Worldwide mobile data traffic will increase 13-fold over the next four years, reaching 11.2 exabytes per month (an exabyte equals one quintillion bytes) for an annual run rate of 134 exabytes by 2017, according to Cisco Systems, Inc. (NASDAQ:CSCO)’sVisual Networking Index Global Mobile Data Traffic Forecast for 2012 to 2017, published on Feb. 5, 2013. The forecast’s annual run rate of 134 exabytes of mobile data traffic is equivalent to:
1). 134 times all the Internet Protocol traffic (fixed and mobile) generated in the year 2000, or
2). 30 trillion images (e.g., via MMS or Instagram) — 10 images daily from each person on earth for one year, or
3). 3 trillion video clips (e.g., YouTube) — one video clip daily from each person on earth over one year.
Figure: Cisco Forecasts 11.2 Exabytes per Month of Mobile Data Traffic by 2017
Smartphones, laptops, and tablets will drive 93% of global mobile data traffic by 2017, according to the forecast. This article will focus on the companies that would benefit immensely from this mobile data explosion. Investors are also expected to be rewarded handsomely if they’re properly positioned.
Revenues will flow mainly from five sources — (1) mobile ads including video ads, (2) mobile retail through m-commerce, (3) mobile payments, (4) selling of hardware, like smartphones and tablets, and (5) app sales and mobile OS licensing. For creating a long-term portfolio to invest in this mobile data revolution, a revenue-wise approach can be an innovative idea.
Mobile Ads including Video Ads
Mobile searches grew four times in 2011-2012. Nearly 70% of smartphone users that watch TV and use print media or the internet do a mobile search. Mobile ad spending worldwide stood at $3.3 billion in 2011 and will be sky rocketing to $20.6 billion in 2015, driven by search ads and local ads. In the U.S. over half of U.S. mobile ad spending is local. Meanwhile Asia continues to dominate global mobile ad spend.
Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) will be the two main recipients of mobile ad spending. Google Inc (NASDAQ:GOOG)’s Android and Apple’s iOS dominate the overall mobile ad market, reports mobile ad platform MoPub. By 2017, mobile video will represent 66% of global mobile data traffic (up from 51% in 2012). Google Inc (NASDAQ:GOOG)’s YouTube will be another source of generating huge video ad revenue for the company.
Purchasing digital goods will be the largest segment ahead of physical goods. According to an eTail survey, 87% of retailers view mobile as the biggest growth area. According to ClickIQ, 48% of retail purchases are influenced by mobile, and 29% of mobile shoppers research in-store and buy online.
Amazon.com, Inc. (NASDAQ:AMZN) will be the undisputed leader in mobile commerce. U.S. mobile commerce grew over 70% year-over-year in 2012, and accounted for roughly 10% of total e-commerce sales. As of September 2012, Amazon has 62 million unique mobile visitors and as of July 2012, Amazon’s mobile reach was 47%. This was way higher than competitors.
M-payments, i.e. paying by mobile, will be over $1 trillion by 2015. The use of near-field communications (NFC), m-banking and mobile money transfer is expected to record massive growth in the coming months and years. 1 in 8 mobile subscribers will use m-ticketing in 2015 for airline, rail and bus travel, festivals, cinemas and sports events.