Thoughts on Morgan Stanley’s Internet Trend Analysis
Last month Morgan Stanley put together a presentation of some analysis that it had conducted on “developing internet trends.” Below you will find the presentation followed by some comments. I apologize for the comments being poorly outlined below the presentation itself, but due to copy write restrictions I was unable to edit the original presentation.
Slide 4
- The stock market is often a leading indicator and we have been seeing growth, although there is no guarantee whatsoever against a “double” dip.
Slide 7
- The rate of growth of mobile internet is astonishing. Apple’s mobile safari browser is expanding at previously unheard of speeds, making the growth of AOL, Netscape and others pale in comparison. In response, a large percentage of websites (including this one) now offer “smart phone” compatible versions of their site.
Slide 8
- The statement that mobile internet usage will surpass desktop usage within 5 years is a rather bold one. Though this slide depicts projects its growth rate, one must not forget that this is merely a projection and no projection is concrete. A bubble can always burst.
Slide 9
- This projection is much more believable as we have yet to see mobile internet used for widespread commerce purposes. Ebay’s iphone app has seen tremendous growth ($1.5 billion worth of goods sold in 2010). smart phones have extreme potential for commerce purposes as they are often carried with the user everywhere he or she may go. A similar correlation lies within one’s own wallet which also goes wherever an individual does. This allows for impromptu, insight purchases to be made (i.e. you see a harddrive for sale at Best Buy, scan the barcode, find it online for cheaper, and complete the purchase all within Best Buy).
Slide 12
- Though email represents a secure staple of the internet, it is not “fun.” My generation is known for its persistent ADD, constantly getting bored of what they have, ever-looking for a replacement (i.e. We upgrade our cellphones almost yearly). Social networking represents a new, ever changing way to communicate not just with your friends, but also with your colleagues and customers. Look for its drastic expansion as the major companies behind it (i.e. Facebook) are actively marketing themselves for total world domination.
Slide 13
- Consumers now want access to all of their information from any location at any time. The solution to this conundrum is to store it all in the cloud. This is a very real possibility as network speeds are constantly increasing. The gradual shift towards cloud computing will surely cause some form of disruption to the now major market players as they will inevitably suffer from cannibalisation (failure to innovate as innovation would lead to the cannibalisation of their current technologies, however, new entrants have all the reason to innovate).
Slide 17
- True, tech cycles have tended to last ten years, however, I would take this comment with a grain of salt as I do not believe that history serves as a valid indicator of future innovation. There is so much to look forward to in the next ten years: touch screen tablets, 3D displays, cloud computing, etc. Just because tablets and cloud computing are starting to take off doesn’t mean that we will have to put 3D displays on hold for another ten years.
Slide 20
- Alluding to my previous comment on Slide 13, this is the “cannibalisation” that i was describing. Incumbents have less of a reason to innovate than new entrants do. Instead, they often seek to “buy out” smaller competitors when they fail to innovate. (i.e. facebook purchasing friend feed, yahoo purchasing flickr, etc.).
Slide 28
- I disagree. 3g is not the key to success of the mobile internet. The next generation wireless will be. It must be as fast, as cheap and as capable as wired internet. 3G is none of these.
Slide 29
- As I alluded to above, the only reason consumers seek to connect to the internet via wired internet is because the current wireless solutions are not adequate enough (i.e. too slow, not secure, too expensive).
Slide 32
- If facebook continues to innovate, it will continue to dominate. They (alongside Google) are one of the few large tech companies that continue to reinvent themselves and avoid cannibalisation. In addition, that have a massive user base that includes the lagging market participants (those that wait until after the majority of the population has signed up for a service before they themselves sign up. they often are reluctant to change.)
Slide 35
- Same comment as slide 29.
Slide 37
- VoIP will always be cheaper than standard phone lines as it simply piggybacks off pre-laid data networks. This low cost strategy differentiates it in such a way that other carrier types cannot compete. As time passes, more and more users will discover that VoIP offers them them the same service that they can expect from both traditional land lines and mobile carries, but at a drastically reduced price.
Slide 39
- Google Voice is essentially the cloud computing version of telephones. Users want to be able to access their content from multiple points, regardless of the medium.
Slide 42
- Apple is only said to be leading in mobile innovation because it has the largest user base, however, other devices continue to innovate past the point Apple that has (i.e. Android). Apple is a company that will inevitably suffer from cannibalisation as its customers will eventually pick up on the lack of innovation each new product they launch has (i.e. iPad is essentially a large iPhone, “major” upgrades to past iPhones involved nothing more than adding copy/paste support, etc.). I would like to take the time to note that Apple’s notorious closed operating systems have little to no affect on consumer adoption, in fact this can probably be seen as a positive characteristic as it ensures a device that runs without errors (think Facebook versus Myspace, and which provider users ultimately enjoyed).
Slide 44
- That is one cool looking graph, but all it really represents is product life cycles. Just because you are big now does not ensure that you are here to stay. I used to love my Sidekick, then I loved my Razr, then I fell in love with Palm, then my love for iPhone came about, and now my fantasies lie within BBM Messenger and RIM. People change. My generation tends to change faster.
Slide 46
- In the field of technology, innovation (namely social innovation) often overlaps. Think Facebook Connect or Retweet buttons. We want to share our lives with others (to give purpose to them I assume). Ultimately, the only service that these “solutions” provide is to publicly display our lives to others. An iPhone is a status symbol, as is our Facebook page. Is there such a thing as oversharing? Probably not as we have seen companies such as Blippy capture markets that were previously considered unheard of (share your credit card transactions with others). In the words of Mark Zuckerberg, “people are dumb fucks.”
Slide 53
- In my opinion, location awareness is the largest asset that mobile devices have to offer over more traditional computers.
Slide 54
- See the Best Buy example I used in slide 9.
Slide 59
- Mobile devices have the ability to disrupt quite a few markets because of their “real-time” characteristic. Whether it be news, social networking or directions, mobile devices can offer what you want when you want it.
Slide 62
- Smart phones: more than just a phone. Eventually we will see networks based completely around data as calls will be routed through VoIP versus traditional networks.
Slide 75
- I believe this comes down to a question of price. Users are more willing to make frequent inexpensive purchases on their mobile device than less-frequent, expensive purchases on their desktop PC. Apps for iPhones are based around a $0.99 model while desktop pc “apps” often cost much more (i.e. $30+). In other words, iPhone apps are approximately 30x more enticing than desktop apps. Why? Well, both desktop apps and mobile apps offer the same utility, with one being much cheaper than the other.
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