My Thesis on the Mobile Internet
I believe a profound computing shift is taking place — one that is hard to see in Western countries. Largely because these countries have what I call a “PC bias”. Most internet users in the West, especially those over a certain age, grew up with a PC. The first experience they had with the internet was the desktop web through a browser. This is why, in all the usage survey data I have on the developed market, we still see extremely high use rates of the desktop web, in particular around activities like commerce.
* Question: What device have you used to make a purchase in the last 30 days? Source: GlobalWebIndex US panel.
I have many more charts than this showing the PC bias of the west for many tasks where in mobile first countries their primary computer is a smartphone. The PC, with its large screen, offers many advantages. But I believe the world is moving away from PC literate consumers and the balance of power in usage and literacy is shifting to smartphones.
Breaking Through the PC Bias
At a fundamental level, the internet remains at the center of the interaction model for our smart devices. What we are seeing is a divergence in internet interaction models in countries and users with a PC bias vs. those with a mobile bias. The internet is simply used differently. The interaction with the internet on a PC is very different than the interaction on mobile. The desktop browser has benefits and limitations. Similarly, the primary interaction with the web on mobile — apps — also has benefits and limitations. But neither is the lesser of ways to interact with the internet. Each is the best in the context of the device. The major difference between the two is the internet on PCs is largely physically fixed whereas the mobile internet is not. It is at this point I believe all the advantages of the future interaction models with the internet skew toward mobile.
I was reading a book with many insights into China called “The End of Copycat China“. I came across this quote as the author, Shaun Rein, was interviewing David Wei, the former CEO of Alibaba. When explaining his investment strategy for internet companies, Wei explained how he segmented Chinese consumers. He shared how he focuses on companies whose products and solutions are targeting those born after 1985. Here is his reasoning:
“In my experience, people who were born before 1980 are not the real internet population of China…The real internet population is people born after 1985. January 2000 was the beginning of China’s internet.”
He goes on to explain:
“People born after 1985 grew up with the internet. They live with it. They use it for shopping, entertainment…. as for people who were born before 1985, it is hard to convince them to move away from ingrained habits..”
It is that last point that stands out to me and the one I think is an essential observation of the PC bias of the West. Wei was talking specifically about commerce, explaining how those born before 1985 still shop in traditional ways at brick and mortar stores. Young people who grew up, not just with the internet but the mobile internet, after that date now shop largely online and largely through mobile devices. The future of the mobile internet is taking place in China and it has everything to do with 100’s of millions of young consumers growing up with the mobile internet rather than the desktop internet.
This shift has yet to happen in Western and developed markets where a PC bias still exists — but it will. Most in the West still have ingrained habits that lead them to prefer the PC for many tasks. China’s internet began on the PC but went mobile extremely quickly. Sites like Alibaba, Tencent, Weibo, and many others prioritized mobile efforts over desktop ones largely because of the rapid rise and domination of the mobile internet over the desktop internet. Now, as we look at China, nearly all hardware, software, and services innovation is focused on mobile first and often mobile only. We are raising a similar “born mobile” generation in the West. However, this demographic of younger people has not yet reached a position of power or influence enough to cause the shift to happen yet as it has in China.
China succeeded initially by copying many concepts from the West. As China was getting started on the internet, the US was the teacher and Chinese technology companies were the students. I fully expect more and more western companies will begin to learn from China’s mobile internet users, thus creating a role reversal where Chinese mobile internet companies are the teachers and their Western counterparts are the students. ((I’m not saying what works in the West is an exact copy of what works in China, but that the West will increasingly use concepts and business models that are working in mobile first countries for when the balance of power shifts to the “born mobile” generation.))
A good Western example of something similar is Facebook. Facebook started and grew on the desktop web. But today, nearly all their focus and innovation is around mobile. This has to do, in part, with their global presence but also as they recognized a shift, even with Western consumers, from desktop Facebook to mobile Facebook. Facebook is increasingly adding things, like Messenger and stickers, that are heavily influenced by things that are working in Asia. I expect this to continue and for the West to begin to bring similar business models.
Follow the Software and the Money
The biggest stand out point to me, which makes clear this shift from the PC to mobile, is to follow the software. Nearly all interesting and innovative things we see in every major market from a software, as well as services, standpoint is on mobile. This is the telltale sign of where we are going. In the PCs heyday, we saw tremendous innovation in software. Now, nearly all PC innovation has moved to the cloud and very little local software innovation exists. This is true even in the enterprise. There is not a new enterprise-focused software or services startup today centering on or even emphasizing the desktop over smartphones and tablets. Any credible enterprise software platform or service must include mobile devices as well.
The same is true from a monetary standpoint. Nearly all the money to be made in software development is in mobile. While there are some opportunities on the PC, what software work we see is designed to monetize cloud services, not necessarily the software itself. Right now in mobile there is money to be made in software. Eventually services will become a bigger deal in mobile as well. But for now, the money is in mobile and most of the focus of software innovation is there too.
The Static Desktop Web
This does not mean the internet of the desktop is dead. My belief is it is at a static endpoint. We will see little to no innovation or advancement around it. As the shift to mobile continues, we will see internet time on the PC drop in Western markets. Consumers will still use the PC for work or other tasks that require a big screen. But at a fundamental level even those tasks will be challenged as the software evolves to meet the medium of mobile. It is shortsighted to make the assumption that certain things can ONLY BE DONE on a PC with a big screen and a keyboard. Those same things can and will be done on mobile but they will be done differently as the task evolves to meet the medium. Many argue you can’t run your business on your smartphone but plenty run businesses off WeChat in China or off Instagram in India. When all you have is a mobile device, software developers will evolve the tools to meet the medium. It is ignorant to think those types of innovations will never make it to the West. ((Emphasizing, that I’m not saying the PC is dead but simply that the computer in the shape of a notebook or desktop is finding its niche as a business tool, or a specialty device in the home.))
The trend of 2-in-1 and portable desktop all-in-one PCs all but acknowledges this point. Those devices are evolving and hope to take part in the momentum of the mobile internet by making the notebook and desktop less of a fixed use device. These devices that have evolved the PC into areas it has not gone before may help evolve their role in consumer’s homes but it is my conviction that most all innovation will be heading toward small, pocketable personal computers.
I know many with a PC bias will disagree with me, but this is is my overall thesis. And all one has to do is observe those who grew up with smart pieces of glass connected to the internet that fit in their pockets to see it.
For a deeper read into where I think we are headed, you can download my report on the Next Phase of Mobile. Here is the outline of the report:
– Low-Cost Hardware
– Google’s Android Conundrum
– Localization vs. Globalization
– Business Model Innovation
– The Brains Behind the Next Wave
– Embedded Security
– Consumer Packaged Technology
– Summary: The World is Going Mobile