MOBILE IS EATING THE WORLD

June 2013

Benedict Evans@benedictevansEnders Analysis

0

50

100

150

200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Global annual unit sales (m)

Corporate PCs Consumer PCs Tablets

The state of PCs

Source: Gartner, IDC, Enders Analysis2

0

200

400

600

800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Global annual unit sales (m)

Corporate PCs Consumer PCs Tablets Smart phones

Smart phones are exploding

3 Source: Gartner, IDC, Enders Analysis

0

500

1,000

1,500

2,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Global annual unit sales (m)

Corporate PCs Consumer PCs Tablets Smart phones All mobile phones

4

More mobile growth coming

Source: Gartner, IDC, Enders Analysis

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250

500

750

1,000

1,250

1,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e

Global annual unit sales (m)

PCs Smartphones and tablets

Source: Enders Analysis5

The future is mobile

The world in 2017

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1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Population Adults Literate adults Mobile Smart phones PCs Tablets

2017 forecast base (m)

Source: GSMA, World Bank, Enders Analysis6

2012 Growth to 2017

• Mobile was always much bigger than tech, but always separate

• Smartphones mean the Technology and Mobile worlds merge

• Internet and Media are being dragged along

• Tablets accelerate the change

• This is changing everything

Fundamental change

7

Fundamental change in scale

PC industry

• 350m PCs sold in 2012

• 1.6bn units in use

• Replaced every 4-5 years

• Shared

Mobile industry

• 1.7bn phones sold in 2012

• 3.2bn mobile users

• Replaced every 2 years

• One per person

8

Fundamental change in use

PC internet

• Shared, or used at work

• Semi-portable at best

• Web and web search

Mobile internet

• Personal

• Taken everywhere

• Web, web search, apps, social, location, service integration, prediction, APIs, image recognition, NFC...

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25

50

75

100

Mar-2009 Sep-2009 Mar-2010 Sep-2010 Mar-2011 Sep-2011 Mar-2012 Sep-2012 Mar-2013

Microsoft share of connected device unit sales (%)

Source: Enders Analysis10

The irrelevance of Microsoft

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25

50

75

100

Units Revenue Operating Profit

Global handset industry share, Q1 2013 (%)

Apple Samsung All other

Source: Apple, Samsung, Enders Analysis11

Dominance of Apple & Samsung

Industry scale

Mobile networksAdvertising

Mobile phonesPCs

AppleBooks

Online advertisingAmazonGoogle

Recorded musicFacebook

0 250 500 750 1,000 1,250

2012 global revenue ($bn)

Source: Zenith, Apple, Amazon, Google (excludes Motorola Mobility), Facebook, Enders Analysis12

0

15

30

45

60

Jun-2010 Dec-2010 Jun-2011 Dec-2011 Jun-2012 Dec-2012

Global unit sales (m)

Laptops Desktops Tablets

Tablets overtaking PCs

13 Source: Gartner, IDC, Enders Analysis

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10

20

30

40

50

Jun-2010 Dec-2010 Jun-2011 Dec-2011 Jun-2012 Dec-2012

Global unit sales (m)

iPad Branded Android Kindle Fire Nexus

120m tablets in 2012 - 66m iPads

Source: Apple, Google, Asus, Enders Analysis14

• Well over 200m tablets will be sold in 2013

• Driven by size and price - 7” screens, $300 and (far) below

• A flood of cheap generic Chinese Androids - perhaps 125m units in China alone this year, with prices under $150

• Not clear these compete directly with Apple, Samsung & Google

Tablets in 2013

15

0

25

50

75

100

Jan 2009 Dec 2009 Dec 2010 Dec 2011 Dec 2012

US Google search volume (indexed)

kindle kindle fire nook

Weakening interest in ereaders

Source: Google16

iPad dominates use everywhere

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20

40

60

80

100

US UK Germany France Japan China

Share of tablet web traffic, February 2013 (%)

iPad Android Kindle Fire Nook

Source: Adobe17

Amazon

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70

1995 1997 1999 2001 2003 2005 2007 2009 2011

Annual results ($bn)

Revenue Net income

Source: Amazon18

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2

4

6

8

10

Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13

Amazon North American revenue ($bn)

Media revenue General merchandise & other revenue

Source: Amazon19

21st Century Sears Roebuck

0%

1%

2%

4%

5%

6%

7%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Ecommerce as % US retail revenue

Much more ecommerce to come

Source: BLS, Enders Analysis20

‘Four horsemen’

Apple Google Facebook Amazon

21

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200

400

600

800

Mar-10 Sept-10 Mar-11 Sept-11 Mar-12 Sept-12 Mar-13

Active users (m)

Apple iOS Google Android Facebook mobile users Amazon accounts

22 Source: Apple, Google, Facebook, Amazon, Enders Analysis

Ecosystem sizes

• Apple and Google’s Android have won

• Unlikely that other platforms will be relevant (Windows Phone, Blackberry, other newer efforts)

• But share of value and use between Apple and Android is fluid

• Google’s control of Android is partial - Amazon Kindle, Chinese Android, Samsung intentions unclear

• Facebook and Amazon trying to extract value23

Platform wars

24

For Apple, the ecosystem is what

sells hardware

For Amazon, Google and Facebook, the experience on the

phone is what drives engagement with all

their services

Ecosystem is the key leverage point