages. The high prevalence of content in English is a hurdle for much of rural India. Hence Vernacular medium is now key to greter penetration2. Given the poor connectivity and the lack of 3G accessibility in India – one would need to design experiences on mobile and web differently making sure that content is served first and pages are kept light. One must plan for delivery of internet on EDGE/2.75G networks
3. With projects such as UIDAI taking wings – a lot of economic activity i.e banking, payments, money transfer would also migrate online – thereby concerns on security is key
4. WiMAX could have been a great local area internet enabler – but then this technology is done and dusted. Something like the Google Balloon could be a good solution – but it may be a few years away yet.
An interesting infographic on Google on its 15th birthday. The $60 billion internet giant possibly will possibly end up having the same impact on history as Industrial revolution 500 years back.
Source: Statista/ Mashable
As Larry Page & Sergey Brin celebrate Google’s 15th birthday today, even they must be pinching themselves at the thought of just how far their company has come. Google permeates our everyday digital lives in a way many thought unimaginable, even when its humble web indexing algorithm became a verb used in common speech around a decade ago.
Before 10am this morning we’d checked Gmail, watched a YouTube clip, accessed a Google Drive document, checked the location of a gig venue on Google Maps, amended our Google Calendar and put some last-minute research into this very article using Google Search all on a tablet running the Google Android OS.
Make no mistake, Google as we know it today is arguably the world’s most important and influential company. How, after just 15 years, did it reach such stratospheric heights?
When Sergey met Larry It all started back in 1995 when prospective Stanford University PhD student Sergey Brin encountered computer science scholar Larry Page on a campus visit. According to Google’s own website, the pair fondly recall how they disagreed about practically everything they discussed that day.
The Early Days
In 1996 the pair began collaborating on Page’s ‘BackRub’ search engine, which by August that year had indexed 75 million URLs and eventually became too big for Stanford’s servers to handle. BackRub became Google (a play on the mathematical term Googol meaning 1 and 100 zeros), the pair garnered some investment, moved into a friend’s garage and, on September 4 1998, the company was officially incorporated in California.
The company’s name was inspired by its desire to organise the infinity of the web in a logical way and from an early stage it seemed Sergey and Larry’s secretive algorithms had a leg up on the competition. By the end of 1999 it had gained massive investment from Sequoia Capital, moved to Mountain View, got a dog and hired a chef. A year later it was pulling April fools pranks, launching in 10 new languages and becoming Yahoo’s default search provider.
Perhaps more importantly, though, the company began selling ads based around search keywords. It was the fruitfulness of this venture – where competitors floundered – that gave Google the financial clout to expand beyond search.
The hire of Eric Schmidt as chairman and then CEO of the company in 2001, allowed Page and Brin to focus their attentions on broadening the company’s product offerings. By this time, Google Search was indexing over 3 billion pages on the web and had established dominance. ‘Google it’ was slowly becoming the default term for search. So the company launched Google News, an aggregator that initially served up 4,000 news sources, and Google Labs, a place where web users could try out experimental tech developed in the company’s R&D department like voice controlled search,
keyboard shortcuts and browser toolbars.
Google’s stream of successes
In 2003, it acquired Pyra Labs, the creators of Blogger. In 2004, it launched Gmail, powered by Google Search and bought Keyhole, which would eventually become Google Earth. A year later it launched Google Maps, soon adding satellite imagery and step-by-step directions, as well as Gtalk and the now dearly departed RSS reader Google Reader. Calendar, Picasa and Documents (following the acquisition of web-based word processing firm Writely) arrived in 2006, Street View arrived to complement Google Maps in 2007 and the Chrome web browser made its debut in 2008.
A hugely significant landmark was its heavily-hyped stock market floatation in 2004, by which time the company had commandeered 85 per cent of all web searches. With its IPO Google secured a value of $27 billion, making Larry and Sergey very rich men indeed. Believe it or not, some thought the company had been overvalued based on Yahoo and Microsoft’s ongoing efforts to build rival search engines. With the cash flowing in from Wall Street in 2006, Google moved for its largest acquisition to date by snapping up the YouTube video-sharing site for $1.65 billion in stock and began selling ads on videos.
Since then, Google has continued to cherry pick companies and start-ups with fervent regularity. Over the last year it averaged one acquisition a week, with notable examples including Motorola’s mobile unit ($12.5 billion), smartwatch manufacturer WIMM and community sourced navigation application Waze for the small matter of $1.3 billion.
Android on Mobile
Getting all its ducks in a row on the web allowed Google to line-up an assault on the mobile world with the Android operating system, which has undoubtedly proved to be the company’s biggest success outside of search.
Set up in 2003 by Andy Rubin and co, Android was acquired by Google in 2005 and pitched as an open source operating system for a new breed of smartphone devices. It’d be another three years before the first devices would emerge, setting the industry on a path to the Android / iOS duopoly as Symbian, Windows Phone and BlackBerry fell by the wayside. The arrival of Android and its subsequent success through eager manufacturers like HTC, Motorola, Samsung and LG may have ruined Google’s cosy relationship with Apple – Steve Jobs threatened to go “thermonuclear” on Android and accusing Google of “wholesale ripping off” iOS – but by this point it didn’t matter.
Google had made itself indispensable to iPhone users, while regular dessert-themed software updates (you’ll see statues of each strewn across the front lawn at Mountain View) continued to push Android towards fulfilling its potential. Custom skins from its manufacturing partners also provided innovative new twists and nuances.
During the early days of the Android era, Google launched its first piece of branded hardware, the Nexus One made by HTC. The buggy device proved a bit of a disaster with Google selling through its own fledgling store, rather than through networks, meaning limited customer support for buyers. Google learned a valuable lesson and devices like the Nexus 4 smartphone and Nexus 7 tablets have proved huge hits. Globally, it currently boasts around 80 per cent of the market and its increasing tablet share has allowed Google to push itself as an all-things-to-all-people entertainment content company too.
There are even dedicated games consoles like Ouya and the Nvidia Shield running Android, while smartwatches, televisions and cameras boasting Google’s software are becoming more and more prominent. Next up? Google Glass.
The foiled and the failures
However, it’s not like everything Google touches turns to gold. For every success the company has enjoyed down the years, there’s been a failure.
As much as Mountain View endeavours to make the Google+ social network the centre of its ecosystem, users just aren’t biting. Its previous social experiments, Buzz and Wave were not well received. It also bought mobile social network Dodgeball in 2005, before the founder Dennis Crowley got frustrated with Google and left to start Foursquare.
Jaiku, a microblogging platform Google purchased in 2007, went the way of the dodo, while Google Latitude, a Google Maps tool that broadcasts the users location, was met with trepidation. The iGoogle personalised homepage, which has been re-imagined on Android as Google Now, was another casualty on the web.
More recently, the cloud-based Chrome operating system, which features a suite of web apps and appears on Chromebook devices with little or no local storage,hasn’t been around quite long enough to be deemed a failure, but it can’t be deemed a success either.
Google TV, the company’s effort to bring its search expertise to the TV world,allowing live television and on-demand video platforms to be seamlessly integrated and joined by high-powered Android apps and games seemed like a good idea in principal. It somehow snatched failure from the jaws of success and now the tech world is simply waiting for Apple to jump on board.
The Ethics Debate
Google’s company motto ‘Don’t Be Evil’ is a commitment to doing right by the world with the idea that it’ll prove beneficial from a business standpoint in the long run. It’s a noble and rare ethos for a company with a market cap of around $300 billion, and although the world is probably a better place thanks to Google, the motto has left the company open to criticism when it is deemed to fall short. Rivals and competition regulators in the EU and US have accused Google of manipulating its search results to ensure its own products, such as Google Play apps, are ranked higher than more popular iPhone apps.
And Google has been in trouble in multiple countries, including the UK, for harvesting data from public Wi-Fi networks while driving around in its Street View cars. This was dismissed by Google as a simple mistake. Then there was a consolidation of 60 privacy policies from its various products (YouTube, Gmail, Chrome etc) into a single document in 2012 which didn’t give users the opportunity to opt out.
Google is also good at putting people in their place over their data. In August this year the company said its 425m Gmail users should have “no reasonable expectation” of privacy. Then in same month, the company claimed UK privacy laws have “no jurisdiction” over the company, amid allegations it by-passed do-not-track software within Apple’s Safari browser in order to provide personalised ads for users.
And then there’s the small matter of tax. The incredibly small matter of tax.
The Internet Economy in India is future waiting to happen. With approximately 200 million new users connecting to the internet in the next 3-4 years horizon Internet is the next big economic and commercial business opportunity. On a cummulative basis the internet economy’s contribution to India’s GDP (i-GDP) is set to break the $100 bln mark (a 3X growth compared to 2012)
1. Number of internet subscribers in India expected to grow from 135 million (Exit 2012) to 330 million (2015).
2. At the same time, Internet’s contribution from India’s GDP to grow from 1.6% in 2011 to 3.4% in 2015.
3. Thus India’s i-GDP (internet contribution to GDP) is expected to hit about $100 billion by 2015 – making it one of the most attractive investment locations and industries globally. Refer to the Chart below for the Assumptions and Calculations
4. Device Convergence; low cost device innovations; reach and affordability of data networks; Increasing digital literacy; access relevant apps and services on the net are factors that are driving the growth of Internet networks in India.
Whats now required is a comprehensive government policy roadmap for the Telecom sector which has been adrift following a few bad calls by the government.
Source of Data: McKinsey Report March 2013 – India’s Internet Opportunity.
Google has released statistics on global internet usage for 2012. According to the company the number of world-wide email users is at 2.2 billion with daily email traffic of 144 billion. Gmail emerged the most popular service provider with 425 million active users while Google’s web page and sites registered 191 million visitors as of November 2012.
The report shows the number of internet users worldwide stands at 2.4 billion with Africa coming in fifth accounting for 167 million of those. Asia is the leading continent in internet usage with 1.1 billion users followed by Europe with 519 million, North America with 274 million, and 255 million users in Latin America and the Caribbean islands.
The Middle East records 90 million users while Australia and Oceania regions account for 24.3 million users. The number of users in China alone is 565 million making it the country with the most users and internet penetration of 42.1 percent. On the social media platform, the report established Brazil as the most active country on Face book with 85,962 posts per month.
Worldwide face book had 1 billion active users as of October 2012, 47 percent of those being female and a user average age of 40.5 years. Twitter followed in popularity with 200 million users with 163 billion tweets since its inception and a user age average of 37.3 years. Google+ recorded 135 million users while Google recorded 1.2 trillion searches in December 2012. The report also establishes that 6.7 billion people were accessing internet through their mobile phones 1.1 billion of those through smart phones.
The number of mobile handsets was at 5.3 billion with 1.3 billion smart phones in use worldwide by end of 2012. 465 million android smart phones were sold in the same year. Google says it is almost impossible to capture all statistics seeing as the web has massive information but the prediction for 2013 is that people will rely more on the internet privately and professionally with more people using their mobile devices to access the internet while social media will become more significant to people’s lives as more use it not only for social networking but also to run their businesses.
If 2000-10 was the decade of voice, the current decade 2010-20 would be the decade of data. Over the next three years, data could more than double in size to a US$14 billion industry, contributing over half the incremental industry revenue and add 500 bp CAGR to an otherwise slowing voice industry. The economic payoff of a data-connected population would also be significant. A World Bank study shows every 10 percentage point increase in broadband penetration leads to a 1.38 percentage point increase in per-capita gross domestic product growth in developing economies.
With 121 million Internet connected consumers, India’s tally lags 565 million Chinese Internet users by more than some distance. However a 42% CAGR in Internet subscribers over a 3 year period from 2008-2011 provides ample reason to get excited about the Internet market’s potential for stellar growth in India. An industry study by Assocham and ComScore indicates that the Internet user base in India is approximately 125 million and among the BRIC nations, India has been the fastest growing market adding over 18 million Internet users and growing at an annual rate of 41 per cent.
India is one of the youngest online demographic globally with about 75 per cent of online audience between the age group of 15-34 years. Among the age segments, 15-24 years of age group has been the fastest growing age segment online with user growth being contributed by both male and female segments. The female population accounts for almost 40% of 125 million internet users – indicating that gender equality on the information superhighway is catching up.
The Assocham-ComScore report on Internet usage in India (october 2012) indicates – The top five popular categories accessed online are social networking, portals, search, entertainment and news sites.
Online travel has seen growth across all subcategories including car rentals, online travel agents, airlines as well as hotels and travel information sites.1 out of 5 online users in India visit the Indian Railways site.
Others waiting to benefit include companies offering Indians everything from online travel bookings, recruitment and matrimonial portals. The country’s Internet retailing market will reach $2 billion by 2014, with consumer electronics, toys and games growing the fastest, forecasts by Euromonitor show. Retail category penetration has increased to 60 per cent reach and has grown to 37.5 million unique visitors a month. The travel segment sales will grow at a compound annual growth rate of nearly 38% in five years from 2009, and total $5.7 billion in 2014, according to Euromonitor. Apparel has been the fastest growing subcategory in retail and reaches 13.4 per cent online users in India.
These are still early days for Data and Internet in India and there are many business empires and business models which would scale up with the rise of the internet and Always on real time data access. The Internet and data industry in india may be 10 years – but the big numbers are starting to build up. Watch this space.