1. 2013
-­‐
The
Year
Ahead
In
Mobile
Alex
Cocotas
Research
Analyst,
Business
Insider
Intelligence

2. Now
that
the
year-­‐end
2012
data
is
in,
where’s
the
mobile
industry
headed
this
year?

3. First, some context

4. As
of
year-­‐end
2012:
2.5+
billion
people
online
Global)Internet)Popula4on)
3,000"
2,500"
2,000"
(millions))
1,500"
1,000"
500"
0"
1990"1991"1992"1993"1994"1995"1996"1997"1998"1999"2000"2001"2002"2003"2004"2005"2006"2007"2008"2009"2010"2011"2012"
Source:(Interna-onal(Communica-on(Union,(Google,(Internet(World(Stats,(BI(Intelligence(es-mates(

5. ~35%
of
global
population
Global&Internet&Popula*on&
8,000"
7,000"
6,000"
5,000"
(millions)&
4,000"
3,000" Global&Popula*on&
2,000"
1,000"
Internet&Popula*on&
0"
1990"1991"1992"1993"1994"1995"1996"1997"1998"1999"2000"2001"2002"2003"2004"2005"2006"2007"2008"2009"2010"2011"2012"
Source:(Interna-onal(Communica-on(Union,(Google,(Internet(World(Stats,(BI(Intelligence(es-mates((

6. Mobile
is
already
1/7
of
global
Internet
traffic
and
growing
its
share
quickly

7. Mobile
now
accounts
for
15%
of
global
Internet
traffic
Global(Internet(Traffic:(Mobile(vs.(Desktop(
100%#
90%#
Desktop(
80%#
70%#
60%#
50%#
40%#
30%#
20%# 15%(
Mobile(
10%# 4%(
1%(
0%#
Dec#08# Apr#09# Aug#09# Dec#09# Apr#10# Aug#10# Dec#10# Apr#11# Aug#11# Dec#11# Apr#12# Aug#12# Dec#12#
Source:(StatCounter(

8. Mobile
on
pace
to
top
25%
of
traffic
by
year-­‐end
2013
Mobile#Internet#As#A#Percentage#Of#Total#Internet#Traffic#
100%#
90%#
80%#
70%#
60%#
50%#
40%#
30%#
20%#
15%#
10%#
4%#
0%#
Dec#10# Apr#11# Aug#11# Dec#11# Apr#12# Aug#12# Dec#12#
Source:(StatCounter(

9. Device
sales
are
pushing
people
onto
the
mobile
Internet

10. Smartphone
growth
continued,
while
PC
shipments
actually
declined
last
year
Global)Internet)Device)Shipments)
1,400,000,000"
1,200,000,000"
1,000,000,000"
Tablets)
800,000,000"
600,000,000"
Smartphones)
400,000,000"
200,000,000"
Personal)Computers)
0"
2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012"
Source:(Gartner,(IDC,(Strategy(Analy5cs,(company(filings,(BI(Intelligence(es5mates(

11. And
the
disparity
will
only
grow
Global)Internet)Device)Shipments)Forecast)
3,000,000,000"
2,500,000,000"
Tablets)
2,000,000,000"
1,500,000,000"
We
are
here
1,000,000,000" Smartphones)
500,000,000"
Personal)Computers)
0"
2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013E" 2014E" 2015E" 2016E"
Source:(Gartner,(IDC,(Strategy(Analy5cs,(company(filings,(BI(Intelligence(es5mates(

12. Tablets
are
poised
to
take
a
huge
leap
this
year

13. U.S.
tablet
penetration
now
~25%,
so
plenty
of
room
to
grow
U.S+Smartphone+and+Tablet+Owners+
140"
120"
100"
(millions)+
80"
60"
Smartphone+Owners+
40"
20"
Tablet+Owners+
0"
May+10" Aug+10" Nov+10" Feb+11" May+11" Aug+11" Nov+11" Feb+12" May+12" Aug+12" Nov+12"
Source:(Pew(Research(Center,(comScore,(U.S.(census(bureau(
Note:(Includes(smartphones(owners(over(age(of(13(and(tablet(owners(over(the(age(of(18(

14. But
…
unlike
smartphones,
tablet
sales
aren’t
usually
subsidized
by
carriers

15. That’s
why
current
owners
tend
to
be
moneyed
U.S."Tablet"Penetra6on"By"Household"Income"
50%#
47%#
45%#
40%#
36%#
%"of"U.S."adults"that"own..."
35%#
32%#
30%#
27%#
25%#
22%#
20%#
20%#
16%#
15%#
10%# 10%#
10%# 9%#
8%# 8%#
5%# 4%# 4%#
3%# 3%#
0%#
Nov#10# Dec#11# Jan#12# Aug#12#
Source:(Pew( <$30,000# $30,000<$49,000# $50,000<$74,999# $75,000+#

16. And
a
bit
older
…
U.S."Tablet"Penetra6on"By"Age"
35%#
31%#
30%#
27%# 27%#
25%#
%"of"U.S."adults"that"own..."
25%# 24%#
20%#
15%#
15%# 14%#
13%#
10%#
10%#
8%#
7%#
6%# 6%#
5%#
5%# 4%#
2%#
0%#
Nov#10# Dec#11# Jan#12# Aug#12#
Source:(Pew( 18829# 30849# 50864# 65+#

17. Thankfully,
tablets
and
mini-­‐tablets
are
getting
cheaper
…
Even
Apple
is
price-­‐cutting
iPad%Average%Selling%Price%
$700#
$600#
$500#
$400#
$300#
$200#
$100#
$0#
Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012# Q4#2012#

18. Lower
prices
will
help
tablet
sales
skyrocket
Tablet)Shipments)Forecast)
500"
450"
400"
350"
300"
(millions))
250"
200"
We
are
here
150"
100"
50"
0"
2010" 2011" 2012E" 2013E" 2014E" 2015E" 2016E"

19. And
tablet
sales
are
just
getting
started
globally
Global&Tablet&Shipments&
40"
35"
30"
25"
(millions)&
20"
15"
Global&
10"
5"
China&
0"
1Q11" 2Q11" 3Q11" 4Q11" 1Q12" 2Q12" 3Q12"
Source:(Analysys(Interna1onal,(iSuppli,(IDC,(BII(es1mates(

20. In
2013,
the
mobile
growth
story
will
shift
to
the
developing
world

21. Mobile
is
driving
Internet
penetration
in
China
Chinese'Internet'Users'
600"
Total'
500"
Mobile'
400"
(millions)'
300"
200"
100"
0"
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"
Source:(China(Internet(Network(Informa5on(Center(

22. (Which
stands
at
42
percent)
China&Internet&Penetra,on&
50%#
45%#
42%#
40%#
35%#
30%#
25%#
20%#
15%#
10%#
9%#
5%#
0%#
Dec#05#Jun#06#Dec#06#Jun#07#Dec#07#Jun#08#Dec#08#Jun#09#Dec#09#Jun#10#Dec#10#Jun#11#Dec#11#Jun#12#Dec#12#
Source:(CNNIC(

23. It
is
now
the
world’s
largest
smartphone
market
Global%Smartphone%Shipments%
!180,000!!
!160,000!!
!140,000!!
!120,000!!
(thousands)%
!100,000!!
!80,000!! Rest%Of%The%World%
!60,000!!
!40,000!!
!20,000!! China%
!"!!!!
1Q11! 2Q11! 3Q11! 4Q11! 1Q12! 2Q12! 3Q12!
Source:(Gartner,(IDC,(Strategy(Analy5cs,(Canalys,(BII(es5mates(

24. Android
is
winning
China’s
platform
race
Chinese'Smartphone'Market'Share'By'Pla9orm'
100%#
Other'
90%#
80%# Symbian'
70%# Apple'
60%#
50%#
40%# Android'
30%#
20%#
10%#
0%#
Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Analysys(Interna1onal(

25. Which
is
bad
news
for
Apple

26. Because
the
next
wave
of
adoption
will
come
from
countries
like
China
BRICs:)Mobile)and)Smartphone)Penetra:on)
1,400% 1,344%
1,241%
1,200%
1,090%
1,000%
1,090%
800%
(Millions))
600%
400%
259%
222% 228%
197%
200% 142%
48% 33% 14%
0%
China% India% Russia% Brazil%
Popula>on% Mobile%Phone%Subscrip>ons% Ac>ve%Smartphones%(YearJEnd%2012e)%
Sources:)Carriers,)governments,)Flurry,)TomiAhonen)Consul9ng,)Umeng,)Cybermedia)Research,)BII)Es9mates)

27. Large
populations,
low
penetration
…
but
less
money
BRICs:)Smartphone)Penetra'on)As)%)Of)Mobile)Subscrip'ons)
25%$
Penetra'on)As)%)Of)Mobile)Connec'ons,)Year7End)2012)Es'mate))
20%$
20%$
15%$ 14%$
10%$
5%$ 5%$
5%$
0%$
China$ Russia$ India$ Brazil$
Sources:)Carriers,)governments,)Flurry,)TomiAhonen)Consul9ng,)Umeng,)Cybermedia)Research,)BII)Es9mates)

28. And
iPhones
aren’t
getting
any
cheaper
iPhone'Average'Selling'Price'
$700$
$650$
$600$
$550$
$500$
$450$
$400$
Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$ Q1$ Q2$ Q3$ Q4$
2008$ 2008$ 2008$ 2009$ 2009$ 2009$ 2009$ 2010$ 2010$ 2010$ 2010$ 2011$ 2011$ 2011$ 2011$ 2012$ 2012$ 2012$ 2012$

29. Which
is
what
is
driving
this…

30. The
shift
to
low-­‐end
emerging
markets
is
crucial
because
…

31. Technology
adoption
growth
slows
after
hitting
the
50%
penetration
tipping
point

32. Because
under-­‐penetrated
segments
are
older
and
less
wealthy
Smartphone+Penetra-on+By+Age+And+Income+(U.S.)+
90%$
81%$
80%$ 76%$
74%$
72%$
70%$ 67%$
60%$ 61%$
59%$ 58%$
60%$
51%$
50%$ 47%$ 46%$
42%$
40%$
34%$
31%$
30%$ 25%$
22%$
20%$ 16%$
10%$
0%$
Ages$18$1$24$ Ages$25$1$34$ Ages$35$1$44$ Ages$45$1$54$ Ages$55$1$64$ Ages$65+$
<$50k$ 50k$1$100k$ 100k+$
Source:(Nielsen(Mobile(Insights,(Q1(2012(

33. Even
though
it
may
look
like
upside
is
still
huge
for
phone
manufacturers
U.S&Mobile&Market&Share&By&PlaAorm&
250"
200"
150"
Non8Smart&
Total&
Mobile&
Users&
(millions)&
100"
Android&
50"
Apple&
Blackberry&
0" Other& Microso,&
Q4"2009" Q1"2010" Q2"2010" Q3"2010" Q4"2010" Q1"2011" Q2"2011" Q3"2011" Q4"2011" Q1"2012" Q2"2012" Q3"2012" Q4"2012"
Source:(comScore(

34. (as$a$percentage$of$the$mobile$popula9on)$
0%#
10%#
20%#
30%#
40%#
50%#
60%#
Jan#10#
Feb#10#
18%$
Mar#10#
Apr#10#
May#10#
Source:(comScore(
Jun#10#
Jul#10#
Aug#10#
Sep#10#
Oct#10#
Nov#10#
Dec#10#
Jan#11#
Feb#11#
Mar#11#
Apr#11#
May#11#
Jun#11#
Jul#11#
Aug#11#
Sep#11#
Oct#11#
Nov#11#
Dec#11#
Jan#12#
U.S.$Smartphone$Penetra9on$
Feb#12#
Mar#12#
Apr#12#
May#12#
Jun#12#
Jul#12#
Aug#12#
Sep#12#
Oct#12#
The
U.S.
has
already
reached
that
point
53%$
Nov#12#

35. So
have
the
largest
European
markets
European)Smartphone)Penetra/on)
70%$ (%)of)mobile)phone)users,)age)13+))
63%$ 62%$
60%$
55%$
51%$ 51%$
50%$ 48%$ 48%$ 48%$
42%$ 42%$
40%$ 38%$ 38%$
34%$ 35%$ 34%$
31%$
30%$
26%$ 25%$
20%$
10%$
0%$
EU5$ Spain$ UK$ France$ Italy$ Germany$
Source:(comScore( Dec$10$ Oct$11$ Oct$12$

36. And
penetration
will
slow
as
a
result
U.S.%Smartphone%Market:%Year9Over9Year%Net%Adds%
40"
35"
30"
25"
Users%
Added% 20"
(millions)%
15"
10"
5"
0"
Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4" Q1" Q2" Q3" Q4"
2008" 2008" 2008" 2008" 2009" 2009" 2009" 2009" 2010" 2010" 2010" 2010" 2011" 2011" 2011" 2011" 2012" 2012" 2012" 2012"
Source:(comScore,(Nielsen,(BI(Intelligence(es4mates(

37. But
globally,
it’s
still
early
days
Global!Smartphone!Penetra>on!Forecast!
!2,500!!
!2,000!!
!1,500!! Feature'Phone'Sales'
Global!Mobile!
Phone!Sales!
(millions)!
!1,000!!
!500!! Smartphone'Sales'
!"!!!!
2010! 2011! 2012! 2013! 2014! 2015! 2016!

38. In
the
developed
world,
the
focus
will
be
on
monetizing
users

39. Over
50%
of
U.S.
mobile
consumers
have
downloaded
apps,
browsed
mobile
Web
U.S.%Mobile%Content%Usage%
80%#
Sent%Text%Message%
70%#
60%#
%%of%mobile%populaCon%that%has...%
Used%Downloaded%Apps%
50%#
Used%Browser%
Accessed%Social%Network%
40%# %Or%Blog%
Played%games%
30%#
Listened%to%music%%
20%#
10%#
0%#
Feb# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May#June#July# Aug# Sep# Oct# Nov#
10# 10# 10# 10# 10# 10# 10# 10# 10# 10# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12#
Source:(comScore(

40. For
now,
U.S.
mobile
audiences
are
still
growing
Top(Mobile(Categories(By(Audience(Growth,(Oct.(2011(vs.(Oct(2012((U.S.)((
40,000$
35,000$
30,000$
Audience(Size((thousands)(
25,000$
60%$
20,000$ 51%$
56%$
46%$
15,000$
46%$
47%$
62%$ 48%$
10,000$ 53%$
50%$
5,000$
0$
Books$and$ Retail$ Payments$ Lifestyle$ Credit$cards$ Men's$ Travel$Service$ Beauty$and$ Kids$and$ Shopping$
Magazines$ magazines$ fashion$ Family$ Guides$
Source:(comScore(
Note:(Includes(both(mobile(web(and(app(audience(
Oct.$2011$ Oct.$2012$

41. Even
among
the
largest
mobile
categories
Top(Mobile(Categories(By(Audience(Size,(Oct.(2011(vs.(Oct(2012((U.S.)((
100,000$
90,000$
80,000$
25%$
70,000$
Audience(Size((thousands)(
60,000$ 32%$
30%$
26%$
50,000$
26%$
40,000$ 28%$
40%$
30%$
30,000$ 37%$ 36%$
20,000$
10,000$
0$
Weather$ Search$ Maps$ News$ Sports$ Entertainment$ Banking$ Movie$Info$ Tech$news$ Restaurant$
News$ Info$
Source:$comScore$
Note:$Includes$both$mobile$web$and$app$audience$ Oct.$2011$ Oct.$2012$

42. Mobile
consumers
glued
to
games,
entertainment,
and
social
networks
Global&iOS&&&Android&Time&Spent&Per&App&Category&
Other&
11%&
U<li<es&
10%&
Games&
43%&
Entertainment&
10%&
Social&Networking&
26%&
Source:
Flurry,
November
2012

43. In
2013,
we’ll
top
1
million
apps
on
Android
and
iOS
Available(Apps,(iOS(vs.(Android((thousands)(
800"
700"
650"
600"
500"
425"
400"
350"
250" 250"
200"
160"
80"
28" 20"
2"
Mar"09" Dec"09" Aug"10" May"11" Jul"11" Oct"11" Jun"12" Jan"13"
Android" iOS"
Source:(Apple,(Google,(Flurry,(news(reports"

44. Downloads
continue
to
grow
frantically
Apple%App%Store%Downloads%
45,000,000,000"
40,000,000,000"
35,000,000,000"
30,000,000,000"
25,000,000,000"
20,000,000,000"
15,000,000,000"
10,000,000,000"
5,000,000,000"
0"
7/1/08"
9/1/08"
1/1/09"
3/1/09"
5/1/09"
7/1/09"
9/1/09"
1/1/10"
3/1/10"
5/1/10"
7/1/10"
9/1/10"
1/1/11"
3/1/11"
5/1/11"
7/1/11"
9/1/11"
11/1/11"
1/1/12"
3/1/12"
5/1/12"
7/1/12"
9/1/12"
1/1/13"
11/1/08"
11/1/09"
11/1/10"
11/1/12"

45. And
time
spent
in
apps
continues
to
skyrocket
U.S.(Web(vs.(Mobile(App(Consump:on(
140#
120# 127#
100#
Minutes(Per(Day(
94#
80#
70# 72# 70#
60# 66#
40#
20#
0#
Dec#2010# Dec#2011# Dec#2012#
Web#Browsing# Mobile#Apps#
Source:(comScore,(Alexa,(U.S.(Bureau(Of(Labor(Sta7s7cs,(Flurry(Analy7cs(

46. Mobile
gaming
population
has
reached
~35%
U.S."Mobile"Gaming"Popula-on"
40%#
%"of"mobile"popula-on"that"has"played"a"game"on"their"phone"
35%#
30%#
25%#
20%#
15%#
10%#
5%#
0%#
Feb# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May# Jun# Jul# Aug#Sept# Oct# Nov# Dec# Jan# Feb# Mar# Apr# May#June#July# Aug# Sep# Oct# Nov#
10# 10# 10# 10# 10# 10# 10# 10# 10# 10# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 11# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12# 12#
Source:(comScore(

47. (Games
suck
up
the
most
user
time)
Global&iOS&&&Android&Time&Spent&Per&App&Category&
Other&
11%&
U<li<es&
10%&
Games&
43%&
Entertainment&
10%&
Social&Networking&
26%&
Source:
Flurry,
November
2012

48. (And
are
the
biggest
money
makers)

49. But,
games
aside,
there’s
a
problem
with
the
whole
mobile
story
…
where’s
the
money?

50. Mobile
app
revenues
are
smaller
than
you
think
Apple)App)Store)Revenues)
$4,500#
$4,000#
$3,500#
$3,000#
(millions))
$2,500#
$2,000#
$1,500#
$1,000#
$500#
$0#
2008# 2009# 2010# 2011# 2012#
Source:(news(reports,(company(releases#

51. ~$4
billion
across
over
800,000
apps
is
significant
but
won’t
create
the
next
generation
of
Internet
giants

52. Most
app
downloads
are
free
Mobile'App'Store'Downloads,'Free'vs.'Paid:'2011'
Total'Downloads'
Free$Downloads$
89%$
Source:(Garner,(September(2012(

53. So
this
…
Instagram&Es5mated&Users&
100,000"
90,000"
80,000"
70,000"
60,000"
Total&&
Users& 50,000"
(thousands)&
40,000"
30,000"
20,000"
10,000"
0"
3/2011" 4/2011" 5/2011" 6/2011" 7/2011" 8/2011" 9/2011" 10/2011"11/2011"12/2011" 1/2012" 2/2012" 3/2012" 4/2012" 5/2012" 7/2012" 7/2012" 8/2012" 9/2012"
Source:(news(reports,(company(releases,(BII(Es6mates(

54. …
and
this
…
Foursquare+Users+
20,000"
17,500"
15,000"
12,500"
(thousands)+
10,000"
7,500"
5,000"
2,500"
0"
Dec"09" Mar"10" Jun"10" Sept"10" Dec"10" Mar"11" Jun"11" Sept"11" Dec"11" Mar"12"
Source:(news(reports,(company(releases(

55. Have
not
necessarily
translated
to
$$$

56. The
mobile
platform
wars
play
a
role
in
the
monetization
gap

57. In
terms
of
operating
systems,
mobile
is
a
two-­‐horse
race
Global'Mobile'Pla:orm'Market'Share'
100%#
90%#
Other'
80%#
70%#
60%#
50%# Windows'
Blackberry'
40%#
Apple'
30%#
20%# Android'
10%#
0%#
Q1#2009# Q2#2009# Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Gartner,(IDC,(Strategy(Analy5cs,(BI(Intelligence(es5mates,(and(company(filings#

58. Android
has
by
far
the
largest
platform
for
smartphones
Smartphone'Market'Share'By'OS'(Global)'
100%#
Microso8'
90%# Other'
80%#
Symbian'
70%#
60%#
Share'of' 50%# Blackberry'
Global'Unit'
Sales' Apple'
40%#
30%#
20%# Android'
10%#
0%#
Q3#2009# Q4#2009# Q1#2010# Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Gartner(

59. Apple
dominates
the
tablet
market,
with
Android
making
a
run
Tablet%Market%Share%By%Pla9orm%
100%# Blackberry%
Nook%
90%# Kindle%
Fire%
80%#
Android%
70%#
60%#
50%#
40%# iPad%
30%#
20%#
10%#
0%#
Q2#2010# Q3#2010# Q4#2010# Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Es+mates(based(on(informa+on(from(IDC,(Strategy(Analy+cs,(and(company(filings#

60. So
Apple
users
are
a
minority
…
but
its
platform
pays
4X
better
Cross%Pla)orm+Revenues:+iOS+vs.+Android+
iOS+
Android'
24%'
Source:(Flurry(Analy/cs,(June(2012(

61. Which
is
why
it
has
developer’s
attention
Developer'Interest'In'PlaBorms'
100%#
iPhone'
90%#
iPad'
80%#
Android'Phone'
70%#
Android'Tablet'
HTML5'
60%#
50%#
40%# Windows'8'Tablets'
Windows''
30%# Phone'
20%#
Kindle'Fire'
10%#
Blackberry'
0%#
1Q11# 2Q11# 3Q11# 4Q11# 1Q12# 2Q12# 3Q12# 4Q12#
Source:(Appcelerator(

62. And
why
Apple
has
dominated
app
revenues
Mobile%App%Revenue%By%Pla<orm%
$4,000#
$3,500#
Other%
$3,000#
Android%%
$2,500#
(millions)%
$2,000#
$1,500#
$1,000#
Apple%iOS%
$500#
$0#
2008# 2009# 2010# 2011#
Source:(iSuppli,(Forrester(Research,(company(releases,(BII(es8mates(

63. And
has
the
most
new
project
starts
New&Project&Starts,&iOS&vs.&Android&
20$
18$
16$ 31%$
14$ 27%$
25%$
12$
Total&New&
Project&Starts& 10$
(thousands)& 27%$
8$ 37%$
69%$
6$ 75%$ 73%$
4$ 73%$
63%$
2$
0$
1Q11$ 2Q11$ 3Q11$ 4Q11$ 1Q12$
iOS$ Android$
Source:(Flurry(Analy/cs,(January(20116March(2012(

64. Android’s
lagging
monetization
has
partly
been
a
function
of
its
fragmentation
problem
Android'Pla+orm'Distribu2on,'September'2012'
Jelly&Bean& Donut& Eclair&
1%& 1%& 4%&
Froyo&
14%&
Ice&Cream&Sandwich&
21%&
Honeycomb&
2%&
Gingerbread&
58%&
Source:(developer.android.com&

65. Android
can’t
get
its
users
to
update
to
more
modern
versions
of
the
system

66. But
in
2013
Android
will
make
headway
on
this,
and
it
already
has
Android'Pla+orm'Distribu2on,'January'2013'
Jelly&Bean& Eclair&
10%& Donut& 2%&
0%& Froyo&
9%&
Ice&Cream&Sandwich&
29%&
Gingerbread&
48%&
Honeycomb&
2%&
Source:(developer.android.com&

67. Expect
the
Android/iOS
monetization
gap
to
narrow

68. However,
because
of
Android’s
massive
audience
base,
revenue-­‐per-­‐user
will
still
be
low

69. Mobile
advertising
will
grab
the
spotlight
in
2013

70. Many
look
at
this
U.S.$Consumer$Media$Consump2on$Share$
50%$
45%$
44%$
45%$ 43%$
42%$
40%$
35%$
30%$
26%$ 26%$
26%$
25%$
25%$
20%$
17%$
16%$
Tripled
since
2009
15%$
14%$
15%$
12%$
9%$ 9%$
10%$ 8%$ 8%$
7%$ 7%$ 7%$
6%$ 6%$
5%$
4%$
5%$
0%$
TV$ Online$ Radio$ Mobile$ Print$ Other$
Source:(eMarketer,(October(2012( 2009$ 2010$ 2011$ 2012$

71. And
this
2011$U.S.$Ad$Spending$vs.$Consumer$Time$Spent$By$Media$
42%$ 43%$
25%$ 26%$
22%$
9%
gap
15%$
11%$ 10%$
7%$
1%$
TV$ Print$ Web$ Radio$ Mobile$
Ad$Spend$Per$Media$ Time$Spent$Per$Media$
Source:
Mary
Meeker
(KPCB),
eMarketer,
IAB

72. And
assume
mobile
advertising
will
skyrocket

73. But
it’s
been
slow
to
scale
Compara've*U.S.*Adver'sing*Media*
Annual*$*Revenue*Growth*(First*5*Years)*
$5,000%
$4,621%
$4,500%
$4,000%
$3,698%
$3,500%
$3,000%
$2,500%
$2,162% $2,162%
$1,920%
$2,000%
$1,500%
$1,171%
$1,012%
$907%
$1,000% $806%
$500% $358% $392%
$267%
$80% $55% $160%
$0%
Year%1% Year%2% Year%3% Year%4% Year%5%
Broadcast%TV% Mobile% Internet%
Source:((IAB,(McCann1Erickson,(BIA1Kelsey,(BII(es9mates( Note:(Adjusted(for(infla9on(

74. And
it’s
still
a
pretty
small
slice
of
digital
U.S.'Digital'Adver7sing'Revenues'
$40#
Mobile'
$35#
$30#
$25#
(billions)'
$20#
$15#
$10#
$5#
$0#
2007# 2008# 2009# 2010# 2011# 2012E#
Source:((IAB,(BIA-Kelsey,(BII(es2mates(

75. But
maybe
there’s
a
good
reason
for
that
revenue
gap
…

76.
The
screen
is
really
small

77. That
drags
on
mobile
ad
prices,
or
CPMs
Effec%ve'CPM,'Desktop'vs.'Mobile'
$3.50&
$0.75&
Desktop&Internet& Mobile&Internet&
Source:(comScore,(Vivaki,(Mobclix(Exchange(

78. The
ecosystem
is
confusing

79. And
incredibly
fractured

80. For
now,
the
lion’s
share
of
mobile
ad
spend
is
still
going
to
search
Es#mated)2012)Mobile)Ad)Spend)By)Format)
Messaging'
9%'
Search'
49%'
Display'
42%'
Source:(eMarketer,(September(2012(

81. (Which
means
Google
…
but
even
Google
has
mobile
headaches)
Global&Mobile&Search&Market&Share&
100%#
Google&
90%#
80%#
70%#
60%#
50%#
40%#
30%#
20%#
10%# bing&
Yahoo!&
0%#
Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec# Mar# Jun# Sep# Dec#
08# 09# 09# 09# 09# 10# 10# 10# 10# 11# 11# 11# 11# 12# 12## 12# 12#
Source:(Global(StatCounter(

82. Year-­‐on-­‐year,
Google
CPC
growth
negative,
partly
because
of
cheap
mobile
clicks
Google&CPC&Growth&
15%%
10%%
5%%
0%%
!5%%
!10%%
!15%%
!20%%
4Q09% 1Q10% 2Q10% 3Q10% 4Q10% 1Q11% 2Q11% 3Q11% 4Q11% 1Q12% 2Q12% 3Q12% 4Q12%
Source:(Company(data,(Evercore(Group(LLC(Research(

83. A
few
big
companies
with
good
mobile
ad
formats
can
make
mobile
ads
pay
Facebook'Ad'Revenues'
$1,200#
$1,000#
$800#
Total'Ad'
Revenues' $600#
(millions)'
$400#
$200# Mobile'
$0#
1Q10# 2Q10# 3Q10# 4Q10# 1Q11# 2Q11# 3Q11# 4Q11# 1Q12# 2Q12# 3Q12#

84. But
until
the
industry
streamlines
and
consolidates,
smaller
publishers
won’t
reap
the
benefits

85. There
are
some
encouraging
signals
…

86. Machine-­‐buying
and
automated
real-­‐time
bidding
may
help
mobile
advertising
scale
RTB'Digital'Display'Ad'Spend'To'Hit'$6'Billion'In'2015'(PC'and'Mobile)'
!$8,000!!
!$7,000!!
!$6,000!!
Millions'Of'USD''
!$5,000!!
!$4,000!!
!$3,000!!
!$2,000!!
!$1,000!!
!$#!!!!
2010! 2011! 2012E! 2013E! 2014E! 2015E! 2016E!
Source:(eMarketer(

87. More
mobile
video
ads
and
location-­‐based
ads
will
lift
CPMs
CPMs%For%Selected%Mobile%Ad%Pla3orms%
xAd!local! !$3.50!!
LSN!Mobile!local!ads!! !$5.00!!
Adsmobi!video!ads! !$5.00!!
Flurry!video!ads! !$10.00!!
!$(!!!! !$2.00!! !$4.00!! !$6.00!! !$8.00!! !$10.00!! !$12.00!!
Source:(Ad(pla.orms,(BII(Research,(Greg(Sterling,(Opus(Research(

88. More
opportunities
for
TV-­‐style
video
ads
as
consumers
watch
more
and
longer
videos
Time'Watched'By'Video'Length'And'Device'
100%$
90%$
80%$
Percent'Of'All'Hours'Watched'
70%$
60%$
50%$
94%$
40%$
71%$
30%$ 60%$
48%$
20%$
10%$
0%$
Desktop$ Smartphone$ Tablet$ Connected$TV$
Video'Length'
>$10$min$ 6$to$10$min$ 3$to$6$min$ 1$to$3$min$ <$1$min$
Source:(Ooyala,(Q3(2012(

89. Tablets
provide
a
boost
to
mobile
ad
prices
Tablets(Have(Edge(Over(Smartphones(on(CPC(For(Search(Ads(
100%#
90%#
80%#
70%#
CPC#As#Percentage#of#Desktop##
60%#
50%#
40%#
30%#
20%#
10%#
0%#
March# April# May# June## July# August#
Source:(Performics(

90. Meanwhile,
the
mobile
ad
industry
is
just
starting
to
consolidate
and
simplify
…

91. So,
in
revenue
terms,
“Freemium”
and
in-­‐app
commerce
remains
the
top
app
business
model

92. But
advertising
is
now
the
most
popular
monetization
tool
%"Of"Developers"Who"Use"Following"Mone6za6on"Models"
40%#
38%#
35%# 34%#
33%#
32%#
30%#
26%#
25%#
25%#
20%# 19%#
18%#
15%#
12%# 12%#
10%#
5%#
0%#
Adver1sing# Pay#Per#Download# In>App#Purchases# Freemium# Subscrip1ons#
Jan>12# Jan>13#
Source:(Developer(Economics(2013(

93. What
are
other
trends
to
watch
in
2013?

94. Mobile
payments
are
growing
exponentially
PayPal&Mobile&Payments&Processed&
$16,000#
$14,000#
$12,000#
$10,000#
Total&&
Payment&
$8,000#
Volume&
(millions)&
$6,000#
$4,000#
$2,000#
$0#
2008# 2009# 2010# 2011# 2012#

95. Now
10
percent
of
PayPal’s
payments
processed
PayPal'Payments'Processed'
$150,000#
Mobile'
$120,000#
$90,000#
Total''
Payment'
Volume'
(millions)'
$60,000#
$30,000#
$0#
2008# 2009# 2010# 2011# 2012#

96. Square
now
at
over
$25
million
a
day
Square(Es9mated(Daily(Payment(Volume(and(Revenues(
$30,000#
$25,000#
$20,000#
Payment(Volume(
(Thousands)(
$15,000#
$10,000#
$5,000#
Revenues(
$0#
3/11# 4/11# 5/11# 6/11# 7/11# 8/11# 9/11# 10/11#11/11#12/11# 1/12# 2/12# 3/12# 4/12# 5/12# 6/12# 7/12## 8/12# 9/12# 10/12#11/12#
Source:(news(reports,(company(releases#

97. Payments
should
get
a
boost
from
increased
mobile
traffic
to
ecommerce
sites
Ecommerce#Website#Traffic#By#Device#
100%#
Tablet#
90%# Smartphone#
80%#
70%#
60%#
50%# PC#
40%#
30%#
20%#
10%#
0%#
Q1#2011# Q2#2011# Q3#2011# Q4#2011# Q1#2012# Q2#2012# Q3#2012#
Source:(Monetate(

98. Tablet
shoppers
boost
ecommerce
because
they
tend
to
complete
purchases
on
their
device
Mobile'Shoppers'
(Percentage'of'owners'that'have'made'a'purchase'on'their'device)'
55%#
28%#
Tablets# Smartphones#
Source:(Adobe,(Nov.0Dec.(2012(

99. And
Because
They
Are
Engaged
Shoppers
Tablet"Shoppers"Are"Looking"For"Bargains,"But"Also"Rich"
Product"Images"
53%$
%"Of"Shoppers"On"Tablet"Apps"Who"Think"Following"App"Characteris;c"Is"Important""
52%$
52%$
51%$
50%$
49%$
49%$
48%$
48%$
47%$ 47%$
47%$
46%$
45%$
44%$
Support$for$loyalty$ Support$for$couponing$ Ability$to$purchase$directly$ Images$and$slideshows$of$ Money$saving$offers$
programs$ from$the$app$ products$at$different$angles$
Source:(Adobe,(Nov.0Dec.(2012((

100. Not
all
ecommerce
mobile
volume
is
cannibalized
from
desktop,
at
eBay
1/3
of
it
is
incremental
Mobile'Transac.on'Volume*'Grows'On'eBay'To'13%'Of'Total'
100%# 2%# 4%#
5%#
9%#
90%#
80%#
70%#
60%#
50%#
40%#
30%#
20%#
10%#
0%#
2011# 2012e#
Desktop#Volume# Mobile#Volume#Cannibalized#From#Desktop# Incremental#Mobile#Volume#
Sources:)eBay,)Morgan)Stanley)Research)*Volume)is)Gross)Merchandise)Value)(GMV),)or)value)of)all)merchandise)transacted)))

101. 2013-­‐
THE
BOTTOM
LINE
• Tablet
sales
make
a
huge
leap
this
year,
driven
by
falling
prices
and
the
growth
of
mini-­‐tablets.
• Smartphone
growth
slows
in
the
West
with
huge
consequences
for
platform
operators,
handset
manufacturers,
and,
eventually,
app
developers.
• Mobile
apps
have
yet
to
effectively
monetize
a
huge
user
base
and
will
refocus
on
monetization
strategies.
• Mobile
advertising
needs
to
consolidate
and
streamline
if
smaller
mobile
properties
are
to
rely
on
it.

102. Thanks!