Mobile Internet Industry Expected to Soar

Technology experts believe the next industry transformation will occur in the mobile Internet segment. Morgan Stanley analysts expect this segment to possess the transformative power that accompanied other major tech launches such as Microsoft’s Windows 3.0 or Apple’s iPhone. The business environment is a bit different this time around but large fortunes will be won and lost as giant companies battle for market share and revenue.

According to Morgan Stanley analysts, the unique features of the mobile Internet segment (as compared to other recent tech transformations) include:

  • Faster growth rate
  • Faster adoption rates (including globally)
  • U.S. has emerged as  a global leader
  • Young but experienced business leaders are driving the trend

Three types of businesses own the mobile Internet industry:

  • Infrastructure – Semiconductors, wireless carriers, wireless equipment/​services
  • Platform – Key players include Apple, Facebook, Skype
  • Applications/​Services/​Content – Mobile operating systems, commerce systems and app creation tools

Revenues will be generated from a number of sources but Morgan Stanley analysts believe that the mobile Internet revenue mix will include more advertising in the long term. In 2007, advertising comprised 1% of global mobile Internet revenue. By 2013, the revenue mix should resemble the following:

  • Advertising 3%
  • Paid services 5%
  • Mobile eCommerce 13%
  • Data access 79%

Mobile Internet advertising spending is expected to increase because marketers will direct their budgets to media formats that have the most consumer attention. The Morgan Stanley study puts the following numbers in place when comparing time spent by U.S. consumers on various media formats to the corresponding percentages of advertising spending:

  • Consumer media time spent on print publications 12%
  • Advertiser budgets on print: 26%
  • Consumer media time spent on radio: 16%
  • Advertiser budgets on radio: 9%
  • Consumer media time spent on TV: 31%
  • Advertiser budgets on TV: 39%
  • Consumer media time spent on Internet: 28%
  • Advertiser budgets on Internet: 13%

For now, advertising accounts for 40% of revenues generated by the top 50 global Internet companies. It is not clear which of these companies will emerge to become key players in the mobile Internet world.  But as more consumers  adopt this media channel and at a faster rate, marketers will  adjust their media mix to avoid being left behind. It’s easy to see that advertising could quickly become a main revenue component for these businesses within the next few years.

[Source: Mobile Internet Report, Morgan Stanley, December 2009] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.