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Through the Mobile Looking Glass The Connected World Through the Mobile Looking Glass The Transformative Potential of Mobile Technologies The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for- profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep in sight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable compet itive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 78 offices in 43 countries. For more information, please visit bcg.com. The Connected World Through the Mobile Looking Glass The Transformative Potential of Mobile Technologies David Dean, Mark Louison, Hajime Shoji, Sampath Sowmyanarayan, and Arvind Subramanian April 2013 AT A GLANCE As mobile access overtakes fixed-line access as the world’s primary way of going online, numerous factors are converging to give mobile the capabilities, scale, and reach achieved by few other technological advances. Mobile Models Take Shape The global playing field is uneven, but this does not necessarily benefit rich coun- tries or nations with extensive telecommunications networks. Mobile is developing along different lines in different markets, driving new waves of innovation around the world. A Complex Policy Agenda Mobile and its impact are evolving faster than the ability of policymakers to deal with them. A Mobile Health Check for Companies Companies need to ask: Can consumers and employees engage with us through the device of their choosing, at a time and place of their determination, and come away from the experience satisfied and having accomplished what they set out to do? 2 Through the Mobile Looking Glass lice never dreamed of a world like this. The numbers tell one part of the Astory. Some 80 percent of the world’s people have gained mobile access in less than two decades. Smartphones already account for almost 40 percent of global mobile-phone sales, and they are increasing fast. This year, mobile access will overtake fixed-line access as the world’s primary way of going online; four out of five broadband connections will be mobile by 2015. For a large and growing share of users around the world, the Internet will be an entirely mobile experience. This isn’t your father’s Internet, however—or even your older brother’s or sister’s. The mobile experience is a whole new universe of connectivity that’s local (it’s always where you are), personal (tailored to your needs and preferences), social (all your friends are there as well)—and it’s always on. That four- (or seven- or ten-) inch screen is much more than a digital image: it’s a real-life window into an entire world that’s open 24/7/365, just waiting for its owner to climb through. Continuous access to information, communication, friends, and entertainment—among myriad other things—turns out to be as addictive as any opiate. Just like Alice peering into the world beyond the looking glass, everyone wants to check it out—continually. Numerous factors are converging to give mobile the capabilities, scale, and reach The primary Internet achieved by few other technological advances. These include devices with comput- experience of the ing power and memory that come close to rivaling desktop PCs; increasingly Millennial generation ubiquitous network coverage characterized by high-speed data connections and low is mobile. network latency; ever-improving battery technology; the ability to apply “context”—location and social networks—to generate value; the proliferation of sensors in devices—for example, multiple cameras, GPS, and motion and tempera- ture sensors; and all manner of wireless connectivity, including Wi-Fi, LTE, Blue- tooth, and near field communications. That’s not to mention smartphone and tablet functionality akin to that of a Swiss army knife, and vibrant application-develop- ment ecosystems with large and growing user bases. In addition, “machine to machine” communications, including smart metering applications, the connected car, and the connected digital home, are being aggressively pursued by many of the world’s leading companies. Combine these factors with two demographic realities, and the full scope of mo- bile’s impact begins to emerge. One demographic shift is the advent of a big new generation of consumers into the economies of the developed world: the 16- to 34-year-old Millennials, who outnumber the baby boomers and have a far greater degree of technical sophistication, appetite for consumption, and desire to be connected. Their primary experience with the Internet is mobile. The other demo- The Boston Consulting Group 3 graphic fact is that the vast majority of the world’s population lives in developing markets where the Internet is just taking hold and where the Internet experience is mostly mobile. As the next billion consumers come online, it will be through the screen of an Internet-enabled smartphone or feature phone. The realization of this scale and reach is beginning to drive new waves of innova- tion in companies and economies around the world. There’s big money at stake. The aggregate Internet economy in the G-20 nations will reach $4.2 trillion by 2016 and contribute 5.3 percent of GDP. (See The Internet Economy in the G-20: The $4.2 Trillion Growth Opportunity, BCG report, March 2012.) An increasing share of this contribution will come from products and services accessed through mobile devices. The worldwide digital-services ecosystem alone will reach $1 trillion in revenues by 2015. (See Exhibit 1.) All kinds of companies are participating—for example, mobile operators (seeking new sources of revenue as others plateau or decline), software developers (trying to create wealth through new applications and business models), and data and analytics companies (wanting to monetize data in new ways). The “mobile first” rallying cry has already become part of the corporate lexicon at tech giants as diverse as Google, Facebook, and IBM. It is no less relevant for those in other sectors of the economy or society. Players in traditional industries are also beginning to differentiate themselves by innovating and competing in the Exhibit 1 | The Digital-Services Ecosystem Will Reach $1 Trillion by 2015 Voice/messaging Content and information Advertising E-commerceVertical segments $67 $54 $102 $540 $4 Music E-health Skype Amazon.com and video AdMob TeamNotes Hulu Salar WhatsApp Netflix RedLaser GE Healthcare Spotify Grooveshark Placecast Tarad.com MedManage Ooma Stryker $55 Games DeNA Cisco WebEx 4Info EA King.com Ubiso NIKEiD $3 Jajah OnLive Connected car Gamesload Zynga Jumptap Argos Fleetilla Sipgate Taobao.com $15 Google AdSense MetaSystem Classifieds and Gourmondo.de TomTom Aim directories Teletrac Monster YP Apple Craigslist Flite eBay Rakuten Careerbuilder.com Where $2 Windows Live JiWire Smart metering $5 Pramool.com Messenger Location Siemens and social GE Healthcare BuzzCity Coupons ICQ SCVNGR Yelp Diehl Metering OpenTable Groupon Google Latitude Bglobal Echelon Google Talk Foursquare Urbanspoon iAd DailyDeals.com Enabling services and platforms $91 Cloud services $3 Mobile to mobile $7 Mobile payments1 Apple Netbiscuits Salesforce.com IBM Wyless MasterCard Zong Google Isis Soonr Google CGI Cinterion Jasper PayPass PayPal M-Pesa Starbucks Global market size in 2015 ($billions) Sources: Euromonitor; Gartner; IDC; Magna Global; Ovum; Telecommunications Industry Association; BCG analysis. 1This assumes a 2.5 percent average fee on transaction volume. 4 Through the Mobile Looking Glass new mobile world. (See the sidebars on mobile’s impact in media, retail, education, and health care.) As Alice discovered when she stepped through the looking glass, the world behind the digital screen is different. Most companies do not yet have all the capabilities they need to engage customers and employees. The first step is to assess their readiness by putting their businesses through a mobile health check, including a view of their ability to compete in the diverse mobile ecosystems taking root in MEdIA GO MOBILE Japan got the mobile-media ball and people spend almost eight hours rolling with the first camera phone a month on average playing games on and mobile novel more than a decade their mobile phones. As the CEO of ago. Streaming video followed soon King.com, the company behind the after. Mobile devices are natural current top game on Facebook—Can- enablers of media consumption, and dy Crush Saga—told Forbes.com, “As consumption has exploded since the smartphones get better and more introduction of the smartphone, consumers are opting to use their starting with music, games, and mobiles and tablets to access games, user-generated content, and now their expectation is access anywhere.” extending across virtually all media A 2012 survey by game developer categories. PopCap found that 44 percent of adults in the U.S. and the U.K. played Users derive enormous value from at least one mobile game in the user-generated content and social previous month—an increase of 29 media, which are available only percent over 2011. online, of course, and increasingly accessed through mobile devices. Smartphones are the third-most-pop- Nearly two-thirds of Facebook’s one ular device for listening to music. billion members regularly use Sales of recorded music increased in Facebook on their mobile phones, 2012 for the first time since 1999, and more than 60 percent of Twitter driven largely by downloads, which users are tracking tweets (as well comprise some 70 percent of rev- as tweeting) on mobile devices. enues. Approximately half the readers ComScore reports that the average of the New York Times, the Wall Street number of Instagram’s daily mobile Journal, and USA Today read these visitors jumped from 886,000 to newspapers online or on a mobile 7.3 million between March and device, according to the Pew Research August 2012.
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