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A Research Service By Business Insider
The Future Of Digital: 2014
intelligence.businessinsider.com
Henry BlodgetCEO & Editor-in-Chief
Emily AdlerSenior Research Editor
Marcelo Ballvé Editorial Director
Cale WeissmanReporter
Hope KingReporter
Nicholas QuahResearch Associate
John GreenoughResearch Analyst
Jessica SmithResearch Associate
Tony DanovaSenior Research Analyst
Mark Hoelzel Research Analyst
John Heggestuen Research Analyst
Cooper Smith Senior Research Analyst
BI Intelligence
There are now nearly 3 billion people online
Source: International Communication Union, Google
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013201
4E0
500
1,000
1,500
2,000
2,500
3,000
Global Internet Population
Billi
ons
Four billion to go
1990199
1199
2199
3199
4199
5199
6199
7199
8199
9200
0200
1200
2200
3200
4200
5200
6200
7200
8200
9201
0201
1201
2201
3201
4E0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Internet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet PopulationInternet Population
Global PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal PopulationGlobal Population
Global Internet Population
Billi
ons
Source: International Communication Union, Google
Attention is shifting to digital, especially mobile
Source: eMarketer, April 2014
TV Online Radio Print Other Mobile
45%
25%
17%
9%7%
4%
37%
18%
11%
4%2%
23%
US Consumer Media Consumption Share
2009 2010 2011 2012 2013 2014
This is a generational shift
Source: Ofcom
Total
Aged 16-24
Aged 25-34
Aged 35-44
Aged 45-54
Aged 55-64
Aged 65-74
Aged 75+
0 10 20 30 40 50 60 70 80 90 100
Digital Is Reaching The New GenerationTop Five Media Mentions Among all Adults, 2013
Watch TVRead Newspapers/MagazinesListen To The RadioGo Online On A Computer/Lap-top/Netbook/TabletUse A Smartphone
One law of media…
Money follows eyeballs.
Ad spending is moving to digital (and mobile)
Source: IAB, U.S. Census Bureau, Strategy Analytics, BI Intelligence estimates
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
$0
$60
$120
$180
Mobile
Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3
All Other Online
Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2
OfflineSeries1Series1
Series1Series1Series1
Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1
U.S. Advertising
Billi
ons
Print ads have fallen off a cliff
Source: Newspaper Association Of America *Estimate
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* $-
$10,000
$20,000
$30,000
$40,000
$50,000 Newspaper Ad Revenue (Print vs. Online)
Print Online
Milli
ons
Google is now bigger than all newspapers, magazines
Source: Google, NAA, PIB
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0
$10,000
$20,000
$30,000
$40,000
$50,000
Google vs. Magazine vs. Newspaper Ad Revenue, US Data, 2004-2013
Google (US)
US Magazines
US Newspapers
Milli
ons
Google now dwarfs “big media”
Source: Company Filings, BI Intelligence estimates
$30
$18 $16 $14
$5 $5 $3 $2
$70 Estimated 2014 RevenueSelect Media Companies
Billi
ons
Google is almost half the size of all global TV advertising
Global TV Ad Revenue Google
$174
$70
Estimated 2014 Ad RevenueGoogle vs. Global TV Ad Market
Billi
ons
Source: Google, PWC
For many years TV folks have (rightly) laughed off digital concerns
Time to stop laughing.
Ratings are falling…
Source: Nielsen
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-20135
5.2
5.4
5.6
5.8
6
6.2
Primetime Household TV Ratings
Big 4 U.S. TV Networks Average
Niel
sen
Hous
ehol
d Ra
ting
(% O
f Hou
seho
lds
With
TV
Sets
Wat
chin
g)
Pay TV subscriptions are dropping…
Source: Leichtman Research Group
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
(800,000)
(600,000)
(400,000)
(200,000)
-
200,000
400,000
600,000
Cable
Satellite
Telephone
Total
Pay-TV Net Additions (US)
Net A
dditi
ons I
n Th
ousa
nds
Facebook reaches more young people than free TV
Source: Nielsen, January 2013
Age 18-24 Age 25-34 Age 35-54 Age 55+
58%
73%83%
89%
63%68%
63%
42%
Facebook vs. TV Daily Reach(US)
Four TV Networks
Perc
ent R
each
Netflix now has more US subscribers than HBO
Source: Netflix, SNL Kagan
4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q20140
10
20
30
40
HBO
NetflixPaid Domestic Subscribers — Netlix v. HBO
Milli
ons
Of U
S Su
bscr
iber
s
YouTube reaches more 18-34s than any cable network
2010 2011 2012 2013 2014E0
200
400
600
800
1000
1200
1400 YouTube “Ratings”Mi
llion
s
Digital video revenue is no longer a joke…
Source: BI Intelligence estimates, Company Filings
2006 2007 2008 2009 2010 2011 2012 2013$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Netflix Netflix Netflix Netflix NetflixNetflix Netflix Netflix
YouTube
YouTube YouTubeYouTube
YouTube
YouTubeYouTube
YouTubeHulu
Hulu HuluHulu
Hulu
Hulu
Hulu
Hulu
Estimated Digital Video RevenueBi
llion
s
iTunes and Netflix already dwarf small cable networks
Source: News Reports, Company Filings
2007 2008 2009 2010 2011 2012 2013$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000iTunes
Netflix
AMC Networks
Cable Network vs. Digital Content Revenue 2007-2013
Billi
ons
YouTube is closing in on broadcast-network revenue
Source: News Reports, BI Intelligence estimates, Company Filings
2007 2008 2009 2010 2011 2012 2013 $-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
YouTube Ad Revenue vs. CBS Ad Revenue And AMC Networks Revenue
Billi
ons
CBS Ad Revenue
YouTube Ad Revenue
AMC Networks Revenue
(Some) live sports are now being streamed
Source: Ooyala 2014
Desktop Tablet Mobile Connected TV
34.5
7.13.5
42.8
11
17.1
10.5
16.9
2.6 4.1 2.85.1
Time Spent Watching Online Video By Content TypeGlobal
All Live EventsSportsVOD
Tim
e Sp
ent P
er P
lay
In M
inut
es
TV now has to share attention with digital
Source: Millward Brown, 2014
Smartphone Laptop Tablet
83(55%) 65
(63%)20
(45%)
68(45%)
38(37%)
24(55%)
Daily Time Spent With Devices, While Watching TV Or Us-ing The Device Independently
Ages 16 - 44, United States Only
Without TVWith TV
Tim
e Sp
ent I
n Mi
nute
s (P
erce
ntag
e Of
Tot
al T
ime)
So, eyeballs are leaving TV
But, so far, TV money is hanging in there
TV still massive, digital video still a blip
Source: Nielsen, IAB
2007 2008 2009 2010 2011 2012 2013$0
$20
$40
$60
$80
US Ad Spend, 2007-2013TV Vs. Online Video
TV Ad SpendOnline Video Ad
Total TVAd Spend(Billions)
So no worries in TV land?
Yes, worries.
It’s a generational shift — look what Millennials are doing
Source: Ofcom
All Adults Aged 75+ Aged 16-24
TV
TV
TV
Radio
Radio
Radio
Computer
3
Computer
Smartphone
Smartphone
“Media you would miss most”
Use A Smartphone
Go Online On A Computer/Laptop/Netbook/Tablet
Listen To The Radio
Read Newspapers/Magazines
Watch TV
Money follows eyeballs…
Source: Mary Meeker, IAB, eMarketer
Print TV Web Radio Mobile
5%
38%
25%
12%
20%19%
43%
22%
10%
4%
2013 U.S. Ad Spending vs. Consumer Time Spent By Media
So it’s only a matter of time.
What’s going on in digital?
Smartphone sales are still booming
Source: IDC, Strategy Analytics, BI Intelligence estimates
-
50
100
150
200
250
300
350
SamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsungSamsung
Apple
Apple Apple Apple Apple Apple Apple Apple Apple Apple Apple Apple Apple Apple Apple Apple Apple Apple
Apple Apple Apple Apple Apple Apple Apple Apple
Xiaomi
XiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomiXiaomi
XiaomiXiaomiXiaomiXiaomiXiaomiXiaomi
XiaomiXiaomiLenovo
LenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovo
LenovoLenovoLenovoLenovo
LenovoLenovoLenovoLenovoLenovoLenovo
LenovoLenovoHuawei
HuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuawei
HuaweiHuaweiHuaweiHuawei
HuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuaweiHuawei
LG
LG LG LG LG LG LG LG LG LG LG LG LG LG
LG LG LG LG
LG LG LG LGLG LG LG LG
ZTE
ZTE ZTE ZTE ZTE ZTE ZTE ZTE ZTE ZTE ZTE ZTE ZTE ZTE
ZTE ZTE ZTEZTE
ZTE ZTE ZTEZTE
ZTE ZTE ZTEZTE
Coolpad
CoolpadCoolpadCoolpadCoolpadCoolpadCoolpadCoolpadCoolpadCoolpadCoolpadCoolpadCoolpadCoolpad
CoolpadCoolpadCoolpadCoolpad
CoolpadCoolpadCoolpadCoolpad
CoolpadCoolpadCoolpadCoolpad
Nokia
NokiaNokiaNokiaNokiaNokiaNokiaNokiaNokiaNokiaNokiaNokiaNokiaNokia
NokiaNokiaNokiaNokia
NokiaNokiaNokia
NokiaNokiaNokiaNokia
Nokia
Sony
SonySonySonySonySonySonySonySonySonySonySonySonySony
SonySonySonySony
SonySonySony
SonySonySonySony
Sony
Motorola
MotorolaMotorolaMotorolaMotorolaMotorolaMotorolaMotorolaMotorolaMotorola
MotorolaMotorolaMotorolaMotorola
MotorolaMotorolaMotorolaMotorola
MotorolaMotorolaMotorola
MotorolaMotorolaMotorolaMotorola
Motorola
HTC
HTC HTC HTC HTC HTC HTC HTC HTCHTC
HTC HTCHTC HTC
HTC HTC HTCHTC
HTC HTCHTC
HTCHTC HTC HTC
HTC
BlackBerry
BlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberry
BlackberryBlackberryBlackberryBlackberry
BlackberryBlackberryBlackberryBlackberry
BlackberryBlackberryBlackberry
BlackberryBlackberryBlackberryBlackberry
Blackberry
Other
OtherOtherOtherOtherOtherOtherOtherOtherOther
OtherOtherOtherOther
OtherOtherOtherOther
OtherOtherOther
OtherOtherOtherOther
Other
Global Smartphone Shipments By VendorMi
llion
s
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
PCsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC ShipmentsPC Shipments
TabletsTablet Shipments
Tablet ShipmentsTablet Shipments
Tablet ShipmentsTablet ShipmentsTablet Shipments
Tablet ShipmentsTablet ShipmentsTablet ShipmentsTablet Shipments
Tablet ShipmentsTablet ShipmentsTablet Shipments
Tablet ShipmentsTablet Shipments
Tablet ShipmentsTablet ShipmentsTablet ShipmentsTablet Shipments
Tablet ShipmentsTablet ShipmentsTablet Shipments
Tablet Shipments
Tablet ShipmentsTablet ShipmentsTablet Shipments
Global Computer Shipments
Thou
sand
s
Tablets have carved out a chunk of PC sales
Source: Gartner, IDC, Strategy Analytics, Company Releases
“Phablets” are replacing small smartphones
Source: BI Intelligence estimates
2006
2007
2008
2009
2010
2011
2012 2 2 2 2 2 2 2
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Phablets
Tablets
Smartphones (Non-Phablet)
Global Annual Shipments By Device
Milli
ons
Nearly half of TVs are now connected
Source: Leichtman Research Group, BI Intelligence estimates
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E0
10
20
30
40
50
60
70
80
0%
10%
20%
30%
40%
50%
60%
27.7 35.7
43.8 50.1
56.5 61.1
65.7 68.6 71.4 72.6
24%31%
38%44%
49%53%
57% 60% 62% 63%
U.S. Households With Connected TVPercentage Of Households; Number Of Households In Mil-
lions
“Wearables” are overhyped but growing
Source: BI Intelligence estimates
2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E0
20
40
60
80
100
120
140
160
Smartwatches
SmartwatchesSmartwatchesSmartwatchesSmartwatches
SmartwatchesSmartwatches
SmartwatchesSmartwatches
Smartwatches
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Global Wearable Device Unit Shipments Forecast
Milli
ons O
f Uni
ts S
hipp
ed A
nnua
lly
35% CAGR2014-2019
We Are Here
Cars are increasingly connected
Source: SBD, GSMA
2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E€ 0
€ 5,000
€ 10,000
€ 15,000
€ 20,000
€ 25,000
€ 30,000
€ 35,000
€ 40,000
€ 45,000
In-vehicle servicesIn-vehicle servicesIn-vehicle servicesIn-vehicle servicesIn-vehicle servicesIn-vehicle servicesIn-vehicle servicesIn-vehicle servicesIn-vehicle servicesIn-vehicle servicesHardware
HardwareHardware
HardwareHardware
HardwareHardware
HardwareHardware
Hardware
Telematics service providers
Telematics service providers
Telematics service providers
Telematics service providers
Telematics service providers
Telematics service providers
Telematics service providers
Telematics service providers
Telematics service providers
Telematics service providers
Telecom service providers
Telecomm service providers
Telecomm service providers
Telecomm service providers
Telecomm service providers
Telecomm service providers
Telecomm service providers
Telecomm service providers
Telecomm service providers
Telecomm service providers
Connected Car Revenue Forecast
Milli
ons
300 million PCs are still sold each year
Source: Gartner, IDC, BI Intelligence estimates
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
0
20,000
40,000
60,000
80,000
100,000
LenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoLenovoHP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HP HPDell DellDellDellDellDellDellDellDellDellDellDell
DellDellDellDellDellDellDellDellDellDellDellDellDellDellDellAcer AcerAcerAcer
AcerAcerAcer
AcerAcerAcerAcerAcerAcerAcerAcerAcerAcerAcerAcerAcer
AcerAcerAcerAcerAcerAcerAcerOther
OtherOther
OtherOtherOther
OtherOther
OtherOtherOtherOther
OtherOtherOtherOther
OtherOtherOtherOtherOtherOtherOtherOther
OtherOtherOther
Global PC Shipments By ManufacturerTh
ousa
nds
iPad released Windows 8 released
Should you be “mobile only?”
No!
It’s a “multi-screen” world
Source: Gartner, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
Personal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal ComputersPersonal Computers
Smartphones
SmartphonesSmartphonesSmartphonesSmartphonesSmartphonesSmartphonesSmartphonesSmartphonesSmartphonesSmartphones
SmartphonesSmartphones
SmartphonesSmartphones
Tablets
TabletsTabletsTabletsTabletsTabletsTabletsTabletsTabletsTablets
TabletsTablets
Tablets
Tablets
Tablets
Smart TVs
Connected/Smart TVsConnected/Smart TVsConnected/Smart TVsConnected/Smart TVsConnected/Smart TVsConnected/Smart TVsConnected/Smart TVsConnected/Smart TVsConnected/Smart TVs
Connected/Smart TVs
Connected/Smart TVs
Connected/Smart TVs
Connected/Smart TVs
Connected/Smart TVsWearables
WearablesWearablesWearablesWearablesWearablesWearablesWearablesWearablesWearables
Wearables
Wearables
Wearables
Wearables
WearablesGlobal Internet Connected
Device Shipments
Units
You should be “mobile, too.”
~60% of online devices are now smartphones or tablets
Source: BI Intelligence estimates
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E0
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
Personal Computers (Desktop And Note-
book)
SmartphonesSmartphonesSmartphonesSmartphonesSmartphonesSmartphones
SmartphonesSmartphones
SmartphonesSmartphones
SmartphonesTablets
Tablets TabletsTablets Tablets Tablets
TabletsTablets
Tablets
Tablets
Tablets
Smart TVs
Connected/Smart TVsConnected/Smart TVsConnected/Smart TVsConnected/Smart TVsConnected/Smart TVs
Connected/Smart TVs
Connected/Smart TVs
Connected/Smart TVs
Connected/Smart TVs
Connected/Smart TVs
Wearables
WearablesWearablesWearablesWearablesWearables
Wearables
Wearables
Wearables
Wearables
Wearables
Global Internet Device Installed Base
Num
ber O
f Dev
ices I
n Us
e (In
Bill
ions
)
Other8%
Visit Websites14%
Games8%
Social Networking15%Talk
26%
Text20%
Email9%Breakdown Of The Average
Smartphone Owner's Daily Time-Spend
On Average, U.S. Smartphone Owners Spend 58 Minutes Daily On Their Phones
We spend an hour a day on our smartphones
Source: Experian Marketing Services, May 2013
We spend ½ hour on tablet each time we use it
Source: Google, August 2012
TV PC/Laptop Tablet Smartphone
4339
30
17
Average Minutes Spent Per Interaction By Device
More than ¼ of Internet traffic is mobile
Source: StatCounter, BI Intelligence estimates
Dec-08 Jan-10 Feb-11 Mar-12 Apr-13 May-140%
25%
50%
75%
100%Global Internet Traffic Share
Desktop Vs. Mobile
Mobile has extended the digital day to 18/7
Source: Google Analytics, Business Insider
9/1/12 9/15/12 9/29/12 10/13/12 10/27/12 11/10/12 11/24/12 12/8/12 12/22/12 1/5/13
Mobile Visits Desktop Visits
Each device has a different “prime time”
Source: comScore, Telefonica, Macquarie Capital (USA), December 2011
Where are we in themobile device cycle?
Developed mobile markets are nearing maturity
Source: comScore
Jan 10Mar
10May
10Jul 10Sep
10Nov
10Jan
11Mar
11May
11Jul 11Sep
11Nov
11Jan
12Mar
12May
12Jul 12Sep
12Nov
12Jan
13Mar
13May
13Jul 13Sep
13Nov
13Jan
14Mar
14May
140%
10%
20%
30%
40%
50%
60%
70%
80%
18%
72%
U.S. Smartphone Penetration(a
s a p
erce
ntag
e of
the
mob
ile p
opul
atio
n)
The action is now in China, India, and emerging markets
Source: Mediacells via The Guardian
China Ind
ia USABra
zil
Indon
esia
Russi
aJap
anMex
ico
German
yFra
nce UKOthe
rsIta
ly
Austr
alia
Malaysi
a
Swede
n0
50
100
150
200
250
300 Smartphone Sales In 2014 Will Be Driven By New Users In Emerging Markets
Sales To New Smartphone Users In 2014
Smartphone Upgrades In 2014
Milli
ons O
f Sm
artp
hone
s
Top 11 Mar-kets
Other Mar-kets
China is already twice the size of the US market
Source: China Internet Network Information Center
June 06
Dec 06
June 07
Dec 07
June 08
Dec 08
June 09
Dec 09
June 10
Dec 10
June 11
Dec 11
June 12
Dec 12
June 13
Dec 13
June 14
0
100
200
300
400
500
600
700
Mobile Users
Total Users
US Users
Chinese Internet Users
Milli
ons O
f Int
erne
t Use
rs
Prices are dropping fast
Source: BI Intelligence estimates
2010A 2011A 2012A 2013E 2014E 2015E 2016E $100
$150
$200
$250
$300
$350
Global Smartphone Average Selling Price ForecastAv
erag
e Se
lling
Pric
e
iPhone sales growth has slowed (iPhone 6 will help)
Source: Company Filings
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
0
10,000
20,000
30,000
40,000
50,000
60,000
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2iPhone SalesUnit Sales
YoY Growth
Unit
Sale
s (Th
ousa
nds)
YoY
Sale
s Gro
wth
Chinese companies sell ~25% of smartphones in world
Source: Canalys, IDC, Strategy Analytics, BI Intelligence, Company Reports
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q140
10
20
30
40
50
60
70
80
90
Selected Local Manufacturers From China Global Quarterly Smartphone Shipments
Xiaomi
Huawei
Lenovo
ZTE
Coolpad
Milli
ons
Global tablet growth has hit a wall
Source: IDC, Strategy Analytics, BI Intelligence estimates
3Q104Q101Q112Q113Q114Q111Q12 2Q123Q124Q121Q132Q133Q13 4Q131Q142Q143Q14-100%
-50%
0%
50%
100%
150%
200%
250%
300%
Year-Over-Year Growth
Global Tablet Shipments Quarterly Year-Over-Year Growth
Sequential Growth
(iPad now experiencing “negative growth”)
Source: Apple
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
0
5,000
10,000
15,000
20,000
25,000
30,000
-50%
0%
50%
100%
150%
200%
iPad Sales
Unit Sales
YoY Growth
Unit
Sale
(Tho
usan
ds)
YoY
Sale
s Gro
wth
Why have tablet sales cratered?
1. Long upgrade cycle2. Phablet cannibalization
3. Need keyboard for serious input4. Price
What about theplatform war?
We have a winner!
Apple is strong in the US, where it’s a two-horse race
Source: comScore
0%
20%
40%
60%
80%
100%
AndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidApple
AppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleAppleApple
BlackBerry
BlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerryBlackBerry
Windows PhoneMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoftMicrosoft
Other OtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherUS Smartphone Platform Market Share
But, globally, it’s an Android world
~85% of smartphones run Google’s Android
Source: IDC, Strategy Analytics, BI Intelligence estimates
0%
25%
50%
75%
100%
AndroidSeries1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1
Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1
iOS
Series2Series2Series2
Series2Series2
Series2Series2
Series2Series2Series2
Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2
Microsoft
Series3Series3Series3
Series3Series3
Series3Series3
Series3Series3
Series3Series3Series3
Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3
BlackBerry
Series4Series4Series4Series4
Series4Series4
Series4Series4
Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4
Other
Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5
Global Smartphone Market Share By Platform
Shar
e of
Glo
bal U
nit S
hipm
ents
~65% of tablets run Android
Source: BI Intelligence estimates
0%
25%
50%
75%
100%
AndroidAndroidAndroidAndroidAndroidAndroid
AndroidAndroidAndroid
AndroidAndroidAndroidAndroid
AndroidAndroidAndroidAndroid
Apple
AppleApple
AppleAppleApple
AppleApple
AppleAppleApple
AppleAppleApple
AppleAppleApple
Amazon Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)
Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)Amazon (Kindle Fire)
BlackBerryBlackberryBlackberryBlackberryBlackberry
BlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryNook Barnes & Noble (Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble (Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble (Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)Barnes & Noble
(Nook)WindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindows
Global Tablet Market Share By Platform
~70% of all new computing gadgets run Android
Source: Gartner, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates
0%
20%
40%
60%
80%
100%
AndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidAndroidWindows WindowsWindowsWindowsWindowsWindowsWindowsWindowsWindowsWindows
WindowsWindowsWindowsWindows
WindowsWindowsWindows
WindowsWindowsWindowsWindowsWindowsWindowsApple iOS
iOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOSiOS
BlackBerryBlackberry
BlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryBlackberryOtherOtherOther OtherOtherOther OtherOther Other OtherOtherOtherOtherOtherOtherOtherOtherOther
Global Computing Platform Market Share
Android used to lag Applebadly with app developers.
Not anymore.
Android “fragmentation” problem is improving
Source: Google
9/15/12 11/15/12 1/15/13 3/15/13 5/15/13 7/15/13 9/15/13 11/15/13 1/15/14 3/15/14 5/15/14 7/15/140%
20%
40%
60%
80%
100%
Other Other Other Other Other Other Other OtherOther
FroyoFroyo Froyo Froyo Froyo Froyo Froyo FroyoFroyo
GingerbreadGingerbreadGingerbread
GingerbreadGingerbread
Gingerbread GingerbreadGingerbreadGingerbread
Honeycomb
Honeycomb
Honeycomb
HoneycombHoneycomb
Honeycomb HoneycombHoneycombHoneycomb
Ice Cream SandwichIce Cream Sandwich
Ice Cream Sandwich
Ice Cream Sandwich
Ice Cream Sandwich
Ice Cream SandwichIce Cream SandwichIce Cream SandwichIce Cream Sandwich
Jelly BeanJelly Bean
Jelly BeanJelly Bean
Jelly BeanJelly Bean
Jelly BeanJelly Bean
Kit KatKit Kat Kit Kat Kit Kat Kit Kat
Kit Kat Kit KatKit Kat
Jelly Bean And Kit Kat Are Now ~80% Of Android
Android now more popular with developers than iOS
Source: Developer Economics, Q3 2014
Android 42%
iOS32%
BlackBerry 103%
Windows Phone10%
Other13%
Mobile Developers' Main Platform
Android will soon overtake iOS in app revenue
Source: Jana, App Annie, BI Intelligence estimates
4Q13 1Q14 2Q14 3Q14 4Q14E 1Q15E 2Q15E 3Q15E 4Q15E 1Q16E 2Q16E$0
$1
$2
$3
$4Estimated App Revenue
Apple App Store Vs. Google PlayBi
llion
s
Android is catching up to iOS in developer payouts
Source: Jana, App Annie, BI Intelligence estimates
3Q13 4Q13 1Q14 2Q14$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
Apple App Store Apple App Store Apple App Store Apple App Store
Google PlayGoogle Play
Google Play Google Play
Estimated App Developer PayoutApple App Store And Google Play
Billi
ons
Android now generates more global ad traffic than iOS
Source: Opera Mediaworks
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q140%
20%
40%
60%
80%
100%
Android Android Android Android Android Android Android Android Android Android
iOS iOS iOS iOS iOS iOSiOS iOS
iOSiOSBlackBerry BlackBerry OSBlackBerry OSBlackBerry OSBlackBerry OSBlackBerry OS
BlackBerry OSBlackBerry OSBlackBerry OSBlackBerry OS
Symbian SymbianSymbianSymbianSymbianSymbianSymbianSymbian
SymbianSymbianOther Other Other Other Other Other Other Other Other Other
Global Mobile Ad Traffic Share By Platform
Shar
e Of
Tra
ffic
The key digital media trends…
MobileSocial
Native
VideoProgrammatic
Most digital growth is now mobile
Source: comScore, April 2014
Dec-10 Dec-130
200
400
600
800
1000
1200
Smartphone131
Smartphone442Tablet
11
Tablet124
Time Spent By Digital Platform Per MonthU.S., December 2010 Vs. December 2013
Billi
ons O
f Min
utes
1,040% Growth
237%
7%
Desktop401
Desktop429
Messaging apps are exploding
Source: Company Statements, News Reports, BI Intelligence estimates
Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-140
100
200
300
400
500
600The Messaging Wars — MAUs For Top Apps
(Monthly Active Users - Global)Mi
llion
s
Social networks and sharing are exploding
Source: BI Intelligence estimates based on data from company filings, comScore, Global Web Index, Totem and news reports
2010 2011 2012 2013 2014E0
500
1,000
1,500
TwitterTumblrInstagramSnapchat
Google Plus
LinkedInPinterestVine
Social Network MAUs (Global)
Milli
ons
Mobile video is booming…
Source: Cisco, 2013
2011 2012 2013 2014 2015 2016 20170
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
Global Mobile Video Traffic Will Continue To Surge Mi
llion
s of T
erab
ytes
Per
Mon
th
Mobile video has enabled the rise of the YouTube stars
Source: Company Filings
35 million viewers
8 million viewers
1 million viewers
Social and music are now mostly mobile
Source: Company Filings
2008 2009 2010 2011 2012 20130%
25%
50%
75%
100%
Pandora
Mobile Usage: Pandora, Twitter, Facebook
Mobile is driving all of Facebook’s growth
Source: Company Filings
Q1 10
Q3 10
Q1 11
Q3 11
Q1 12
Q3 12
Q1 13
Q3 13
Q1 14
Q3 14
$0.0
$500,000,000.0
$1,000,000,000.0
$1,500,000,000.0
$2,000,000,000.0
$2,500,000,000.0
$3,000,000,000.0
$3,500,000,000.0
Advertising (Non-Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Advertising (Non-Mobile)Advertising (Non-
Mobile)Advertising (Non-
Mobile)Mobile Advertising
Mobile AdvertisingMobile AdvertisingMobile AdvertisingMobile Advertising
Mobile AdvertisingMobile AdvertisingMobile AdvertisingMobile AdvertisingMobile AdvertisingMobile Advertising
Mobile AdvertisingMobile AdvertisingMobile AdvertisingMobile Advertising
Mobile AdvertisingMobile Advertising
Mobile AdvertisingMobile AdvertisingPayments And Fees
Payments And FeesPayments And FeesPayments And FeesPayments And Fees
Payments And FeesPayments And FeesPayments And FeesPayments And FeesPayments And FeesPayments And Fees
Payments And FeesPayments And Fees
Payments And FeesPayments And Fees
Payments And FeesPayments And Fees
Payments And FeesPayments And Fees
Facebook Revenue By Segment (Global)
Billi
ons
Mobile is now a third of eCommerce traffic
Source: Monetate
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q140%
25%
50%
75%
100%
PC PC PC PC PC PC PC PC PC PC PC PC PC
TabletTabletTabletTabletTabletTabletTabletTabletTabletTabletTabletTabletTablet
SmartphoneSmartphoneSmartphoneSmartphoneSmartphoneSmartphoneSmartphoneSmartphoneSmartphoneSmartphoneSmartphoneSmartphoneSmartphone
Ecommerce Website Traffic By Device
PayPal powers $30 billion in mobile payments
*PayPal counted a small portion of Braintree’s transaction volume as its own in the last 12 days of Q4 2013.Source: PayPal
2008 2009 2010 2011 2012 2013$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
PayPal Mobile
PayPal Mobile PayPal MobilePayPal Mobile
PayPal Mobile
PayPal Mobile
Braintree Mobile*
Braintree Mobile*Braintree Mobile*
Braintree Mobile*
Braintree Mobile*
Braintree Mobile*
PayPal Mobile Transaction Volume(Including Braintree 2013)
U.S.
Dol
lars
In B
illio
ns
Venmo is (finally) replacing friend-to-friend payments
Source: PayPal, BI Intelligence
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
$81 $105$141
$194
$314
$468
$700
Venmo Payment Volume
Milli
ons O
f Dol
lars
Ad growth is mobile, social, video, native, programmatic
Source: BI Intelligence estimates based on data from BIA/Kelsey, IAB, IDC, and Magna Global Note: Formats overlap. Mobile includes all ad formats that appear on mobile.
Desktop Display
Desktop Video
Desktop Search
Mobile Social Native Programmatic
-0.4%
15.1%
2.3%
42.6%
18.0%
34.7% 35.7%
Advertising Revenue Growth (US)CAGR 2013 - 2018
Mobile is a “green field”
Source: eMarketer
Latin America Middle East and Africa
Eastern Europe Asia-Pacific Western Europe North America
$1 $1 $1 $3
$10 $12
$1 $1 $1 $3
$15
$30
$1 $1 $1$4
$19
$46
Annual Mobile Ad Spend Per Mobile Internet UserBy Region
2011 2012 2013
Social is booming
Source: BI Intelligence estimates, BIA/Kelsey
2013 2014E 2015E 2016E 2017E 2018E $-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
Non-Mobile Non-Mobile Non-Mobile Non-Mobile Non-Mobile Non-Mobile
MobileMobile
MobileMobile
Mobile Mobile
FORECAST: Social Media Advertising Spend(US)
Billi
ons
“Display” ad spending is still respectable, but…
Source: Company Filings, BI Intelligence estimates
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
GoogleSeries1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Other Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2
Series2Series2Series2Series2Series2Series2Series2Series2
Series2Series2Series2Series2Series2Series2Series2Series2
Series2Series2Series2Series2
YahooSeries3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3
Series3Series3Series3Series3Series3
Series3Series3Series3Series3Series3Series3Series3Series3
Series3Series3Series3Series3Series3Series3Series3
AOLSeries4
Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4
Series4Series4Series4Series4Series4Series4
Series4Series4Series4Series4
Series4Series4Series4Series4Series4
Series4Series4Series4Series4
Series4Series4Series4
Microsoft Series5Series5
Series5Series5Series5Series5
Series5Series5Series5Series5
Series5Series5Series5
Series5Series5Series5Series5
Series5Series5Series5Series5
Series5Series5Series5Series5Series5
Series5Series5Series5Series5
Series5Series5Series5
US Display Advertising, 2006-2014 (Quarterly)
TotalDisplay
AdvertisingRevenue(Millions)
Growth is shifting to “native”…
Source: BI Intelligence estimates, IAB
2013 2014E 2015E 2016E 2017E 2018E$0
$5
$10
$15
$20
$25
$1.0 $1.3 $1.9 $2.7 $3.9 $5.7 $0.8 $1.0 $1.3
$2.0 $2.7
$3.4
$2.9 $5.6
$7.5 $9.2
$10.7
$11.9
Native Advertising Revenue (US)Desktop And Mobile
Native-Style Display Sponsorship Social
Billi
ons
And “programmatic”
Source: BI Intelligence estimates, Magna Global, IDC
2013 2014E 2015E 2016E 2017E 2018E
$6,032$8,288
$12,076
$17,931
$23,221
$27,715
FORECAST: Programmatic Ad Spend (U.S.)
Ad S
pend
In B
illio
ns
Google is still the digital advertising king
Source: Company Filings Note: Based on GAAP revenue.
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14$0
$4,000
$8,000
$12,000
$16,000
$20,000
GoogleGoogleGoogleGoogleGoogleGoogleGoogleGoogleGoogleGoogleGoogleGoogleGoogleGoogle
FacebookFacebookFacebookFacebookFacebookFacebook
FacebookFacebookFacebookFacebookFacebookFacebookFacebook
YahooYahooYahooYahooYahooYahooYahoo
YahooYahooYahooYahoo
YahooYahooYahoo
AOL
AOL AOLAOL AOL AOL AOL
AOL AOL AOL AOL
AOL AOLAOL
Digital Advertising Revenues (Global)
Billi
ons
Google’s YouTube dominates digital video and video ads
Source: Company Filings, BI Intelligence estimates
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
$0
$250,000,000
$500,000,000
$750,000,000
$1,000,000,000
$1,250,000,000
$1,500,000,000
$1,750,000,000
YouTubeYouTubeYouTubeYouTubeYouTubeYouTubeYouTubeYouTube
YouTubeYouTubeYouTubeYouTubeYouTubeTremor
TremorTremorTremorTremorTremorTremor
TremorTremorTremorTremor
TremorTremor
YuMe
YuMe YuMe YuMeYuMe YuMe YuMe
YuMeYuMe YuMe YuMe
YuMeYuMe
TubeMogul
TubeMogulTubeMogulTubeMogulTubeMogulTubeMogulTubeMogul
TubeMogulTubeMogulTubeMogulTubeMogul
TubeMogulTubeMogul
Global Digital Video Advertising Revenue(Select Companies)
Reve
nue
In M
illio
ns
Google’s Chrome browser is crushing Firefox and IE
Source: StatCounter
2010 2011 2012 2013 20140%
10%
20%
30%
40%
50%
60%
Other
Safari
Firefox
Internet Explorer
Chrome
Opera
Global Web Browser Usage Share
Google’s Android has peak-Windows-like market share
Source: IDC, Strategy Analytics, BI Intelligence estimates
0%
20%
40%
60%
80%
100%
AndroidSeries1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1
Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1Series1
iOS
Series2Series2Series2
Series2Series2
Series2Series2
Series2Series2Series2
Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2Series2
Microsoft
Series3Series3Series3
Series3Series3
Series3Series3
Series3Series3
Series3Series3Series3
Series3Series3Series3Series3Series3Series3Series3Series3Series3Series3
BlackBerry
Series4Series4Series4
Series4Series4
Series4Series4
Series4Series4Series4
Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4Series4
Other
Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5Series5 Series5Series5Series5
Global Smartphone Market Share By Platform
Shar
e of
Glo
bal U
nit S
hipm
ents
Google93%
Bing3%
Yahoo2%
Other2% Europe Search Market Share
Oct. 2014
In Europe, Google has peak-Windows-like search share
Source: StatCounter
Basically, Google is swallowing the world…
Source: Google, 2014 Is An Estimate
2009 2010 2011 2012 2013 2014E $-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000 Google Global Annual Revenue
Billi
ons
(And people are noticing!)
Source: StatCounter
(For Microsoft, DOJ attack was the beginning of the end)
Source: StatCounter
Have Google and Facebook won?
Not necessarily.
Money follows eyeballs.
Search click growth is finally decelerating
Source: Google
Q1 13 Q3 13 Q1 14 Q3 14
20%23%
26%
31%
26%25%
17%
Google Paid Clicks GrowthGlobal, Year-Over-Year
US desktop search queries are now shrinking
Source: comScore Note: Explicit user initiated search queries only.
Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14
10%12%
14%
10%7%
4%0%
-3%-5%
-7% -8% -7% -7%
Total Monthly Search Query Growth U.S., Year-Over-Year; Desktop Only
“No one uses Facebook anymore” — Gen Z-er
Source: Piper Jaffray
Fall 2012 Spring 2013 Fall 2013 Spring 2014
42%
33%
27%
23%27%
30%
31%
27%
12%
17%
27%
30%
The Most Important Social Networks To US TeensPercent Of Respondents Who Say The Network Is Most
Important
FacebookTwitterInstagram
Why do teens love Instagram?
2010 2011 2012 2013 2014E0
50
100
150
200
250
300 InstagramMi
llion
s
“Because parents see that camera icon and think it’s a photo app. They don’t know it’s a social network.”
What’s Tumblr for?
2010 2011 2012 2013 2014E0
50
100
150
200
250
300
350 TumblrMi
llion
s
“Fandom. And de-pressed and creepy people.”
What about phone calls? Do people talk anymore?
2010 2011 2012 2013 2014E0
200
400
600
800 WhatsAppMi
llion
s
“No. Everyone has phone numbers, but they’re for texting.”
Digital is the medium for the new generation.
Digital will grow for decades.
So, what’s next?
Connected cars — we spend 1.2 hours a day in them
Source: Bureau Of Labor Statistics
0
12
24
8.8 hours
7.6 hours
2.5 hours1.2 hours1.1 hours1.1 hours1.7 hours
Average Daily Time Spent Per PersonU.S. Employed Citizens ages 25 to 54
Other
Household Activities
Eating And Drinking
In The Car
Leisure And Sports
Sleeping
Working
Wearables (someday)
Source: BI Intelligence estimates
2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E0
20
40
60
80
100
120
140
160
Smartwatches
SmartwatchesSmartwatchesSmartwatchesSmartwatches
SmartwatchesSmartwatches
SmartwatchesSmartwatches
Smartwatches
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Fitness Bands And Other Activity
Trackers
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Rest Of Wearables Market
Global Wearable Device Unit Shipments Forecast
Milli
ons O
f Uni
ts S
hipp
ed A
nnua
lly
35% CAGR2014-2019We Are Here
Smartwatches, like Apple Watch, should do okay
Source: BI Intelligence estimates
2013 2014 2015E 2016E 2017E 2018E 2019E 2020E0
20
40
60
80
100
120
140
Apple WatchApple Watch
Apple WatchApple WatchApple WatchApple WatchApple WatchApple Watch
Total SmartwatchMarket
SmartwatchesSmartwatches
SmartwatchesSmartwatches
SmartwatchesSmartwatchesSmartwatches
Apple Watch Annual Shipments Forecast2015-2020
Milli
ons
Fitness bands will remain niche
Source: NPD Group, BI Intelligence estimates; Annual Data From April Through March
2010-2011 2011-2012 2012-2013 2013-2014 -
500
1,000
1,500
2,000
2,500
3,000
3,500
Fitbit
Fitbit Fitbit
Fitbit
Jawbone
JawboneJawbone
Jawbone
Nike
Nike
Nike
NikeOther
Other
Other
OtherFitness Band Hardware Annual Unit Sales
By Device Maker, US Only
Thou
sand
s Of F
itnes
s Ban
ds S
old
“Internet of Things” — 20B connected devices by 2020
Source: BI Intelligence estimates
2014E 2015E 2016E 2017E 2018E 2019E -
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
EnterpriseEnterprise Enterprise Enterprise Enterprise
EnterpriseGovernment/In-
frastructureGovernment/In-
frastructure
Government/In-frastructure
Government/In-frastructure
Government/In-frastructure
Government/In-frastructureHome
Home
Home
Home
Home
Home
Estimated Number of InstalledIoT Devices by Sector
We’ll fill our houses with smart devices
Source: ABI Research, TechNavio, Pike Research, BI Intelligence estimates
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E0
500
1,000
1,500
2,000
Smart Home EnergyHome AutomationHome AutomationHome Automation
Home AutomationHome Automation
Home AutomationHome AutomationSmart Home Security
Home SecurityHome SecurityHome Security
Home Security
Home Security
Home Security
Home Security
Smart Appliances
Smart AppliancesSmart Appliances
Smart Appliances
Smart Appliances
Smart Appliances
Smart Appliances
Smart Appliances
Other Systems
Other SystemsOther Systems
Other Systems
Other Systems
Other Systems
Other Systems
Other Systems
Global Connected Home Device ShipmentsBy Device Category
Milli
ons
And companies will buy them by the billions
Source: BI Intelligence estimates
2014E 2015E 2016E 2017E 2018E 2019E - 1,000,000,000 2,000,000,000 3,000,000,000 4,000,000,000 5,000,000,000 6,000,000,000 7,000,000,000 8,000,000,000 9,000,000,000 10,000,000,000
Global Enterprise Device Growth
Five-Year (2014-2019) CAGR 49%
Thank You!
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