If you’ve worked in mobile, you’ll remember that 2011, 2012 and 2013 were all ‘the year of mobile’, and with no jargon regulators to police what that meant, the declaration was met with nods, scowls or disbelief.
As well as being crowned the year of the selfie by Twitter, and the year of gluttony by CNBC, 2014 has yet again seen impressive highs among mobile’s key metrics. But is it finally, finally the year of mobile..?
Adoption and traffic
UK smartphone ownership is set to reach 80% post-Christmas, with a ‘saturation point’ of around 90% expected in 2016. The Internet Advertising Bureau reckons tablet penetration will tip 50% by the end of 2014, true validation for the device you never knew you needed.
Google’s Android platform continues to power more than 80% of the world’s smartphones and although Samsung remains the top manufacturer, its share of the market dropped from 32.1% in Q3 last year to 24.4% in 2014.
Apple’s share grew from 12.1% to 12.7%, with the remaining top five smartphone makers now all based in China: Huawei, Xiaomi and Lenovo. Record sales in emerging markets are now offsetting decline in Europe.
Mobile traffic has been threatening to overtake desktop since mid-2013, and, in Q2 and Q3, smartphone and tablet surfing on UK retail sites represented more than 50% of total traffic in two consecutive quarters for the first time.
Gartner forecast last year that the value of mobile payments worldwide would reach $235.4bn (£150.7bn) in 2013, representing a 44% increase on 2012’s $163.1bn. 37% of online sales in Q3 this year in the UK were made on mobile, 80% of which were done on tablets, with that figure reaching 43% in fashion retail. That’s growth of 4000% from the 1% made in 2010.
Gartner downgraded its prediction for contactless mobile payments “due to disappointing adoption… in all markets in 2012 and the fact that some high-profile services, such as Google Wallet and Isis, are struggling to gain traction”.
But the launch of Apple Pay in September looks set to take the service mainstream, with main rival Samsung now rumoured to be kick-starting its own version.
Given the lucrative position that owning both online and offline payments data offers, rivals are soldiering on in the US, including the big retailers with CurrentC, and the mobile operators’ effort, Softcard. However, news that the Weve payments solution, part of the JV between UK mobile operators, was being shelved back in September can’t inspire much confidence.
In its report on the opportunity of the so-called ‘sharing’ economy, PwC predicts that its value will grow from $15bn in 2013 to $335bn by 2025, equalling the revenue of traditional services like hotels and car rental.
Car sharing has been the biggest battleground in London, with the likes of Kabee, Hailo and new kid on the block, Maaxi, launched in October by Nat of the Rothschild banking dynasty, all fighting it out. This is all only slightly baffling given the range of other transport options in the capital!
Two major hurdles the report identifies, regulatory and scaling up, have both been poorly-cleared by 2014’s poster kids of sharing – Airbnb and Uber. Airbnb, which has ramped up its mobile efforts this year, has seen its users pinpointed, with up to 75% of listings in the city declared illegal.
In spite of it picking up terrible headlines in the past few months, Uber is now making its transition from being a noun to a verb, a sure sign it’s ubering its way to success, and the word is being used left, right and centre to describe Uber-like services in other sectors. As of December, it was available in 53 countries and, demonstrating there’s big money in, er, sharing, its latest round of funding, of $1.2bn, valued the company at more than $40bn.
Instagram just reached 300m users, overtaking Twitter’s 280m, proving that people do want to know exactly what other people had for breakfast, but now mainly in visual form. Instagram’s $1bn price, paid by Facebook for the image sharing platform and just 13 staff back in 2012, looks to have been a shrewd buy. Commentators are anticipating that it will make $100m per quarter, particularly after signing a $40m deal with Omnicom in March.
Facebook’s $18bn acquisition of WhatsApp in February has so far proved fruitless, with the company posting $15.9m in revenue, along with a loss of $232.5m, most of which went on paying share-based compensation. But Mark Zuckerberg and WhatsApp CEO Jan Koum are said to still be focused on building on its existing 600m userbase before they monetise.
Can ad-funded and freemium services last?
According to Ofcom back in April, two-thirds of apps downloaded in the UK are never actually used, with only 10% seeing regular usage. This is reflected across developed markets and may be part of the reason that Angry Birds maker Rovio has cut 14% of its workforce and Mind Candy saw revenue drop by a third during 2013. Both combine in-app purchases and ads, a business model that may well be unsustainable.
The slow death of the banner
Display ads are on the up, largely driven by video, native and rich media. Without a banner in sight, in Q3, Facebook’s mobile ad sales represented 66% of its $2.96bn ad sales, or around $1.95bn. At the same time a year earlier, mobile ads were 49% of its ad business, demonstrating the social giant’s successful transition to being mobile-first. Overall in mobile ads, search, aka Google, remains the dominant segment, representing 48.9% of total global mobile ad revenue in 2013, at $9.5bn.
Death of Nokia
To many, the death of the Nokia brand back in April symbolised the end of engineering excellence in Europe. And soon after making the acquisition, Microsoft announced 18,000 job cuts, 14% of its workforce, the majority of which were in its new hardware division.
Having cut almost 40% of its staff late last year and losing nearly $1bn, BlackBerry is seeing if a touch of nostalgia will alter its fortunes after it has sold out on pre-orders of its new, Classic handset. IBM, Dell, Sony and Philips have all likewise made huge hardware redundancies.
So 2014 was certainly a year of highs and lows for mobile; margins in hardware are clearly getting slimmer, but it’s not clear whether software businesses can generate equivalent value. The battle for 2015’s mobile tech profits will surely be fought in the cloud, particularly in enterprise, with the IoT, ‘sharing’ companies and those focused on emerging markets all tipped to win big.