Mary Meeker, the famous Internet analyst at Morgan Stanley, spoke at the Web 2.0 Summit in San Francisco today. She recited the litany of bad economic news that we currently face. She noted, for instance, that GDP quarter-to-quarter decline in the third quarter was the worst since 1980. Our home ownership is up, but so is debt, and personal savings for Americans has dipped below zero per year. The days of easy credit are over, for sure.
Times are bad. But will this recession last just one year, or five years? She actually didn’t answer that question, but said there is some good underlying news for the tech economy. A lot of this stuff is pretty eye-opening, but Meeker didn’t get a lot of time to expound on each point.
Social networks are growing. Sites such as YouTube and Facebook are gaining usage, but the downside is that advertising rates collecting from such growth are declining. YouTube is up 52 percent year over year to 329 million users; Facebook is up 119 percent to 161 million (comScore’s number, while Facebook says it’s 120 million); Skype is up 51 percent to 370 million; and PayPal is up 19 percent to 65 million. Those numbers suggest something good is happening in the tech economy. If Skype were a carrier, it would be No. 2 behind China Mobile, she said. Of course, these are all growth rates for the past year, and they don’t take into account the nose dive that some of these folks are likely to see in the downturn.
She points to hot products like the Nintendo Wii, the Apple iPPhone 3G, and others as more examples of the acceptance of hot new digital products. She predicts mobile will be a hot sector but that it will be full of winners and losers. She believes notebook computers accessing the cloud via 3G wireless networks will be a hot trend. The infrastructure is in place to enable more mobile growth, she said. She thinks that the launch of the T-Mobile G1 with Google Android software is an “inflection point” in the mobile industry as computing moves into mobile devices. She said Symbian (owned by Nokia) dominates the market for smartphones but is losing share to the likes of Apple.
She said the top ten emerging markets will surpass the top ten developed markets in terms of Internet usage in 2008. China, for instance, added 86 million mobile users in 2007 alone.
“Having lived through a downturn before,” she said, “companies that add value will survive.” She thinks sites such as Amazon have only begun to take share away from brick and mortar retailers. CPMs are under short-term pressure but will be growing in the long term. With 1.35 billion Web users, we have $41 billion in online ad revenue and $30 in ad revenue per user, she said.
“History proves that ads follow eyeballs,” she said. “It just takes time.”
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