Views about the Internet Trend Report of 2016

July 7, 2016 5 mins read
Views about the Internet Trend Report of 2016

Early in the morning of June 2nd, Mary Meeker, who was called the queen of internet, issued the “internet trend report 2016” at the US Code conference. The data in this report is very complex, and it can be roughly divided into four parts:

1. Transfer across platforms: PC, mobile phones, cars

Mary Meeker believes that the smart phone is following the PC to become a thing of the past, and cars are likely to be the next computing platform. This is actually questionable. It seems that the trend of visual reality (VR) is more obvious than that of cars at present in China.

Furthermore, in the mobile phone platform, the share of IOS system has obviously declined and dropped to 16% in 2015. In this changing speed, after two or three years, the ratio of shares between IOS and android will become 1: 9 respectively.

2. Multimedia content: voice, images, videos

The use of voice search, social image sharing, and video content are increasing significantly. With the increased developments of hardware and wireless network speed, the density of content will be elevated definitely. Especially with the introduction of the VR era, the prosperity of 3-D video will be a major event waiting to happen soon.

3. The monopoly of advertisement and time

In the United States, Google’s advertising revenue has grown by 18% in 2015, and the revenue of facebook has grown by 59%, when combined adds up to monopolize 76% of American online advertising, while the growth rate of other advertising media accounts for 24%. That is to say, in the online advertising market, the monopoly trend is becoming further enhanced. The same is in China. BAT monopolizes the 71% of internet users’ online time, and what especially shocks us is Tencent, the share of which has reached about 55%. In other words, Chinese internet users spend more than half of their online time on Tencent every day.

The monopoly in terms of time is a global trend which provides us with two revelations:

A: In the era of mobile, the opportunity for independent application startup’s are disappearing, and the social platform will evolve into one-stop operating system. Both the content startups and application startups are very likely to be attached to them.

B: These shifts make Tencent have more influence than the other two. Especially in the financial business, the alipay which depends on taobao, once had the absolute advantage, but now, Tencent is becoming more irresistible. Official accounts of Tencent come from medium platform, which means it undermines the foundation of portal and Baidu, and its O2O alliance ecology is equivalent to build up another virtual business world besides taobao. Coupled with the independent game system, all the transactions in this virtual world is done by wechat payment, its trading frequency stands at the the top of global financial tools.

Although the total transaction amount of wechat payment is less than alipay, its high viscosity and quick growth brings Tencent huge imaginary space. Because of this, the market value of Tencent catches up with Alibaba in this month. Two years ago when Alibaba was listed, its market value was two times of Tencent; six years ago, market value of Tencent was even lower than Baidu.

4. The Chinese style of online business, the future dream of India

It is well-known that Chinese e-commerce is extremely prosperous, and an important reason for that is - the backward traditional service industry which lacks competitiveness; so the new internet model has more powerful competitiveness and development prospects. Such as the seven biggest retailers in the United States, the first is Wal-Mart, the second is CVS, and Amazon only ranks fifth. There is no traditional giant chain in China, which brings the online business a better chance to develop it’s market base, the biggest retailer is Alibaba and the second is JD. In terms of the on-demand transportation development, China also catches up and has a leading position in the world.

According to this logic, it is important to start paying attention to India. The reason for this is because the smart phone market in China is saturated and the internet penetration in China is already matured, but India is just taking off. The amount of internet users in India has increased by 40% in 2015, exceeding 270 million, which is more than the United States, and only second to its northern neighbor. It can be seen from above, the transportation market is the size of India which was lower than half of Northern America last year which then just becomes the same as the United States in the first season of this year.

This fission growth is rare. Because of the lower level of traditional service industry development, the application of the internet is more dependent on smart phones, its potential of development would definitely not be lower than China and its development direction would just be the same as China. Cheetah mobile has already launched a mobile news app in India which is similar to Headlines Today, and the far-sighted entrepreneurs are copying the Chinese model in India. For many years, Chinese entrepreneurs pilgrimage to the United States to apply their copycat methods of Chinese models. But due to the big differences in the economic levels between China and the United States, the American models meet a lot of problems in terms of localization in China, which brings the local Chinese entrepreneurs many chances to develop.

But the differences in economic levels between China and India are small, which makes the resistance of the Chinese model being carried out in India smaller. Many applications have already achieved great success in India, such as UC browser and AnyShare etc.

Now, it is the time for China to export its models.

Marlon Mai's picture
Marlon Mai
Managing Director, Greater China