In a speech on internet trends for the next year Mary Meeker, partner at blue chip technology venture capital firm Kleiner Perkins Caufield & Byers, predicted strong growth in mobile use but a cash shortfall for companies relying on ad revenue. She also took time to critique Facebook's recent IPO.
According to her report, global mobile traffic now accounts for 10 per cent of the total internet load and in India has already surpassed desktop access - mobile subscriptions grew 841 per cent there last year. With just under a billion current smartphone users worldwide, and over six billion mobile users, there was still significant opportunity for growth, Meeker says.
Tablet use is also growing fast – with 29 per cent of US homes now having a fondleslab or ereader - and there was good news for Android. KPCB estimates Android users are growing four times faster than iOS purchases and there's no sign of its popularity peaking. But this mobile success will not lead to the kind of revenues that some are predicting, Meeker warns. Mobile suffers a number of clear limitations in turning users into gold.
"It's early, and the screen is small, and advertising hasn't really been rolled out effectively yet," she said at the All Things D10 conference. "There are some companies that are doing it very effectively – Twitter's had some good campaigns – and we're still figuring out local and social."
This translated to a much lower revenue per user return than desktop, up to five times lower for companies like Zynga. While the number of mobile users is only going up, getting money out of them is quite another matter and companies should trim their outlook. KPCB wasn't investing at the moment because it was unhappy with business valuations, she said.
Another cloud on the horizon is the overall economic situation in the US and especially the EU. Debt problems in Greece, Italy, and Spain are expected to send the EU into recession for the year. In the US, consumer confidence is falling and Meeker warned about the levels of debt America is running and the possible consequences.
She also took time out to discuss the current social networking IPO cycle and critiqued the launch of Facebook. Meeker is one of the most qualified people to do so, having taken Netscape to IPO in 1995 and playing a key role in the 2004 launch of Google onto the stock market before leaving banking and going into venture capital.
Meeker said that Facebook shares were trading at $104bn valuation before the IPO on secondary internal markets and the IPO managers pitched the price at what they could get, but that the launch itself was bedeviled with technical problems. At launch, trading levels were higher than any IPO in history; equal to the entire normal daily volume of the New York Stock Exchange, or one and a half times as much traffic as NASDAQ usually handled.
"This IPO was a financial share tsunami – it was coming in and NASDAQ was trying to process all this stuff," she explained. "NASDAQ had a trading issue because it was dealing with this financial tsunami and people owned shares and didn’t even know they had 'em. Then people got shares, saw the price was already lower and said 'I'm out, I'm scared.'" ®