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The 2010s: The Golden Decade of the Mobile Internet

· miscellaneous,general,review

{{{Alexander Kremer}}}

The opinions expressed in this essay reflect my personal views only. While this article aims to paint a broader picture about the rise and spread of the mobile internet over the past decade, it largely draws on examples in the US and China based on American and Chinese companies, potentially missing out on specific regional or local developments.

It is December 2019 and the last month of the 2010s. With the decade coming to an end, it is a good time to take a step back and look at how our lives changed during the past 10 years. While the world underwent significant changes politically, economically and socially, technology and the mobile internet played a big role in all of it. Before the 2000s, information technology was mostly present in the workplace. Then in the 2000s, we saw the wider spread of personal computers in households and the internet alike (in fact, global PC sales peaked around 2011 and have been on a decline since). Of course, it was initially in 2007 that the iPhone was released but it was not until in this decade that smartphone ownership usage reached mass adoption. While this fact itself might not be controversial, the scale of change this development had on our lives in the past decade can hardly be understated. During the 2010s, our world went from “mobile” to “mobile first” to reaching a state of “mobile only” for many services.

Just before the burst of the dotcom bubble, the Nasdaq Composite Index reached 5500 points in the spring of 2001. This level was not reclaimed again during the remaining 2000s. Then in the past decade, the Nasdaq Composite Index started at around 2000 and went all the way to almost 9000 points, surpassing its previous height half way through the decade. In that sense, internet companies experienced a renaissance in the 2010s. While there has certainly been an inflation of asset prices in the past 10 years thanks to cheap money (e.g., QE), still the Nasdaq Composite Index went up 4.5x compared to just 3x for the Dow Jones Industrial Average.

Further, 7 of the 10 most valuable companies by market cap are now technology companies - 5 of them companies that built their businesses directly on the back of the mobile internet. The change over the past decade is striking: 10 years ago, 4 out of the Top 10 companies were oil companies and 3 were banks. It is now clear that the past decade was a good time to have invested into technology / mobile internet as internet companies are now among the most influential in the world. But what happened in the past 10 years to make this change possible and how did it affect our lives?

Improvements in the mobile infrastructure laid the foundation for the mobile revolution

  • When we entered the 2010s, the iPhone 3GS was the hottest smartphone model in the market. It is worth noting that it did not even had a front camera. The largest storage capacity was 32 GB and it had a mere 256 MB RAM. It had a 3.5 Zoll display.
  • 10 years later by now, the iPhone 11 Pro has 4 cameras in total. It has up to 512 GB storage, and 4 GB RAM. The display size is up to 6.5 Zoll.
  • Meanwhile, the average selling price for smartphones went down from above USD 400 to well below USD 250 thanks to ongoing progress in hardware (i.e., in chips) and the market entry of lower-cost smartphone makers such as Xiaomi.
  • The network infrastructure improved significantly. While in the 2000s people were still using 3G (HSPA) at roughly 2Mb per second, the 2010s brought 4G of up to 1GB per second. We now even see some 5G launches.
  • App stores went from mere-existent to ubiquitous. As of late 2019, there are more than 2 mn apps available in the Google Play Store and in the Apple App Store each - an amazing number considering the decade started out with less than 200k in each.

Smartphone penetration took off across the globe

With this much-better infrastructure in place, smartphone penetration took off across the globe:

  • Overall on a global level, in the past decade we went from around 25% to beyond 50% smartphone penetration.
  • China with almost 800 mn smartphone users now has 60% penetration, up from less than 10%.
  • India has almost 400 mn users and around 40% penetration, up from less than 10% at the beginning of the decade.
  • The US started the decade with 20% smartphone penetration and will end it with over 70% and 250 mn users.
  • In many countries, daily average time spent on smartphones exceeds 5h. Smartphone users spent 90% of their time in apps and only 10% on mobile websites. As a result, many services maintain only a very light website and get the majority of their traffic from smartphone apps.

Several B2C and B2B industries were disrupted by the mobile internet in the 2010s

As a majority of people in the world have taken to carrying a small computer in their pockets at all time, the internet economy has taken an increasingly important role in our daily lives, making our life more convenient on the way and also changing forever the way we consume certain services. For the first time, this allowed internet giants to emerge not only in the Silicon Valley but also in China (and to some degree in Europe, India, SE Asia and LATAM). Below are some services that did not play a major role before the past decade but are now part of our everyday life:

  • Ecommerce: In the US, Amazon is the clear winner in ecommerce. It´s revenue went up around 10x in the past decade to reach over USD 250 bn in 2019. In China, ecommerce penetration went from just 3% to beyond 20% of total retail sales. Combined with its massive population and fast GDP growth, this has made China the largest ecommerce market globally. Accordingly, in the Middle Kingdom the largest companies by GMV are no longer traditional brick-and-mortar retailers but internet companies. Alibaba, JD.com and Pinduoduo in China achieved almost USD 1.5 tn GMV combined. Meanwhile, companies like Forever21, Barney´s and Karstadt had to file for bankruptcy.
  • Financial services: The financial service industry has also experienced great changes across the globe in the past decade. Essentially non-existent at the beginning of the decade, mobile payments have become the norm in China where Wechat Pay and Alipay together now process transactions worth more than USD 50 tn per year. Online payment solution provider Klarna went from a very small revenue base to handling more than 1 mn transactions per day on its platform and beyond USD 30 bn in volume. With the rise of mobile banking, direct-banks and neo-banks such as Revolut and N26, the number of bank branches declined steadily in developed markets (often by more than 15%). At the same time, services like TransferWise made remittance transfers much easier, processing over USD 50 bn of transfers in 2019 and lowering transaction costs for 6 mn people. Likewise, robo-advisers and P2P lending rose up on the back of the mobile internet.
  • Travel: The vast majority of all trips (flights and hotels) are now booked online in major markets. Booking was initially established in 1997 but in the past decade went from around USD 3 bn to beyond USD 15 bn in revenues (5x increase). The volume of gross travel bookings has now reached around USD 100 bn. Ctrip, the largest travel platform in China went from just USD 400 mn revenue in 2010 to over USD 5.5 bn (more than 10x) in the past decade. AirBnB achieved scale in this decade and a valuation beyond USD 40 bn. In London alone, it now has beyond 60k listings, making it the largest hotel provider. Meanwhile, Thomas Cook declared bankruptcy in 2019.
  • Transportation: In the past decade, Uber in the US and Didi-Chuxing (after a series of mergers) in China changed the transportation industry forever. While taxis long held near-monopolies on transportation within cities, Uber and Didi broke into this industry just at the beginning of the decade. By the mid-2010s, ride-hailing replaced taxis as the preferred urban mode of transportation in many major cities. Uber alone will have more than USD 10 bn gross bookings in 2019. Other means of transportation such as inter-city coach travel, bike-sharing (e.g., Mobike) and scooter-sharing (e.g., Lime) also came into our lives in the 2010s. Surprisingly though, car ownership per 1000 people in countries like the US and Germany has actually grown 10% over the past decade. That said, big car companies continue to merge and form alliances to deal with new challenges posed by the new business models in the age of the mobile internet, the driverless revolution and the push for electrification.
  • Social: Facebook went from 500 mn users to beyond 2 bn in the past decade. In China, Wechat went from launch in 2011 to 1 bn users at the end of the decade. With that, instant messaging and VoIP-calls were increasingly conducted through those app ecosystems, forcing mobile carriers to change their pricing strategies in search for new profit pools. Services like Instagram, Snapchat and Douyin (TikTok) did not exist before this decade but all reached several hundreds of millions of active users. The internet became the largest channel in terms of ad spending, disrupting the entire advertising industry (e.g., agencies, media platforms, etc.).
  • Food delivery: Doordash, the largest food-ordering service in the US, was only established in 2013 but now has more than 200k restaurants signed up on its platform with revenues expected to reach around USD 900 mn in 2019. In China, Meituan-Dianping was originally established just at the beginning of the decade around 2010 but is expected to reach USD 14 bn in revenues in 2019. Dark kitchens, business exclusively serving online food-orders, became a common business model. Meanwhile, McDonalds will finish the decade with revenues 10-20% below the level at the beginning of the decade (which is also partly driven by other factors, such as a change to healthier consumption); while Burger King´s 2010s looks even worse.
  • Media streaming: Already disrupted in the 2000s thanks to (free and illegal) file-sharing services, the music and video industry went through another decade of change thanks to the rise of streaming services. Spotify started the decade with just USD 100 mn in revenues and will end it with close to USD 7 bn, reaching between 250 - 300 mn users (DAU). Tencent Music in China meanwhile now has over 600 mn users of which 30 mn are paying. The way new artists are now discovered on SoundCloud in the West or NetEase in China changed the dynamics of the industry forever. In video and series, we saw the rise of services like Netflix (US) and Youku, iQiyi and Tencent Video in China. Netflix alone went through another company business model transformation and increased revenues from USD 2 bn to beyond USD 16 bn (8x increase), reaching more than 150 mn paying subscribers. Meanwhile, DVD-rental-company Blockbuster went out of business. Video streaming services also turned into content production companies, launched exclusive blockbuster movies and received Academy Awards nominations.
  • Gaming: The gaming industry underwent interesting dynamics this decade. While growing overall into the mainstream in many regions, mobile became the largest segment ahead of console and PC in the USD 150 bn global gaming market (more than 2x increase). Tencent from China acquired major gaming studios around the world to become the largest gaming company overall, undergoing a 15x increase in overall revenues in the past decade of which gaming is the largest component. Top esports players are now celebrities, earning salaries comparable to traditional sports players. Danish Dota 2 player N0tail earned an excess of USD 3 mn in prize money in 2019 plus a much larger amount through streaming, sponsorships, etc.

While having more and more data, we struggled to process and make sense of it

With the shift across industries to digital channels thanks to the mobile internet, much information has been logged or digitized for the first time. This has created massive amounts of data. It is now believed that the amount of data stored in the whole world went from just around 3 zettabyte in 2010 to beyond 30 ZB (a 10x increase). With that, new questions about the storage and processing of data emerged.

  • Storing and processing data: To deal with the ever-increasing need for storage and processing of data at a reasonable cost, resilience of operations and greater scalability, the 2010s saw the rise of cloud computing. In the US and Europe, Amazon Web Services established itself as the pre-eminent cloud provider (especially in Iaas/PaaS). Its revenues grew from below USD 1 bn to almost USD 30 bn (30x increase). It is believed that Amazon maintains around 50 data centers globally. Meanwhile in Asia, AliCloud established itself as the leading player with around USD 5 bn in revenues at the end of the decade, though it was established just in 2009.
  • Making sense of data: we started the decade talking about advanced analytics and ended with machine learning/AI which - while different in methodology - all deal with the same question of how to make sense of large amounts of data. Accordingly, the number of publications including terms such as “machine learning” and “artificial intelligence” skyrocketed. At the same time, according to the TIOBE programming community index, while Java and C remained the most popular programming languages in the 2010s, Python and SQL saw a steep increase.

The internet industry was forced to grow up

With the increased mobile penetration and significant impact on many industries, the internet industry made a large impact on society as a whole in the 2010s.

  • The reach into offline: With several industries now dominated by (mobile) internet companies, technology companies went a step further by reaching out into the offline world. For instance, Amazon acquired Whole Foods in 2017 for USD 14 bn.
  • The impact on the society and environment: Over the course of the decade, several discussions emerged about the impact of technology companies on society and environment. Those included discussions about privacy and values (e.g., several data scandals) but also about waste and carbon footprints (e.g., ecommerce parcels). While these problems existed from the early days, only with increasing scale were internet companies confronted with the question of their larger role in society – it now appears the industry has yet to improve in many ways. Now only half of the Americans believe that internet companies are good for the development of the respective industries they are in, down from more than 70% earlier in the decade.
  • Regulators became more critical: Given their outsized impact on society, regulators across the globe became more skeptical about technology companies. That included regulations around competition, tax evasion and data privacy, among others. Interestingly, Europe took a lead on regulating tech. What only started in the 2010s is expected to be a major theme in the next decade as technology companies have yet to live up to their responsibilities.

***

History can rarely be viewed in a linear way, even though it is tempting to present things as such in retrospect. I do believe that future historians will have many things to tell about the 2010s and how this decade influenced the years ahead politically, economically and socially. While hopefully some of the developments of the past decade may later be viewed just as extreme movements or outliers, overall, I am confident people will refer to the 2010s as the golden age the mobile internet – when consumers were positive about technology and regulators relaxed, innovation was sprawling and our lives were changed in fundamental ways.

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