Mobile Cocooning How Growing Reliance On Smart Devices Is Influencing Consumer Behaviour

MOBILE COCOONING: HOW GROWING RELIANCE ON SMART DEVICES IS INFLUENCING CONSUMER BEHAVIOUR
Euromonitor International September 2013
MOBILE COCOONING: HOW GROW ING RELIANCE O N SMART DEVICES IS I NFLUENCING CONSUMER BEHAVIOUR
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LIST OF CONTENTS AND TABLES

Executive Summary ..................................................................................................................... 1 Demand Factors ....................................................................................................................... 1 Chart 1 Leading Countries by Mobile Internet Subscriptions 2012 ........................... 2
Mobile Behaviour ...................................................................................................................... 2 Commercial Impact ................................................................................................................... 3 Chart 2 Global Sales of Selected Electronic Devices 2012 ....................................... 5
Marketing Opportunities ............................................................................................................ 5 Outlook ..................................................................................................................................... 6 Summary 1 Mobile Cocooning: Opportunities and Challenges ....................................... 7 Introduction................................................................................................................................... 8 Cocooning on the Move ............................................................................................................ 8 Chart 3 Use of Apps: Home and Away 2013............................................................. 8
Social Impact ............................................................................................................................ 9 Demand Factors ......................................................................................................................... 10 Expansion of the Internet ........................................................................................................ 10 Table 1 Table 2 Internet Users as % Population by Country 2007/2012/2017 ..................... 12 Internet Retailing by Country 2007/2012 .................................................... 13
Increased Adoption of Smart Devices..................................................................................... 13 Chart 4 Global Sales of Smartphones Versus Feature Phones 2007/2012 ............ 14
Growth in Wireless Access ..................................................................................................... 14 Table 3 Mobile Internet Subscriptions by Country 2007/2012 ................................. 14
Higher Network Speeds .......................................................................................................... 15 Expanding Access To Wi-fi ..................................................................................................... 16 Location-based Mobile............................................................................................................ 17 the Transition To Cloud Computing ........................................................................................ 18 Security and Privacy Concerns ............................................................................................... 18 Chart 5 Attitudes Towards Internet Privacy 2013 .................................................... 19 Mobile Behaviour........................................................................................................................ 20 Digital Versus Traditional Media ............................................................................................. 21 Mobile Phone Activities ........................................................................................................... 21 Chart 6 Global: Mobile Phone Activities Away From Home 2012 ........................... 21 Worlds Most Used Apps July 2013 ............................................................ 23 Euromonitor International Pulse Survey: Favourite Apps 2013 .................. 24
App Dependency .................................................................................................................... 22 Summary 2 Summary 3
Social Networking Behaviour .................................................................................................. 25 Chart 7 Chart 8 Table 4 Table 5 Reasons for Using Social Networking Websites 2011................................ 26 Leading Social Media Websites Globally 2013 .......................................... 27 Facebook Users by Region 2012 ............................................................... 28 Fastest Growing Facebook Countries 2012 ............................................... 28
People Power ......................................................................................................................... 29 Entertainment on the Move ..................................................................................................... 30
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Summary 4 Summary 5
Top 10 iOS Game Apps by Monthly Downloads May 2013 ........................ 31 Top 10 Google Play Game Apps by Monthly Downloads May 2013 .......... 32
Smart Travel ........................................................................................................................... 32 Summary 6 Selected Travel Apps 2013 ........................................................................ 33
Mobile Shopping ..................................................................................................................... 34 Chart 9 Frequency of Mobile Phone Activity in Stores 2012 ................................... 35
Growing Popularity of Fitness Apps ........................................................................................ 36 Commercial Impact .................................................................................................................... 36 Growth of Internet Enabled Devices ....................................................................................... 36 Table 6 Chart 10 Chart 11 Chart 12 Chart 13 Global Sales of Selected Electronic Devices 2007/2012 ............................ 37 Leading Markets for Smartphones 2012 .................................................... 38 Top 10 Global Smartphone Manufacturers by Retail Volume 2012 ........... 40 Top 10 Global Tablet Manufacturers by Retail Volume 2012 ..................... 40 Leading Markets for Tablets and Other Portable Computers 2012 ............ 41
App Development ................................................................................................................... 42 Chart 14 Global Mobile App Store Downloads 2011-2016........................................ 43
Impact on the Video Games Market ....................................................................................... 44 Table 7 Global Sales of Video Games 2007/2012 .................................................. 45
Impact on Foodservice ........................................................................................................... 45 Marketing Opportunities ............................................................................................................. 46 Mobile Ad Revenues............................................................................................................... 46 Chart 15 Forecast Mobile Advertising Revenue by Region 2012/2016 ..................... 46
Email Campaigns.................................................................................................................... 47 Viral Marketing ........................................................................................................................ 48 Summary 7 Top Brand-driven Social Video Advertising Campaigns of 2012 ................ 49
Ratings Apps Increase Publicity for Small Businesses ........................................................... 49 Getting the Best Out of Social Media ...................................................................................... 49 Key Market Trends ..................................................................................................................... 51 Brazil....................................................................................................................................... 51 Chart 16 Table 8 Chart 17 Brazil: Mobile Phone Activities Away From Home 2012 ............................. 51 Brazil: Sales of Mobile Devices and Games 2010-2012............................. 52 Brazil: Smartphone Operating Systems 2012 ............................................ 53
China ...................................................................................................................................... 53 Summary 8 Chart 18 Table 9 Chart 19 China: Leading Social Networking Websites 2013 ..................................... 54 China: Mobile Phone Activities Away From Home 2012 ............................ 55 China: Sales of Mobile Devices and Games 2010-2012 ............................ 56 China: Smartphone Operating Systems 2012 ............................................ 56
France .................................................................................................................................... 56 Summary 9 Chart 20 Table 10 Chart 21 France: Leading Social Networking Websites, December 2012 ................. 57 France: Mobile Phone Activities Away From Home.................................... 58 France: Sales of Mobile Devices and Games 2010-2012 .......................... 59 France: Smartphone Operating Systems 2012 .......................................... 59
Germany ................................................................................................................................. 60
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Summary 10 Chart 22 Table 11 Chart 23
Germany: Leading Social Networking Websites, December 2012 ............. 61 Germany: Mobile Phone Activities Away From Home 2012 ....................... 61 Germany: Sales of Mobile Devices and Games 2010-2012 ....................... 62 Germany: Smartphone Operating Systems 2012 ....................................... 62
India ........................................................................................................................................ 63 Chart 24 Table 12 Chart 25 India: Mobile Phone Activities Away From Home 2012 .............................. 63 India: Sales of Mobile Devices and Games 2010-2012 .............................. 64 India: Smartphone Operating Systems 2012 .............................................. 65
Japan ...................................................................................................................................... 65 Table 13 Chart 26 Japan: Sales of Mobile Devices and Games 2010-2012 ............................ 66 Japan: Smartphone Operating Systems 2012 ............................................ 67
UK........................................................................................................................................... 67 Chart 27 Table 14 Chart 28 UK: Mobile Phone Activities Away From Home 2012 ................................. 68 UK: Sales of Mobile Devices and Games 2010-2012 ................................ 69 UK: Smartphone Operating Systems 2012 ................................................ 69
US........................................................................................................................................... 70 Summary 11 Chart 29 Table 15 Chart 30 US: Leading Mobile Social Networking Websites, 2012 ............................. 71 US: Mobile Phone Activities Away From Home 2012 ................................. 71 US: Sales of Mobile Devices and Games 2010-2012 ................................ 72 US: Smartphone Operating Systems 2012 ................................................ 72
Future Outlook............................................................................................................................ 73 Trends To Watch .................................................................................................................... 73 Chart 31 Forecast Sales of Smartphones and Tablets by Volume 2012/2017 .......... 75
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MOBILE COCOONING: HOW GROWING RELIANCE ON SMART DEVICES IS INFLUENCING CONSUMER BEHAVIOUR
EXECUTIVE SUMMARY Demand Factors
Recent years have seen rapid growth in internet-enabled mobile devices that are capable of fulfilling a multitude of tasks, from shopping, entertaining and networking to banking, education and navigation. The proliferation of smartphones and tablets, along with consumers increasing reliance on apps, has dramatically changed the global digital landscape and exerted a strong influence on all aspects of lifestyles and behaviour. As a result, the trend towards a home-centred lifestyle that characterised the early part of the century has given way to a movement towards mobile or individual cocooning, whereby consumers are immersed in their own digital worlds anywhere and anytime. Todays young generation, known variously as the digital natives or the touch screen generation, are the most likely to be addicted to their smart devices, using them for everything from education and play to communicating and entertainment. In developing markets, rising disposable incomes and the emergence of cheaper devices have led to a boom in smartphone and tablet ownership among largely young and urban consumers that as yet has shown no signs of abating. On the downside, increased use of digital devices is leading to social problems such as mobile distraction, phubbing (snubbing companions while on mobile devices) and problems in switching off from work. Along with rising internet use in general, increasing web access via wireless devices and the growth in smartphones at the expense of feature phones are key factors contributing to the mobile revolution. The volume share of feature phones fell from 94% in 2007 to just 57% in 2012. Euromonitor Internationals database also shows that mobile internet subscription figures grew substantially in all countries over the 2007-2012 period. They were highest in the US (236 million), followed by China and Japan. The widespread availability of high-speed internet access has significantly enhanced the media consumption experience. Wi-Fi usage via mobile devices has become more prevalent, while networks speeds have also increased with 4G and LTE technology. According to data released by Wireless Intelligence, a total of 580 operators in 186 countries were running mobile broadband networks by early 2013. There were 1.6 billion 3G and 4G subscriptions, equal to 23% of the worlds mobile cellular connections. The number of free or paid-for Wi-Fi spots has also increased dramatically around the world, enabling consumers to log onto their devices without having to rely on mobile networks. Hotspots may be located in foodservice outlets, transport hubs or other public places.
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Free internet access has become an important part of the service offering of coffee shop chains such as Starbucks, as they seek to make their restaurants more desirable spaces for customers who want to do more than simply grab a coffee to go. Location services, which use the tracking capabilities of smartphones to target customers based on where they are and what decision they are making, are becoming increasingly popular as a marketing tool. Cloud computing, which allows data processing and data storage to take place outside of mobile devices, is also becoming essential to cope with the rapid growth in world IP data traffic and the limited processing power, battery life and storage capacity of smartphones. Privacy concerns are mounting, as consumers are becoming increasingly aware that app developers, wireless providers and handset manufacturers can and do sell their personal information to other companies or organisations. Some new regulations have been introduced, such as the EUs Cookie Directive of 2012, which requires marketers and website owners in the EU to obtain consent from users before implementing cookies or other technologies to capture online visitor information. Children are at particular risk with regard to privacy, as they often have no qualms about giving away personal information. Analysts suggest that a huge number of the 100 million photos shared every day on Snapchat are from tweens. Chart 1 Leading Countries by Mobile Internet Subscriptions 2012
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Mobile Behaviour
Euromonitor Internationals Out and About survey of 2012 revealed that the most common mobile phone activity away from home (apart from talking) was texting, with 77% of respondents saying they use their phone for this purpose. Email and taking photos were the next most popular activities, while 48% of respondents use social media sites. M-commerce is still in its infancy, with only 15% saying they shop online when away from home.
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An ever growing array of apps have been developed to address almost every need, including alarm clocks, news and entertainment, navigation, communication, education, keeping fit, organisation, shopping, travel and many others. According to a recent study by GlobalWebIndex, the navigation app Google Maps was the most popular app worldwide, used by 54% of the global smartphone population. It was followed by the social networking websites Facebook Mobile and the Chinese Weixin/WeChat. Social websites, such as Facebook and Twitter, have fundamentally changed the way people interact with one another and with companies. Social interaction has also been incorporated into most other mobile activities, including shopping, video sharing, music and gaming. Consumers are increasingly relying on user-generated content to help with buying decisions. Ratings websites have become a powerful driver of behaviour, and a growing number of apps enable consumers to read and write reviews directly from their mobile devices. In addition, online crowdsourcing has become a cost-effective way for companies and consumers to gather information and opinions from all over the world. The development of geolocation services has led to a boom in crowdsourced travel apps, such as Localmind. The mobile entertainment sector has grown rapidly thanks to the roll-out of 3G and 4G services, the increasing depth and sophistication of the music, video and games for smart devices and the proliferation of tablets, whose bigger screens allow for a better viewing experience. Mobile gaming has expanding strongly at the expense of console and PC games. Many mobile games are based on the fremium model, whereby games are downloaded for free but charge for in-app purchases at crucial junctures. Travel is another sector that has been revolutionised by mobile. Apps now save time by providing a range of travel-related functions, including navigation, translation, traffic advice, check-in, reviews and reservations, or help to find cheap, last-minute hotel rooms. There is also a growing range of health and fitness apps available for smartphones. Popular apps include MapMyRun, Workout Trainer and NikeFuel for fitness, and Weight Watchers, Lose it! and Calorie Counter for weight control. The increasing sophistication of smart device functions is providing users with the convenience of making their purchases on the move. Many shopping apps acts as a gobetween from the smartphone to the store, thus cutting out the website completely. Companies are meeting the needs of consumers by offering product information via QR (quick response) codes, facilitating instant purchasing, offering downloadable coupons, highlighting promotions or special offers, and displaying customer reviews.
Commercial Impact
The most obvious market impact of the rapid growth in the use of web-enabled devices is a sharp rise in global sales of portable consumer electronics such as smartphones, tablets and ultrabooks, largely at the expense of feature phones, desktop PCs and portable media players. Euromonitor International data show that by 2012, sales of smartphones had reached US$202.9 billion, while the tablets sector was worth US$52.7 billion. Tablets are expected to exceed laptops in volume sales in 2013. Within smartphones, Googles Android mobile operating system has been the major success story of the past two years, thanks to its open-source code that can be used by competing handset manufacturers and app developers.
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Androids growth has left Apples iOS system behind, while Wind ows may expand as a mobile platform over the next few years following Microsofts merger with Nokia announced in September 2013. Despite e-book apps being available on smartphones and tablets, e-readers also made rapid progress over the review period, largely due to a global push by Amazons Kindle. Sales of e readers reached US$2.6 billion in 2012. China and Japan both overtook the US during the review period to become the largest markets for smartphones in 2012 (worth US$39.7 billion and US$20.5 billion, respectively). South Korea, Mexico and Brazil were among the markets witnessing the most dynamic growth. Declining prices of components and high volume sales are enabling manufacturers to produce smartphones more cheaply and efficiently. This has led to an expansion in the price range of smartphones, including an array of pay-as-you-go devices available for under US$200. Since Apples iPad was launched in 2010, the tablet has gone from an early adopters must have to a common device used by consumers from all walks of life. Increasingly, consumers are willing to pay for this ideal platform for delivering and consuming content both at home and on the go. Cost has been a major deterrent affecting demand for tablets, but as the market begins to mature and spread to emerging markets, average prices are declining. Regional brands of cheap tablets are making strong headway in emerging markets such as China, India and Russia. The US was by far the most developed market for tablets in 2012, with sales of US$23.2 billion. However, all other markets have grown dramatically since 2007 and there is still plenty of room for further growth. In response to demand for smaller devices that are more portable than tablets but allow for a better viewing experience than smartphones, manufacturers have successfully launched mini tablets, such as Googles Nexus 7 Android tablet, Amazons Kindle Fire HD and Apples iPad Mini. Manufacturers are also introducing hybrid all-in-one devices, dubbed phablets, which are designed to combine the functionalities of a smartphone and tablet. These usually have screens of 5.0 to 6.9 inches (13-17cm) in size. According to a 2012 report from research company Distimo, there were more than 700,000 different apps available across both the Apple and Google platforms, producing a total market worth around US$22 billion. One of the main challenges facing mobile content developers has been how to monetise content that was previously available to consumers for free. Gartner estimates that the number of downloads featuring in-app purchase will rise from 5% of downloads in 2011 to 30% in 2016. Apples App Store accounted for an estimated 25% of available apps in 2012. Other major players include Google Play and Microsofts Windows Phone Marketplace. Popular app stores from third parties include Amazons Appstore and Facebooks recently launched App Center. Gaming is by far the most popular category of apps in terms of downloads, and generates the most revenue of all the different app types. According to App Annie, Candy Crush Saga was the most downloaded game across both iOS and Google Play platforms in May 2013. Mobile games was also the most dynamic category within the digital games sector between 2007 and 2012. Euromonitor International estimates that sales of mobile games grew by 339% to US$5.6 billion over the review period.
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Chart 2
Global Sales of Selected Electronic Devices 2012
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Marketing Opportunities
The proliferation of smart devices has fundamentally changed the face of marketing and advertising, allowing for more tailored and interactive approaches. Gartner predicts that in 2013, mobile advertisements will collectively generate US$11.4 billion in revenues, up from almost US$9.8 million in 2012. By 2016, this is expected to rise to US$24.6 billion and represent some 4% of all advertising expenditure. According to a recent study by digital communications company Yesmail Interactive, more than a third of emails are opened on a mobile device. However, companies using email marketing have been slow to take advantage of this and adapt their designs accordingly. The growth of location-based services has allowed marketers to target their audience more accurately. Methods can range from geo-aware or geo-fenced advertising campaigns to hyper-local efforts at Wi-Fi hotspots, and location-based targeting of specific consumer segments. Many free music streaming apps earn revenue from advertisements that are periodically interspersed into playlists. These advertisements are often targeted based on the location of the consumer, or even the type of music that they select. Other companies have become sponsors of online games, offering real-world incentives (such as a discount on a drink) to players. Some have also expanded their social media presence by regularly uploading informational and marketing videos to sites such as YouTube. The arrival of social networking gave rise to the viral video phenomenon. Viral clips that have been an instant hit on YouTube have been instrumental in creating a buzz around brands both small and large across the world. The scale of viral advertisements was greater than ever in 2013, with the top three videos all gaining more than 100 million views over the year. This was the first time any branded video had achieved this.
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In addition to placing mobile advertisements and launching viral videos, companies are able to monitor online conversations about their brands, and engage in dialogue with customers in order to obtain valuable feedback on products and services. Companies also use celebrities to push their brands on social media, either through brand endorsement contracts or separately per tweet. Celebrity endorsement has a huge impact on a brands sales by increasing its visibility and giving it credibility in the eyes of fans. Successful crowdsourcing initiatives have helped many companies to drive brand development. This allows companies to tap consumers for new ideas and has also been proven to result in greater customer satisfaction and can increase positive word of mouth by participants.
Outlook
The trend towards mobile cocooning is likely to intensify in the future. Consumers all over the world will spend more time immersed in their own worlds on mobile devices, as products become more innovative, more powerful, more affordable and more convenient. This means there is still tremendous potential for continued growth in sales of web-enabled devices, such as smartphones, e-readers and tablets, in addition to apps, video and audio content, and mobile games. Increasing amounts of consumers lives will be controlled by smartphones, with bank cards, loyalty cards, travel cards and boarding passes gradually disappearing from physical wallets and becoming integrated into smartphone software. Innovations such as 4G (and eventually 5G), mobile payments and increased security will continue to drive the market. Processors may eventually become so small and energy efficient that smartphones will have enough processing power to meet virtually all needs. Falling unit prices and the development of budget models will open up the market for smart devices to a much wider consumer base in emerging markets. These consumers will typically be highly value conscious and will seek simple tariff options and unlimited time-based and content-based packages. While the US market for tablets may be reaching saturation, there is still much room for growth in other markets. In value terms, sales per household reached US$192 in the US in 2012 but were still less than US$100 in all the major European markets and below US$10 in China. The increased adoption of tablets will diminish further the need for PCs, laptops and output peripherals, as tablets will be designed to be reliant on a rapidly expanding array of cloud services and are compatible with televisions for home use. Another category that could see further growth due to their convenience is hybrid devices, such as ultrabooks (eg Chromebook), tablet/laptop hybrids (eg Lenovos IdeaPad Yoga), phablets (eg Samsungs Galaxy Note) and mini tablets, such as the iPad Mini. One factor which may slow growth of smartphones and tablets in markets that are starting to rely on replacement purchases is that new software is being developed to extend the life of these devices. This mean users will be less inclined to spend money upgrading them. The forecast period will see the stronger adoption of high speed 4G networks around the world, as well as a greater proliferation of Wi-Fi spots in public places, as well as in cafs, restaurants and leisure outlets, and on flights. Wearable devices could be the next big thing in mobile. Google is expected to commercialise its much anticipated Google Glass in 2014, which incorporates a computer into an optical head-mounted display. Several smart watches are also coming to market.
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In-vehicle connectivity and entertainment will also see widespread adoption. According to a 2013 JD Power study, more than half of vehicle owners said their next car would definitely or probably include wireless connectivity or the ability to sync with their smartphones. M-commerce will continue to grow. Consumers will become more accustomed to accessing product information, reviews and price comparisons from their smartphone or tablet while shopping, and will be less likely to rely on in-store displays or salespeople. The popularity of established social networking websites such as Facebook and Twitter may wane especially among young people in the face of a wave of new and mobile-first social apps, such as WhatsApp, LINE and Snapchat. Summary 1 Opportunities Mobile Cocooning: Opportunities and Challenges Challenges Privacy concerns are mounting among mobile users. Honesty and transparency will be key to success for websites and apps targeting this audience. With smartphones containing more personal data than ever before, loss or theft of a mobile device will have increasingly serious consequences. Malware is an increasing threat to smartphone users, with the growth of app stores without proper security mechanisms.
Consumers will become increasingly reliant on smart devices as they become more powerful and portable and offer a growing array of innovative apps Faster network speeds, including 4G and eventually 5G, will allow for easier streaming of music and video onto mobile devices. Governments, telecoms companies and service providers will continue to invest in expanding Wi-Fi access points to cater to growing demand for anywhere, anytime web access. There is still significant potential to develop the market for smartphones and tablets in emerging markets, where penetration is still low and purchasing power is rising. In-vehicle connectivity and apps will see widespread adoption and will become increasingly sophisticated. Cloud will grow, and move beyond computing and storage into a new realm of communications, applications, content and applications. M-commerce will grow as consumers become more accustomed to accessing product information, reviews and price comparisons, and shopping from their smart devices. Hybrid devices, such as phablets and ultrabooks, have strong growth potential as consumers seek convenience and flexibility. Location-based marketing via smartphones offers significant opportunities for brands to target consumers more accurately and effectively. Successful viral marketing campaigns via mobile devices will allow brands to gain visibility and spread their message globally in
With purchasing power in emerging markets still relatively low, the development of low-cost handsets and flexible, all inclusive data plans is a must. Limited network coverage in large rural areas, especially across major territories such as India and China, will continue to pose challenges to growth in some markets. App developers and app stores face the ongoing challenge of monetising their products and attracting advertising revenue, for example through in-app purchases. In order to continue appealing to increasingly tech-savvy shoppers, retailers must focus on improving in-store technology, such as Wi-Fi, QR and touchscreen kiosks. The development of new software to extend the life of existing smart devices means users may be less inclined to buy new models in the future. Companies must be sensitive in their approach to advertising within peoples personal space and make sure they offer only relevant and exciting incentives. Android and iOS-based systems may face stronger competition from Windows, following Microsofts recently announced merger with
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a short space of time. New mobile-first social apps, such as WhatsApp and Snapchat, may see rapid growth at the expense of more established websites such as Facebook and Twitter.
Source: Euromonitor International
Nokia. The development of wearable devices, such as Google Glass and smart watches, will provide competition for standard smartphones and tablets in the future.
INTRODUCTION Cocooning on the Move

The mobile revolution The arrival of smartphones in the latter half of the 1990s, followed by the emergence of tablets with the launch of Apples iPad in 2010, dramatically changed the global digital landscape and began to exert a strong influence on all aspects of consumer lifestyles and behaviour. Recent years have seen rapid growth in internet-enabled mobile devices that are capable of fulfilling a multitude of tasks, from shopping, entertaining and networking to banking, education and navigation. Moreover, the trend is showi ng no signs of abating. Microsofts recent expansion directly into smartphones through the acquisition of Nokia is further evidence of the fact that mobile is still seen as the way forward in technology and communications. An always-connected society A major consequence of the growth in mobile web use is that the trend towards cocooning the home-centred lifestyle that characterised the early part of the century has given way to a movement towards mobile or individual cocooning, whereby consumers are immersed in their own digital worlds anywhere and anytime. While there may be greater interaction than ever between friends, family and strangers, this is increasingly likely to take place via a digital device rather than in face-to-face situations. Smartphones and tablets have therefore become essential accessories that many feel they cannot live without. The move towards away-from-home mobile access is illustrated by the results of Euromonitor Internationals Analyst Pulse survey of July 2013, in which the companys network of in-country analysts and in-house researchers around the world were asked about their app use. As many as 58% of respondents were found to use smartphone apps equally at home and away from home, and 29% used them only or mostly away from home. Only 8% used smartphones apps only at home. Tablet apps were, however, more commonly used at home (35%). 40% of respondents did not own a tablet, but 19% used tablet apps equally at home and away. Chart 3 Use of Apps: Home and Away 2013
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Euromonitor Internationals Analyst Pulse survey of July 2013
The touch screen generation The mobile-centric lifestyle, which was once confined to the richer developed markets, has recently spread to emerging markets, where rising disposable incomes and the emergence of cheaper devices have led to a boom in smartphone and tablet ownership. This is having a profound impact on sales of consumer goods and services and is changing the way companies approach their marketing and advertising strategies. Todays young generation sometimes dubbed digital natives or the touch screen generation, due to the fact that they were born into an age of smart devices are especially attached to their tablets or smartphones. Many children are connected to their friends 24/7 and rely on apps for everything, from education and creative play to communicating and entertainment. According to research from the NPD Group released in September 2013, almost 80% of US parents with children between the ages of 2 and 14 had a mobile device up 16% over the previous year. These devices were used by 51% of children, with almost 40% of these being considered a primary user. The NPD Group study found that gaming was the favourite activity of 87% of children on smart devices. Around a third of parents were found to be spending more on apps for their children than they did in 2012, while across all app types (including film apps, educational games apps and books and reading apps), parents were found to be willing to pay an average of US$5.90 per app.
Social Impact
Digital addiction In countries where the mobile cocooning trend is most developed, social problems have arisen, such as smartphone addiction, digital distraction, antisocial behaviour and a blurring of the boundaries between work and leisure. Some say the reliance on mobile technology is leading to a decline in the art of conversation and in peaceful reflection.
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A July 2011 survey by location-based technology company Telenav found that 50% of respondents claimed they would give up such pleasures as coffee or sports and 10% would prefer to go without shoes rather than do without their smartphones. In the US, internet addiction has actually become classified as a mental disorder (with symptoms including eye twitch and dry mouth). Off-lining retreats have been established for internet addicts to help them survive without smartphones, tablets or PCs. In June 2013, it was reported that 300 Silicon Valley executives attended the inaugural Camp Grounded, a three-day digital detox in the forests north of San Francisco. A UK study by technology retailer Pixmania, published in October 2012, suggested that smart devices were turning people into workaholics by preventing them from ever switching off from work. Its survey found that more than 90% of office workers have an email-enabled phone, with a third accessing them more than 20 times a day. It was estimated that, overall, smartphones and tablets add an extra 460 hours to the working year. Another study by TripAdvisor recently claimed over half of consumers check their work emails every day while on holiday. Mobile distraction Mobile devices have also been found increasingly to distract users from daily activities. For example, the 2013 Mobile Life report by O2 and Samsung found that an estimated 20 million passengers in the UK miss bus or train stops each year due to being distracted by their smartphones many of them London-based. This has reportedly affected 51% of all consumers and caused 15% of commuters to run late for meetings. The leading smartphone distractions were found to be: Using social media/surfing the web (35%) Emails (28%) Gaming (27%) Making calls (15%) Watching video clips and TV (7%). O2 and Samsung have gone as far as to issue Mind My Stop stickers for travellers who become too distracted by their mobiles to notice their stop. Users are encouraged to write the name of a stop on the sticker in the hope that another commuter will alert them. Phubbing The growing reliance on mobile phones and the internet to replace social interaction has led to the coining of the term phubbing the act of snubbing friends and acquaintances by checking messages or replying to texts. In Australia, a Stop Phubbing campaign group has begun, whose website allows companies to download posters, or even placecards for weddings, to discourage phubbing. In the UK, following the well publicised case of a supermarket checkout assistant who refused to serve a customer until she stopped using her phone, YouGov carried out a survey which showed that 57% of consumers check their emails on holiday, a third said they would answer the phone in a restaurant and 19% said they would answer their phone while being served in a shop. According to research by advertising agency McCann, 37% of people feel it is worse to not answer a message than it is to phub friends.
DEMAND FACTORS Expansion of the Internet
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Global user base expands Surging mobile use is due in part to the extraordinary expansion of the global internet user base, and in particular, broadband adoption. Broadband adoption has been driven in recent years by emerging markets, where consumers are increasingly able to afford new technology, and government investment in infrastructure has meant that operators have often leapfrogged outdated technology and implemented latest generation telecom architecture. Euromonitor Internationals database indicates that the number of inte rnet users worldwide (with access to the internet from home, work, mobile phones or via internet cafs) soared by 79% between 2007 and 2012, to 2.4 billion. China and India drive growth Internet use has already reached very high levels throughout the developed world, with more than 90% of the population using the web in Denmark, Norway, the Netherlands and Sweden, and most other developed markets seeing penetration rates of more than 80%. However, in emerging markets such as China and India, numbers are still rising rapidly. In China, the user base grew by 170% over the review period, to 568 million. Nevertheless, it is still the case that the majority of Chinese cannot yet get on-line at home. Internet cafs are popular, with trade sources reporting in 2011 that about a third of the countrys internet population uses the internet from these venues. The governments Broadband China project is intended to deliver high-speed broadband connections to over 250 million households, both urban and rural, by 2015. The take-up of internet services has also expanded quickly in India, as a result of rising demand and more affordable prices of equipment and services. However, due to the countrys relatively low income levels, the prices of computers or smartphones remain out of reach for many consumers, especially those in rural areas. The rapid increase in the number of web users in India has been attributed to the growing popularity of mobile internet and connections in public places. There were almost 7,900 cyber cafs across India in 2011; while a large number of internet kiosks, which were set up by the government and development organisations in rural areas, have helped to boost rural internet usage and narrow the digital gap between rural and urban Indians. Broadband accounted for almost 81% of all internet subscriptions in India in 2012, up from just 23% 2007. Obstacles persist in Latin America Growth in internet usage throughout Latin America has been slower. Obstacles for consumers have included high subscription prices, a lack of internet providers and limited access in rural areas. Businesses are faced with still-widespread poverty and income inequality, inadequate fixed-line infrastructure, and a deficiency in economies of scale. High-speed broadband internet subscription fees are out of reach of most Latin Americans. In Brazil and Mexico, fewer than half the total population were internet users in 2012, although the number of users is rising rapidly. Improving access in remote areas Many of the worlds remotest regions are still without internet access of any kind, but the situation is improving all the time. For example, Google announced in June 2013 that it would introduce giant helium balloons to provide free internet access to isolated, disaster-stricken or poor areas. The concept, Project Loon, was tested in New Zealand, where the thin plastic balloons that are barely visible from the ground use a mix of highly sophisticated and basic methods to deliver internet connections of at least 3G cellular speeds. These carry antennas, radios, solar-power panels and navigation equipment that communicate with specialised antennas on rooftops below. However, they do not have motors and their travel largely depends on wind patterns.
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The aim of Googles project is to provide much cheaper internet connections around the world, since balloons are much cheaper than satellite technology. In many African nations, for example, internet costs are higher than monthly salaries. Providing that a balloon is within a 24mile radius, people will be able to tap into the network. Google requires permission from local governments to tap public airwaves, while if balloons drift into the wrong areas, engineers can use GPS and other technology to adjust their flight. Table 1 % population 2007 Denmark Norway Netherlands Sweden Switzerland Australia Austria Germany Canada France South Korea Belgium UK Japan US Taiwan Spain Poland Hungary Italy Malaysia Russia Greece Brazil Argentina Turkey China Venezuela Mexico Thailand South Africa Indonesia India WORLD
Internet Users as % Population by Country 2007/2012/2017
2012 91.3 94.5 93.2 91.3 86.8 80.9 81.8 83.9 83.8 81.7 84.0 80.2 82.5 80.9 78.7 73.0 69.1 67.0 60.8 59.1 62.2 51.5 54.9 48.0 50.2 45.7 42.1 42.6 38.7 25.3 22.6 19.7 12.3 34.6
2017 96.3 96.2 96.1 92.5 91.2 87.9 87.7 87.6 87.5 87.0 86.5 86.5 86.5 85.8 81.9 77.7 73.9 73.5 68.1 67.7 67.0 61.2 60.3 57.4 56.2 55.3 52.5 51.2 47.9 31.6 29.6 27.7 21.6 41.4
85.0 86.9 85.8 82.0 77.2 69.5 69.4 75.2 73.2 66.1 78.8 64.4 75.1 74.3 75.0 64.5 55.1 48.6 53.3 40.8 55.7 24.7 35.9 30.9 25.9 28.6 16.0 20.8 20.8 20.0 8.1 5.8 4.0 20.6
The growth of internet shopping In tandem with the growth in internet access in general has been a rise in internet shopping, at the expense of physical retailing. Online shopping is increasingly taking place on mobile devices, as more sophisticated shopping apps and secure payment methods are being developed. The US remains the worlds largest market for internet retailing, with sales of US$177.4 billion in 2012. It also continues to grow strongly, registering an increase of 73% over the 2007-2012
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period. However, it is China that has seen the most dramatic growth. According to Euromonitor Internationals retailing database, internet sales in China rocketed from just US$1.4 billion in 2007 to US$64.4 billion in 2012. Not far behind were Japan and the UK, with sales of US$52.0 billion and US$47.9 billion, respectively. Several key markets achieved triple digit growth in US dollar terms over the review period, including Japan (156%), Germany (102%) and France (148%). Table 2 US$ million 2007 US China Japan UK Germany France South Korea Brazil Russia Canada Netherlands Italy Australia Poland Switzerland Norway Sweden Taiwan Turkey Denmark Belgium Argentina Mexico Austria Spain India Venezuela Thailand Greece South Africa Malaysia Indonesia
Internet Retailing by Country 2007/2012
2012 177,397 64,378 52,038 47,879 26,963 25,544 23,761 11,110 10,421 5,286 4,834 4,809 4,685 3,991 3,938 3,674 3,622 3,271 3,191 3,056 2,942 2,753 2,700 2,567 2,358 1,591 733 619 483 398 298 78
% growth 73.2 4,613.2 156.0 66.2 101.6 148.4 55.3 144.6 172.0 68.3 91.4 134.0 143.0 96.7 114.7 44.1 68.5 68.5 353.2 129.1 117.7 316.4 497.7 51.9 74.5 273.1 192.0 81.0 61.6 120.7 130.3 597.3
102,404 1,366 20,329 28,810 13,374 10,282 15,302 4,543 3,831 3,141 2,525 2,055 1,928 2,029 1,834 2,549 2,150 1,941 704 1,334 1,351 661 452 1,690 1,351 426 251 342 299 180 130 11
Increased Adoption of Smart Devices

Along with rising internet usage in general, the increase in web access via wireless devices and the growth in smartphones at the expense of feature phones are the key factors contributing to the mobile revolution. Not all smartphones users access the internet via their devices, but the rapid growth in the smartphone market at the expense of feature phones, and in the tablets market at the expense of PCs and laptops, means that the potential for mobile access is ever greater. According to Euromonitor Internationals consumer electronics database, the share of feature phones shrank from 94% of the total market by volume in 2007 to just 57% by 2012. In absolute
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terms, sales of smartphones shot up from 59.2 million to 673.9 million during the period, while the feature phones market declined from 934.3 million to 895.2 million. Chart 4 Global Sales of Smartphones Versus Feature Phones 2007/2012
Source:
Growth in Wireless Access

Increase in mobile internet subscriptions Internet access via mobile devices has become increasingly common, due to the move towards smartphones and tablets, lower data costs, the mushrooming of Wi-Fi hotspots and the introduction of high speed 3G, 4G and LTE technology. Indeed, internet researcher comScore estimates that more than one out of every three minutes online is now spent on devices other than PCs. Euromonitor Internationals database shows that mobile internet subscription numbe rs grew massively in all countries over the 2007-2012 period. This refers to mobile-broadband subscriptions that allow access to the web via HTTP and use Internet Protocol (IP) for data connection (SMS and MMS are not included, even if they are delivered via IP). It includes only actual subscribers, rather than those with broadband enabled handsets who do not use them to access the internet. The US had by far the largest number of mobile internet subscriptions, at 235.9 million in 2012, followed by China and Japan. Table 3 000 2007 US China Japan Indonesia Russia 20,325 5,012 51,355 528 18,516 2012 235,866 233,400 133,183 77,990 75,442 Mobile Internet Subscriptions by Country 2007/2012
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Brazil India South Korea UK Germany France Italy Spain Egypt Australia Poland Canada Vietnam South Africa Saudi Arabia Turkey Mexico Taiwan Netherlands Sweden Singapore Finland Hong Kong, China Argentina Greece Romania Israel Denmark Chile Austria Czech Republic Norway United Arab Emirates Malaysia Philippines Belgium Portugal Morocco Switzerland Bulgaria Ireland New Zealand Ukraine Colombia Hungary Slovakia Venezuela Peru Thailand
2,239 1,799 26,953 11,647 9,200 5,890 6,304 2,422 3,262 6,087 10,063 2,564 1,142 2,379 1,794 585 31 1,227 2,555 4,774 1,921 335 1,122 495 706 790 944 333 256 607 1,266 2,093 321 96 648 274 1,377 190 943 90 1,203 789 1,009 103 190 192 150 27 20
72,669 61,660 51,522 45,240 33,617 33,100 31,557 24,901 22,543 22,054 18,873 17,350 17,039 13,200 12,280 12,162 11,294 10,742 10,192 9,616 6,481 5,755 5,288 5,100 5,079 5,070 5,043 4,895 4,871 4,681 4,644 4,198 4,125 3,964 3,690 3,638 3,474 3,274 3,202 2,980 2,942 2,910 2,470 2,352 2,297 1,915 1,420 826 100
Higher Network Speeds

Mobile broadband now global The arrival of 3G greatly increased the capability of smartphones, allowing them to offer such services as Global Positioning System (GPS), mobile TV, video on demand and location-based
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services. 4G is now being rolled out across the world, offering even faster mobile broadband access. According to data released by Wireless Intelligence (the research arm of the GSM Association), a total of 580 operators in 186 countries were running mobile broadband networks in early 2013. These are defined as any CDMA EV-DO, HSPA, WiMAX or LTE technology, as well as the TD-SCDMA systems used in China. There were 1.6 billion 3G and 4G subscriptions, equal to 23% of the worlds mobile cellular connections. The US was one of the first markets to start rolling out 4G, in 2010. By September 2012, 22.3 million people were using 4G LTE in 194 cities across the countrys main carriers, AT&T, Verizon, Sprint and T-Mobile. In Asia, Japan and South Korea lead in high-speed connections. Verizon is the leading 4G LTE provider in the US. The company has been innovative, having recently introduced its Share Everything service, which allows multiple devices to connect to one 4G broadband package at the same time. This is attractive to those using more than one device, such as a smartphone and a tablet. In the UK, EE launched 4G in 12 UK cities in July 2013, giving consumers a theoretical top speed of 150Mbps. EE claimed that 24% of the UK population was covered by its 4G network. Although in reality most smartphone users experience speeds of only around 24-30Mbps on average, this is still said to halve the download times for apps, games, films, etc for current 4G users. Other major UK carriers, O2, Vodafone and Three, also announced that they would begin rolling out 4G to their customers by the end of 2013. 4G yet to be launched in China and Brazil Mobile broadband has evolved rapidly in emerging markets. While 2G remains the dominant technology on the Chinese market, Chinas 3G networks went on -line in 2009, after a long delay, and by July 2012, the countrys 3G penetration rate was 16%. China is al so trialling 4G, but industry sources report that licences will not be made available until 2014 or 2015. As the Brazilian government has been supporting auctions that encourage telecom carriers to purchase 4G bandwidth at competitive prices, all four of Brazils major telecom companies have now obtained licences for 4G high-speed internet capabilities. The networks are aiming to have their 4G networks in time for Brazils hosting of the FIFA World Cup in 2014. Indias wireless and mobile infrastructure has also experienced rapid growth, due to the relatively low costs of providing mobile services in comparison to fixed-line services. In an effort to boost rural mobile penetration and reduce the investment costs for mobile operators, the Telecommunications Regulatory Authority of India (TRAI) has, since 2005, allowed mobile operators to cooperate with telecom tower companies in expanding their networks, thus making the roll-out of mobile networks faster and easier. 3G services cover all of Indias major towns and cities, and 4G was launched in early 2012.
Expanding Access To Wi-fi

Introducing more hot spots In response to the growing demand for anywhere, anytime internet access, the number of free or paid-for Wi-Fi spots has increased dramatically around the world, enabling people to log on with their devices without having to rely on 3G or 4G networks. Hotspots may be located in restaurants and coffee shops, transport hubs, airports, libraries, hotels, hospitals, bookstores, services stations, retail outlets, educational establishments and other public places. Mobile apps are available which locate free and paid public Wi-Fi hot spots on wireless devices. For example, Wi-Fi Finder is capable of detecting 545,000 hot spots in 144 countries worldwide. US operator AT&T recently announced that it had more than 2.7 billion connections to its WiFi network during 2012 more than double the number recorded in 2011. It also reported that
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three times more mobile device traffic (more than 5.2 billion MB) was exchanged on its Wi-Fi network in 2012; while 40% more Wi-Fi network connections were made in the fourth quarter of 2012 by smartphones and tablets, compared with the same period of the previous year. In France, the internet service provider Free claims to have 5.0 million Wi-Fi access points, making it the largest Wi-Fi network in the world. The UKs largest high street Wi-Fi provider, The Cloud (part of BSkyB) gives Sky broadband customers free access to its network of more than 18,000 hot spots, and claims to have more than 7 million registered users connecting for over 200 million minutes a week. Recent research by The Cloud found that around 10 million people in the UK log onto a public Wi-Fi hot-spot every week when away from the home, with usage among the young being particularly high. The number of Wi-Fi hotspots has also increased dramatically in many emerging markets. In early 2011, the Chinese government declared that it planned to convert all of the countrys phone booths into Wi-Fi hotspots. Later that year, the Beijing city government announced that it would create more free Wi-Fi hotspots across major public areas in the city, including shopping centres and subway stations, in an ambitious project to become one of the worlds leading wireless cities. China Mobile had 3.8 million Wi-Fi access points in place across China by the end of 2012. In July 2013, the South Korea government announced plans to provide more free Wi-Fi access zones across the country to enable citizens to gain better access to the internet from portable devices. Up to then, around 2,000 locations had been connected with free Wi-Fi networks throughout South Korea, and this number is expected to rise to 12,000 by 2017. Similar moves have been taken in other parts of Asia. In Taiwan, some 4,400 hotspots were introduced across the country at major attractions, transportation hubs and tourist offices. In Thailand, private and state-owned operators have created a consortium aimed at installing 250,000 Wi-Fi hotspots in 2013 and 400,000 by 2015.
Location-based Mobile
Location services, which use the tracking capabilities of smartphones to target customers based on where they are and what decision they are making, have moved beyond simple mobile check-in. With GPS technologies becoming more advanced, location-based services are becoming more precise. They can not only identify which town a user is in, but which restaurant or shop. This works in a number of ways: from mobile apps and IP addresses, to GPS, telephone masts and 3G or 4G connections. Services such as Foursquare and Gowalla began by using social marketing and mobile check-in as a way to drive business to locally-based merchants and provide concierge-type recommendations. Four Seasons was one of the first luxury hotel brands to take the geo-social route with Gowalla for engagement and promotional purposes. Its Gowalla app offers guests concierge recommendations while travelling, and allows them to earn hotel credits. The big players are now rolling out more comprehensive location-based offerings. Apple recently integrated Yelp, an online city guide to leisure venues, into its mapping app so that users can use Siri (Apples voice activated virtual assistant) to access Yelps social location based functions, including check-ins, and communicate with others without exiting the map. It is thereby making maps social by combining them with people, merchants and events. Groupon recently joined the fray by adding a universal search feature to its iPhone and Android apps. Since April 2013, Groupon users have been able to find nearby discounts that are both time-sensitive and rolling. According to Groupon, 40% of its transactions in North America were via mobile devices in April, up from around 30% six months previously. Groupons iPad app is available in 18 countries. Popular location-based mobile apps like Flirtomatic, Skout and Grindr for the gay community have revolutionised socialising and dating for many. Experts believe that people will soon no
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longer need to fill in questionnaires on dating sites. Their personal information will be held on servers in data clouds that will alert them automatically when a potential lov e interest is nearby.
the Transition To Cloud Computing

Cloud computing is becoming increasingly necessary to cope with the rapid growth in world IP data traffic generated by the rapid growth in mobile devices. Web-based cloud services are virtual servers that can be accessed on demand and include everything from e-mail to complex data analysis programmes. As they are hosted by remote machines, they reduce the need for in-house software and hardware, thus increasing efficiency and convenience. All companies or consumers need is the cloud computing systems interface software, which can be as simple as a web browser. The market is developing fast. Gartner recently forecast that global public cloud spending would increase from US$111 billion in 2012 to US$131 billion in 2013, representing a rise of almost 19%. Amazon is still the largest player globally, but is being challenged by Microsofts Azure and Googles Google Cloud Storage. Microsoft also offers free cloud services for consumers, including Hotmail and SkyDrive; while Googles Google Drive, launched in April 2012, offers 5GB of storage space for documents, videos, photos, PDFs and other files. Mobile devices are particularly suited to cloud computing, given their limited processing power, battery life and storage. Cloud infrastructure allows all data processing and data storage to take place outside of mobile devices. The future will see cloud moving beyond computing and storage into a new realm of communications, content and applications.
Security and Privacy Concerns

Use and abuse of personal data With growing use, PCs, smartphones and tablets contain ever larger amounts of personal data, from contacts and photos to calendar appointments, financial information and details of current and past locations. Cookies (small pieces of code left on web devices by browsers, which personalise the online experience) are a cause of concern for smartphone users who access the web. Websites routinely use cookies and other technologies to tailor online customer experiences, enable web analytics, recommend products, allow auto-log in and compile browsing histories. Consumers are becoming increasingly aware that app developers, wireless providers and handset manufacturers can and do use some of this personal information, or sell it to other companies or organisations. For example, a report published in the UKs Daily Mail in September 2013 claimed that companies are accessing peoples private health information through health and fitness apps, such as MapMyRun, and selling them to insurance companies. According to a study by web analytics and privacy group Evidon, the 20 most visited apps transmit information to almost 70 companies. MapMyFitness, another exercise app, reportedly earns half of its revenue from partnerships with insurance companies. According to a survey carried out by online privacy management services provider TRUSTe in early 2013, 66% of smartphone users were more concerned about their privacy on the devices than they were a year previously, while 79% said they avoid using apps which they do not believe protect their privacy online. As part of its Analyst Pulse survey of July 2013, Euromonitor International asked respondents how comfortable they were with websites and apps collecting information about their web usage or selling or sharing this information with third-party marketers and advertisers. The majority of
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respondents in all cases said they felt uncomfortable with these practices, although far more were amenable to companies collecting non-personal than personal data. Chart 5 Attitudes Towards Internet Privacy 2013
Source:
Euromonitor Internationals Analyst Pulse survey of July 2013
Growth of stalker apps The capture of personal data and the development of geolocation technology are also allowing for an increasing array of rather creepy apps that are able to spy on people and reveal the identities of others. One example is the controversial Girls Around Me iPhone app, wh ich allows the user find nearby women using publicly available photos from Facebook and location check-ins from Foursquare. Another is the Brazilian stalker app, Rastreador de Namorados (Boyfriend Tracker), which promises to act like a private detective in your partners pocket. In August 2013, Google Play was forced to remove the app from sale in Brazil in response to complaints about privacy abuses, as well as its potential to be used for extortion. Functions included sending the tracker updates on their partners location and forwarding duplicates of text message traffic from the targeted phone. Similar apps are marketed for smartphone users in other countries, including Europe and the US. Stealthgenie, for example, allows the user to read a partners text messages, listen in on calls, check calendars or remotely turn on a microphone. Children ignore risks Children are at particular risk with regard to privacy, as they often have no qualms about giving away personal information. Many parents were alarmed at the results of a new study published in August 2013 that highlighted how easy it is to find the location of smartphone users who upload pictures to the internet using geo-tagging (although commentators were quick to suggest ways to disable this type of data tracking to greatly reduce the privacy risk). A popular app among children, Snapchat, was developed in response to concerns about the storing of photos and videos by the likes of Facebook and Instagram. Snapchat allows
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recipients to view pictures only for as long as the sender specifies. After a few seconds, the file is deleted from the viewers phone and cannot be recovered. Snapchat is officially limited to users over 13 and is often used by teenagers to send risqu images. However, it has also proved a huge favourite among tweens for sending fun pictures between themselves. While nothing prevents a Snapchat recipient from taking a screenshot of the file, the fact that the app immediately alerts the sender that the recipient has done so acts as a major deterrent to doing this. However, in August 2013, news came of a new iOS app, Snap Save, which not only makes saving Snapchat photos and videos easier than ever, it also allows them to be saved without the knowledge of the sender. Moreover, websites such as Snapchat Leaked and Naked Snapchats, which collect snaps using specialised technology, have emerged on Facebook and blog networks. Regulatory changes While the internet remains largely unregulated, efforts have been made by some government bodies to protect consumers privacy. For example, in the US, the Federal Trade Commission (FTC) has taken action in a couple of high profile cases. The social networking company Path was recently charged with deceiving users by collecting personal information from their mobile address books without their knowledge or consent. Path agreed to settle the charges, and the FTC issued privacy recommendations both for operating system providers (such as Apple, Google, Microsoft and Amazon) and app developers. It requested that they provide smartphone owners with straightforward disclosure about the data they collect and how it could be used. In the EU, the e-Privacy Directive, known as the Cookie Directive, came into effect in May 2012. It requires all marketers and website owners operating in the EU to obtain consent from users before implementing cookies or other technologies to capture online visitor information. This means that cookies may only be placed on machines where the user or subscriber have opted in. This has become more difficult since smartphones have proliferated especially as not all cookies are the same. There are session-based (temporary) cookies, or persistent cookies which stay in a browsers subfolders for anything from 18 months to 18 years, unless manually deleted by the user. Around half of all cookies written onto users browsers are first party, belonging to the site being visited. The difficulty arises with the rest of cookies, which are thirdparty cookies belonging to partners, services or advertisers working with the site. Apples Safari blocks third-party cookies such as those from advertisers, so it is impossible to track iPhone users when they are online. Mozilla is joining Apple in the latest version of its Firefox browser and intends to disable third-party cookies. Smartphone malware Malware is another danger to mobile phone users and has become increasingly common as cheaper smartphones proliferate, especially in emerging markets. Malware spreads most easily through app stores without proper security mechanisms, and appears most commonly on Android devices. It is often hidden in pirated versions of legitimate apps, which are then distributed through third-party app stores. Malware can install additional software to target communications, location or other personal identifying information. The SMS Trojan, for example, sends premium SMS messages which run up charges on the owners phone bill that cannot be recovered. According to software security company McAfee, during spring 2011, Android malware increased by 76%.
MOBILE BEHAVIOUR
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Digital Versus Traditional Media

As more consumers go online, the consumption of digital media especially through mobile devices is growing rapidly at the expense of traditional media. An August 2013 study by PQ Media estimated that global digital media use grew by an average of 18% per year between 2007 and 2012, increasing by 13% in 2012 to an average of 5.3 hours per week. The 12% share of digital media use in 2012 was nearly double the level of 2007, while its share of total advertising and marketing revenue nearly doubled over that period, to 23%. According to the PQ Media study, internet use overall accounted for nearly half of digital time spent (almost 48%), with mobile use accounting for 21% and other digital media 31%. Mobile usage increased by 22% to 1.1 hours per week, while internet use rose by 11% to 2.5 hours. In terms of age groups, the study found that Gen X spent the most time consuming digital media, at 6.6 hours, followed by Baby Boomers, at 5.9 hours. However, this is because in the BRIC markets it is mainly the older, wealthier consumers who are able to afford digital media devices. In developed countries, such as the US, the UK, Australia and South Korea, Millennials rank either first or second in digital media consumption. The study found that consumers in four of the worlds largest media economie s averaged more than 15 hours a week using digital media in 2012, led by Australia (15.8 hours), followed by South Korea, the UK and the US. All four markets have double-digit penetration rates for broadband internet access, over 50% smartphone adoption and growing demand for tablets.
Mobile Phone Activities

According to the results of Euromonitor Internationals Out and About survey of 2012, which covered 6,200 consumers in 15 markets, the most common mobile phone activity away from home, apart from talking, was texting, with over three quarters of respondents (77%) saying they use their phone for this purpose. Email and taking photos were the next most popular activities, which suggests that smartphones have taken over from more cumbersome cameras as consumers imaging device of choice. Fewer than half the respondents claimed to undertake other activities on their phones while away from home, although 48% used social media sites. M-commerce is still in its infancy, with only 15% saying they shop from their device while out. This activity is expected to gain importance in the future as mobile payment systems improve. Chart 6 Global: Mobile Phone Activities Away From Home 2012
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Source: Note:
Euromonitor Internationals Out and About Survey 2012 Question: When you are away from home (shopping, attending social outings, dining out, or on vacation), what activities do you do on your mobile phone or smartphone? Excludes phone calls
App Dependency
Theres an app for that... Apps for mobile devices appear to be taking over consumers lives. Apps have been developed to address almost every task, forcing people to become increasingly reliant on their smartphones or tablets to get them through the day. Apps can be used for wake up calls, news and entertainment, navigation, communication, study, fitness, organising, shopping, travel and a host of other activities. Theres an app for that has become a popular phrase directed at anyone undertaking a task without the use of a phone. In February 2013, Apigee, a leading provider of application programming interface (API) technology and services, reported the findings of its 2013 Mobile App Behavior survey of over 760 smartphone owners across France, Germany, Spain, the UK and US, which confirmed an increased dependency on apps in all countries. Overall, 85% of respondents said they would rather give up drinking water than delete all of their apps! Furthermore, 82% of respondents agreed that there are critical apps that they cannot do without even a day, including email (57%), Facebook (41%) and alarm clock apps (31%). The number of apps used by consumers each day varies. 72% of respondents said they use as many as 10 apps per day, while 2% said they use more than 50 apps per day. The Apigee report found that checking email was what respondents would miss most if they did not have access to apps, with almost half (48%) citing this. It is notable that almost a third of respondents would most miss their wake-up call (32%). For others, apps give them a sense of happiness or pride. The full list of basic things that respondents considered they would be unable to do without apps is as follows: Checking email (48%) Being woken up (32%) Feeling happy (23%) Navigating to work (20%) Maintaining a relationship (19%)
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Finding dates (13%) Ordering dinner (12%) Impressing people (10%) Spain was revealed as the most app-reliant country surveyed, with 93% of respondents saying they could not go one complete day without apps. The importance of various types of app was also found to vary from country to country. For instance, as many as 18% of French respondents said they could not order dinner without an app, while 23% of Spanish respondents said they could not find a date without apps (compared with just 5% of US respondents). 53% of drivers globally admitted to using apps on their smartphone while driving. This was as high as 64% and 61%, respectively, in Germany and France, but just 30% in the UK. Google Maps tops the list A study by UK-based research company GlobalWebIndex found that among the 969 million or so smartphone users worldwide, the navigation app Google Maps was the most popular app, used by over half (54%) of the global smartphone population. Other popular map apps include Nokias Ovi Maps (ranked 11th, with 9% smartphone users) and Apple Maps. The social networking app Facebook Mobile ranked second, according to GlobalWebIndex, used by 44% of global smartphone users. Chinese social networking service Weixin/WeChat also ranks highly globally, even though it is only used in China and certain other countries (mainly Hong Kong, Malaysia and Mexico). The YouTube phenomenon The video-sharing website YouTube was used by 35% of global smartphones users in July 2013. The app is used largely for entertainment, but also for educational and informational purposes. Created in 2005, the YouTube website was bought by Google in 2006. It began as a way for users to upload their own content for the world to see, but companies are increasingly using YouTube to advertise their products or air TV programmes. In 2010, YouTube began free streaming of certain content, including 60 cricket matches of the Indian Premier League. According to YouTube, around 60 hours of new videos are currently uploaded to the site each minute and there are 800 million unique users a month. YouTube now has a powerful influence on popular culture. For example, the music video of the song Gangnam Style by Psy, shown on YouTube in July 2012, sparked a new dance craze all over the world. The video received a record 1 billion views on 21 December 2012. Summary 2 App Google Maps Facebook Mobile App YouTube Google + Mobile App Weixin/WeChat Twitter Facebook Messenger WhatsApp Instagram Foursquare Worlds Most Used Apps July 2013 Type Mapping service Social networking Video sharing Social networking Social networking Social networking Messaging Messaging Media sharing Location-based social
% smartphone population using in last month 54 44 35 30 27 22 22 17 11 6
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networking Shazam Flickr Yelp Vine

Source:
Music identifier Media sharing Reviews Media sharing

Euromonitor International from GlobalWebIndex survey
5 5 3 2
Killer apps In its Analyst Pulse survey of July 2013, Euromonitor International asked its network of incountry analysts and in-house researchers around the world about their app use. The survey found that as many as 83% of respondents regularly use apps on a smartphone or tablet. The figure was especially high among respondents in the Asia Pacific region (92%). When asked what were their favourite apps and what were they used for, most respondents cited social networking or messaging apps, which they mainly use to stay in touch with family and friends. Facebook was the most quoted, followed by the mobile messaging app WhatsApp. WhatsApp Messenger is a cross-platform messaging system which is fast replacing texting. It sends data using either Wi-Fi or the phones web package, so is free to use to anywhere in the world. In August 2013, WhatsApp had over 300 million active users, and 325 million photos were being shared each day. The instant messaging/VoIP app Skype ranked third in terms of its number of mentions by Analyst Pulse respondents, while the similar services Viber and Asian-based Line were also cited in the survey as favourites. The Google Maps app is used worldwide for navigation, while rival Israel-based traffic app Waze was found to be a favourite among Latin American respondents. Waze also provides satnav functions with real-time updates to smartphones, and claims to have more than 50 million direct users worldwide. In 2013, Google acquired Waze for US$1 billion, but in August it was reported that the deal was being investigated both by the FTC in the US and the UKs Office of Fair Trading for being potentially anticompetitive. Entertainment apps, such as YouTube and Tune In Radio, which allows users to listen to radio stations from anywhere in the world, also ranked highly in Euromonitor Internationals opinion survey. Several music services were quoted, including Spotify, Pandora and Shazam, which identifies music tracks when the phone is pointed towards them. Facebook-owned Instagram was cited as a favourite app by several respondents worldwide; while practical apps, such as Flashlight and clocks that wake the user, also proved popular. In addition to the common apps in the table below, respondents cited a number of local apps in sectors that are more fragmented, such as gaming, fitness, news and weather. Fitness apps included Fitness Sports Tracker (in the EMEA region), My Fitness Pal (in North America and EMEA) and Map My Run (North America). Several respondents also quoted apps that send a taxi to the location of the user, such as Uber in the US and Tappsi in Latin America. Apps that locate a missing mobile phone are also popular, such as Wheres My Droid and Find iPhone, while some respondents use apps such as Juice Defender to preserve their phones battery. Summary 3 Euromonitor International Pulse Survey: Favourite Apps 2013 App (number of respondents Used for Home regions of respondents citing as a favourite)
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Facebook (48) WhatsApp (36) Skype (20) Google Maps (15) Twitter (14) YouTube (10) TuneIn (7) Instagram (7) Pinterest (6) LINE (5) Endomondo (5) Flashlight (5) Shazam (5) Linked-In (5) Viber (4) Waze (4) Safari (4) Spotify (4) Pandora (4)
Source:
Social networking Messaging Instant messaging Navigating Micro blogging Information/entertainment International radio Media sharing Sharing links Messaging Tracking sports activities Light source Music identification Business networking Instant messaging Navigation/traffic updates Browsing Music streaming Music streaming
EMEA; North America; Latin America; Asia Pacific EMEA; North America; Latin America; Asia Pacific EMEA; Latin America; Asia Pacific EMEA; North America; Latin America; Asia Pacific EMEA; North America; Latin America; EMEA; North America; Latin America; Asia Pacific EMEA; North America; Latin America EMEA; North America; Latin America; Asia Pacific North America; Latin America Asia Pacific EMEA EMEA; North America; Latin America EMEA; Latin America EMEA; North America; Latin America; Asia Pacific EMEA; North America; Latin America Latin America EMEA; North America; Asia Pacific EMEA; North America; Asia Pacific North America
Euromonitor International Analyst Pulse survey, July 2013
Social Networking Behaviour

The move towards online communication The social networking phenomenon has been a key driver of the trend towards mobile cocooning. Social media has brought the world together as a series of global communities, but has also contributed to a breakdown in face-to-face interaction on a local level, as communication increasingly takes place online via mobile platforms. Facebook and Twitter have fundamentally changed the way people interact with one another, and the way consumers interact with companies. Furthermore, social interaction has now been incorporated into almost all other internet activities, including shopping, video sharing, music and gaming. Many streaming music services, such as Spotify, are directly integrated with social
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networking sites, allowing listeners to share their favourite music and playlists with their network. Sites like YouTube, or the Chinese equivalents Youku and Tudou (which are reportedly merging), allow viewers from all over the world to comment on videos that they watch, and upload new videos themselves. Online video games can also be played as applications within popular social networks, such as FarmVille. These games are then linked to the players profile and those in their network are updated on their progress within the game, or can even download the application themselves to play together. Reasons for using social networking websites Euromonitor Internationals Global Youth Survey of 2011 found that the main motivations for using a social networking website were to stay in touch with friends and to keep abreast of what is happening in the world. As many as two thirds of global respondents said they used social networking to stay in touch with local friends, and almost a half (49%) did so to stay in touch with friends abroad. There were also found to be a variety of other important reasons for using social networking websites, such as sharing news, opinions, music and photos, arranging social events and dating. Chart 7 Reasons for Using Social Networking Websites 2011
Source:
Euromonitor Internationals Global Youth Survey 2011
Leading social networking websites Facebook remains the worlds number one social networking website and continues to grow in terms of users. According to research by GlobalWebIndex, just over half of internet users logged onto Facebook at least once a month in the first quarter of 2013. Behind Facebook, competition is fierce between Google+ (26%), Google-owned YouTube (25%), and the microblogging site Twitter (22%). However, while Twitter was placed only fourth overall in 2013, it is likely to move up the rankings in the future, as GlobalWebIndex claims it is
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the fastest growing social network. It estimates that between the second quarter of 2012 and the first quarter of 2013, the number of active users of Twitter rose by 42% worldwide. The major international social networking websites were followed closely by a cluster of Chinese sites, namely Sina Weibo, Qzone, Tencent and Tencent Weibo, and the slightly smaller YouKu, RenRen and Tudou. This reflects the vast size of the Chinese internet user base and the fact that foreign sites such as Facebook, Twitter and YouTube are banned in China. Although these figures relate to all users and not just mobile ones, analysts agree that much of the growth in social network usage is coming from mobile phones and tablets. Chart 8 Leading Social Media Websites Globally 2013
Source: Note:
Euromonitor International from GlobalWebIndex: Stream Social: Quarterly Social Platforms Update Relates to users logging on to the site at least once a month in the first quarter of 2013
The rise and rise of Facebook Facebook has reached staggering proportions. In 2012, it had more than 900 million users and was available in more than 70 languages, while 300 million photos were uploaded each day. According to statistics from Socialbakers, Asia became the largest user base for Facebook during the course of 2012, with 278.7 million users. Nevertheless, penetration in the region remains low, at just 6.9%, which is largely due to its being banned in China. China has the worlds largest internet base, and its Facebook equivalent, Renren, has 154 million users. The rapid growth in Asian users has been fuelled by countries such as India, Japan, Indonesia, Vietnam, South Korea and Thailand. Facebooks highest penetration is in North America and Oceania, where almost 45% and 41% of the population, respectively, are Facebook users. Facebook has made great strides in Latin America, recently overtaking the regional player, Orkut, in terms of active users. According to Socialbakers, Brazil became the second largest country for Facebook in 2012, and gained the most new monthly active users (almost 30 million) over the year.
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However, in terms of percentage growth, Vietnam and Japan grew more quickly, with the number of users in Japan increasing by 174% over 2012, from 6.3 million to 17.2 million. This means that Facebook might soon overtake local player Mixi in Japan, which has about 20 million users. Some analysts attribute Facebooks rise in popularity in Japan to the tsunami and earthquake disaster of March 2011. With the countrys major form of communication (mobile phones) down, they took to social networking to connect with friends and family. It would also appear that more Japanese college students are using the social media site to look for work. Table 4 Facebook Users by Region 2012 Number of users (000) Asia Europe North America South America Africa Oceania
Source: Euromonitor International from Socialbakers
% population
278,747 251,582 241,226 142,980 51,759 14,824
6.9 30.4 44.7 36.1 5.1 41.1
Table 5
Fastest Growing Facebook Countries 2012
Number of users (000) 1 January Brazil India Japan Indonesia Mexico Vietnam US South Korea Thailand Germany
Source: Note: Euromonitor International from Socialbakers Ranked by growth in absolute terms
31 December 64,878 62,714 17,196 51,489 40,230 10,658 163,818 10,063 17,721 25,332
% growth 84.5 51.5 174.4 23.3 29.8 195.3 4.1 87.9 33.5 14.5
35,155 41,402 6,266 41,775 30,989 3,609 157,412 5,355 13,276 22,119
Twitter: shaping public opinion The microblogging website Twitter has become a key part of todays global culture. Twitter has given everyone a chance to make their voice heard, from reporting news to broadcasting thoughts, sharing ideas and organising protests. As such, Twitter has come to shape public opinion and change the way the world communicates and collaborates. Since its launch in 2006, the website has gained over 200 million regular users, with thousands of new users signing up each day. The average number of tweets sent per day rocketed from 50 million in 2010 to 500 million in October 2012. Twitter has contributed to the growing influence of celebrities on consumer behaviour and buying habits (see Commercial Impact section), and is also playing an ever more powerful rol e in political campaigns and protest movements. In August 2013, the three most followed Twitter accounts were all pop singers: Justin Bieber, Katy Perry and Lady Gaga, with 43.4 million, 41.2
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million and 39.8 million followers, respectively. They were followed in fourth place by US president Barack Obama, with 35.5 million followers. Following a campaign by a number of women who were targeted with abusive messages by trolls on Twitter, including the European editor of Time magazine, Catherine Mayer, the website extended its report tweet option in 2013 to take in users across all platforms, including desktop websites, and not just mobile phones. The changing face of the news Mobile devices are having a major impact on the type of news and the rate at which news is being consumed. In the UK, around a third of all traffic to leading news websites such as the BBC reportedly now comes from smartphones. Live blogs, which consist of short updates that incorporate the backchat from social media, are becoming increasingly popular for news and sport. Younger people, in particular, are ignoring traditional sites and obtaining their news directly from links in their Twitter or Facebook streams. In future, social video services, such as ThisNewsNow, which focus on short viral videos with a new informal style, are expected to become popular. At the same time, the combination of mobile and social media has increased the speed with which malicious gossip, in addition to genuine news, can spread around the world. In the UK, Lord Justice Leveson called for new laws to end what he calls mob rule and trial by Twitter. More high-profile Twitter and Facebook prosecutions could take place in the future, along with new social media education programmes in schools and workplaces.
People Power
User-generated content Regardless of whether they eventually buy over the internet or at a physical store, a growing number of consumers first research products, services and companies online by studying customer reviews. As a result, ratings websites and apps have become a powerful driver of consumer behaviour. Added to the constant tweeting of opinions and brand endorsements via Facebook, it seems that the power of consumers to influence both each other and brand strategies is becoming ever greater. Despite the debate about the validity of online ratings and peer-to-peer reviews, they continue to assume a greater importance within consumers buying decisions a nd are likely to continue to do so over the forecast period, as more people come online and come into contact with sites offering respected reviews, such as Amazon or TripAdvisor. Consumers will also become more savvy about how to spot fake reviews or about ignoring people with an obvious grudge or who just happen to have had an isolated unfortunate experience. The findings of BrightLocal.coms Local Consumer Review Survey (2012), which included 2,862 respondents in the US, Canada and the UK, revealed a positive shift in consumer trust and appreciation of online reviews between 2010 and 2012. Around 72% of consumers surveyed said that they trust online reviews as much as personal recommendations, while 52% said that positive online reviews make them more likely to use a local business. According to the survey results, 46% of consumers had read reviews of restaurants/cafs, up from 31% in 2010; while 22% had read reviews of hotels, B&Bs or guest houses, which was down from 26% in 2010. The use of reviews of doctors and dentists shot up from 11% in 2010 to 21% in 2012. In the past, reviews were mainly been written on PCs, but increasingly, as more and more tasks are carried out on the move, apps have been developed to enable consumers to read and write reviews directly from their mobile devices. Yelp announced in August 2013 that it would finally allow people to post reviews directly through its mobile app rather than only via a PC. Yelps mobile app was used on nearly 10.4 million unique mobile devices on a mont hly average
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basis in the second quarter of 2013. Reviews that are deemed too short by Yelp will be converted to Tips, in order to maintain the quality of reviews written on the move. Crowdsourcing Crowdsourcing is another type of user-generated content (UGC). The most obvious example of a crowdsourced website is Wikipedia, which allows users to write and edit entries for its online encyclopaedia. However, companies have also begun to take advantage of crowdsourcing techniques by consulting consumers about their experience of a product or on the design or marketing of new products sometimes with rewards (see Commercial Impact section). Many companies report that consumers enjoy being part of the product development process and like to be heard regarding feedback on products they use. Crowdsourcing is increasingly taking place on web-enabled devices, in line with the rise in mobile usage. With the development of geolocation services, there has recently been a boom in crowdsourced travel apps, such as Localmind. This allows consumers to ask questions of local people who are checked in at any location around the world. Questions may include, for instance, how crowded a venue is, or which specials are on offer. Users can send follow-up messages and also accrue karma points for helping others. In another recent example, a project was launched by Vietnams National Tourism Administration in 2013, which enabled both residents and visitors to record information and impressions of destinations, local culture and cuisine via a new smartphone app for tourists, called Kool Vietnam. The aim of the app is to help raise Vietnams profile as a tourist destination.
Entertainment on the Move

A burgeoning sector The mobile entertainment sector has grown rapidly in recent years, due to the roll-out of 3G and 4G data services, the increasing depth and sophistication of the music, video and games available for web enabled devices and the proliferation of tablets and ultrabooks, whose bigger screens allow for more comfortable viewing. The widespread availability of high-speed internet access has significantly enhanced the media consumption experience, with streaming and downloading entertainment becoming faster and more convenient by the day. After carrying out a study of 50,000 consumers in more than 50 countries, Canadian research company IE Market Research Corporation estimated that aggregate revenue from mobile music, mobile gaming, mobile personalisation, mobile TV and other premium content amounted to US$39.6 billion in 2011 and was forecast to rise to US$53.9 billion in 2016, giving a CAGR of over 6%. The entertainment industry is realising the potential and benefits of adopting mobile as a key medium to enable it not only to reach a wider audience, but also to facilitate content production and distribution, and make it more cost-effective. Music streaming Mobile entertainment is dominated by the music segment, in which ringtones have given way to full track downloads and audio streaming services. Most music is still sideloaded from PCs, but while the problem of digital piracy remains huge, many consumers use legal streaming or download services such as Spotify, Pandora and Apples iTunes. Cloud computing is also emerging and will continue to grow as an alternative to physical music storage. In 2013, it was reported that the iTunes Radio service was set to challenge Spotify and Pandora. A new Tags feature in OS X Mavericks helps users organise and find files on a Mac or using Apples iCloud. Apple is already believed to have signed licensing d eals with Warner Music Group and Universal Music Group.
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Pandora relies on its users being connected to the internet at all times and plays songs at random within certain genres free of charge. Spotify has a catalogue of some 20 million songs and charges users a set monthly amount for streaming, subject to the number of songs and whether they want to stream on their mobile devices. Spotify previously offered downloads, but stopped the service in January 2013. Pandora is supported by advertising, whereas Spotify uses a mix of advertising and subscriptions. iTunes Radio is free, supported by advertisements. Nokia Entertainment has also had a streaming radio service in place since 2011. Mobile video still in its infancy Mobile video streaming has made huge advances over the last year, especially since 4G has begun to roll out in several countries. According to an article on streaming media.com, The State of Mobile Video 2013, tablets and smartphones have already come to account for most of internet video consumption in the US. This is largely thanks to the growth in tablets, as well as design improvements in screen quality, size and battery life, which allow for a better viewing experience. Another factor contributing to the growth of mobile video streaming is the expansion of Wi-Fi networks. Due to the high cost of data via telecom providers, consumers are increasingly using Wi-Fi spots to gain access to video content. According to a report from Rhythm NewMedia in 2012, Wi-Fi-based video consumption across both tablets and smartphones increased from 51% of all of Rhythms video consumption in the second quarter of 2011 to 71% a year later. According to the streaming media.com article, the 2012 London Olympic Games also contributed strongly to the shift towards mobile content. During the games, the BBC Online service reached more than 65% of the adult UK population, as well as a good proportion of the global audience. BBC Future Media claimed that with 12 million video views for mobile devices and over 1.9 million downloads of the Olympic smartphone app, more than 34% of content requests to the BBC Sport website were from mobile devices. A new market of mobile gamers Mobile gaming is another segment that is expanding rapidly and continues to hold huge potential for growth. Technologically advanced mobile handsets and smartphones are competing ever more strongly with traditional video game consoles and PC games. Many mobile games are based on the fremium model, whereby games are downloaded for free but charge for in-app purchases at crucial junctures. According to research by Newzoo, in 2011 mobile gaming accounted for 13% of all time spent on games worldwide, totalling more than 130 million hours a day. It also accounted for 9% of total money spent on games, at US$5.8 billion. According to Newzoos research, 4.2 million iOS games are downloaded per day in the US, and 2.4 million in the key EU markets. Newzoo estimates that the number of US consumers playing games on their smartphone, tablet or iPod Touch surpassed the 100 million mark in March 2012, representing growth of 35% since the previous year. Europe counted a further 70 million gamers across seven countries, having seen lower growth of 15%. Whereas males have traditionally dominated video games usage, Newzoo found that women were found to be almost as avid mobile gamers as men. In the US, men accounted for 52% of mobile gamers, and in the key European markets 55%. Mobile gaming is also very big in the Asia Pacific region, in particular China, Japan and South Korea. Globally, Candy Crush Saga was the most downloaded game across both iOS and Google Play platforms in May 2013. However, Japans Puzzle & Dragons (GungHo Online) continued to generate the most revenues for Google Play. Summary 4 Top 10 iOS Game Apps by Monthly Downloads May 2013
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Game 1. Candy Crush Saga 2. Fast & Furious The Game 3. Iron Man 3 The Official Game 4. Hardest Game Ever 2 5. Angry Birds Friends 6. Tetris Blitz 7. FallDown! 2 8. Little Dentist children games 9. Fruit Mania 10. Running with Friends
Source:
Publisher King Kabam Gameloft Orangenose Studios Rovio Electronic Arts Hannes Jensen George CL Storm8 Zynga
Country base UK US France Taiwan Finland US Sweden Australia US US
Euromonitor International from App Annie Index
Summary 5 Game
Top 10 Google Play Game Apps by Monthly Downloads May 2013 Publisher Country base King Liloo Imangi Studios Halfbrick Studios Zakeh Zeptol.ab Fingersoft Pie Labs Rovio Rovio UK Denmark US Australia Lebanon UK Finland Russia Finland Finland
1. Candy Crush Saga 2. Subway Surfers 3. Temple Run 2 4. Fruit Ninja Free 5. Pou 6. Cut the Rope: Time Travel 7. Hill Climb Racing 8. iPhone lock Screen Theme 9. Angry Birds 10. Angry Birds Friends
Source:
Euromonitor International from App Annie Index
Smart Travel
Smartphone reliance and fast mobile internet access have transformed nearly all aspects of life, but travel has seen some of the most dramatic changes. Todays apps can provide a variety of travel-related functions, including navigation, translation, traffic advice, check-in, reviews and reservations, or help a find cheap, last-minute hotel. PhoCusWright estimated that the US mobile travel market could exceed US$8 billion in value in 2013. Online travel companies already report a significant percentage of their bookings via mobile. However, opportunities for travel applications go beyond bookings. Advertising revenue will flow to travel apps in part because they are able to ask for and collect location data from users. Mobile is especially popular for last-minute hotel bookings. According to Orbitz, more than 70% of reservations coming through smartphones are being done within a day of check-in, and
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Expedia reported a similar figure of 68%. Mobile has clearly created a new business opportunity in hotel booking, creating a channel through which to sell rooms that otherwise would remain unoccupied and unsold. Mobile travellers are a lucrative audience for brands and advertisers. For example, research shows that business travellers are more likely to book their travel on mobile and consumers who use their mobile devices for travel-related services tend to have higher than average incomes. The following table gives a list of popular or interesting travel-related apps. Summary 6 App TripAdvisor Google Maps Selected Travel Apps 2013 Summary Allows users to view and post reviews of hotels, restaurants and attractions Free mapping app with built-in Google local search, voice guided turn-by-turn navigation, public transit directions and Street View Finds the best deals on fuel, and allows users to pin individual service stations to the Start screen to get real-time updates on fuel prices Free app giving hourly forecasts for more than 2.7 million locations worldwide Free app which searches hundreds of travel sites to find the best deal on flights, hotels or car hire Live flight status tracker Free currency changer using live rates When the user inputs where they are going, how long for and who with, the app will suggest a list of what might be needed, split into essential, clothes, gadgets and others A geo-tagged directory of 25,000 listings for budget hotels. Also provides access to over 3.5 million user reviews When the user forwards various confirmation emails for flights/hotels/hire cars/restaurant bookings etc to the website, the app instantly generates an itemised itinerary for the trip. The premium version generates alerts to let the user know when flights are delayed or gates change Orienteering app, with maps showing contour lines. Facility for storing maps on SD card in case mobile signal drops out Gives directions to the nearest source of wireless internet and allows maps to be downloaded before departure Translator, with add-on features such as textto-speech, history tracking, search, landscape display options and Twitter/Facebook/SMS/email support Gives emergency service numbers across the globe for police, ambulances, fire engines and
GasBuddy
AccuWeather Kayak
FlightTrack Pro XE Currency Packing Pro
Hostelworld
WorldMate
MapMyHike GPS Hiking
Wi-Fi Finder
iHandy Translator Pro
TravelSafe Pro
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embassies JetLag Genie When the user inputs dates, destination and sleep times, the app will help them adjust sleeping habits prior to departure to cope better when the time comes Provides times across the world Free texting and video messaging app that can be used anywhere in the world with a WiFi or 3G connection A guide to the transportations systems of more than 400 cities Calculates tips according to local cultures Location-based app that locates the user and offers a list of tips from those who have been there Free app allowing users to make discounted hotel bookings at more than 330,000 properties in 184 countries; includes reviews and maps
World Clock WhatsApp
MetrO Tipulator FourSquare
Booking.com
Source:
Mobile Shopping
Smarter purchase functions The increasing sophistication of smart device functions is allowing users the convenience of making their purchases on the move. M-commerce enables consumers to buy goods by way of an app that acts as a go-between from the smartphone to the store, thus cutting out the website completely. However, consumers are not only buying merchandise, services and content direct from their smartphones or tablets, they are also using apps to get the most out of their shopping experience. Products and companies are meeting the needs of consumers by facilitating instant purchasing, offering downloadable coupons, highlighting promotions or special offers, and displaying customer reviews. This has been facilitated with the invention of QR (quick response) codes, which allow for the encoding of a far larger amount of data than barcodes, and in a smaller space. They can quickly and easily link to content on smartphones, allowing consumers to download coupons, link to a brands website for more product information, or compare prices in store. Mobiles play a greater role in shopping experience Euromonitor Internationals Out and About survey of 6,200 consumers in 15 markets worldwide, carried out in 2012, confirmed the increasingly important role played by mobile technology as part of the shopping experience. The survey revealed that as internet access and smartphone ownership rise, shoppers are becoming increasingly accustomed to gaining knowledge about products and services from technology rather than from salespeople or advertisements. Respondents showed themselves to be more likely to turn to their smartphone to check a website for product information (35%) than they are to ask for help in-store (29%). Although some physical retailers have begun offering their own technology, often in the form of in-store kiosks, these have yet to gain widespread popularity among shoppers. In the UK,
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retailers such as Argos are introducing Wi-Fi into their stores to encourage shoppers to use their mobile devices to compare prices and order products. Apps replace salespeople While checking a website on a smartphone for product information in stores is now more common than asking a salesperson, human interaction while shopping has not yet been universally replaced by technology. Indeed, in emerging markets such as Brazil and India, shoppers still turn to salespeople more frequently than websites. However, in other regions, particularly developed countries, where shoppers are less likely to seek product details from any source, websites are quickly overtaking in-store salespeople in popularity. This is especially the case in the UK and Japan, where respondents were found to be around three times more likely to visit a website frequently on their smartphone for shopping information than they are to speak with an in-store salesperson. Similarly, Chinese respondents, among the most tech-savvy, are much more likely to visit a website than they are to refer to a salesperson. QR codes slow to take off The Out and About survey revealed that the use of QR codes while shopping is still relatively uncommon. Over 40% of respondents in developed countries were found to have never scanned a QR code for product information. Even in China, where respondents often use technology to augment their shopping experience, only one fifth frequently scan QR codes in stores. Beyond store-specific mobile activities, many consumers turn to their smartphones for other shopping-related information, whether they are in stores or simply out of the house. The most common of these activities is checking product prices. A quarter of respondents were found to use their smartphone to obtain price information on potential purchases. Mobile price-checking is especially common in India, China, and the US, where over one third of respondents claimed to do so. The influence of reviews Less common on smartphones, although still important to many consumers, are the product and service reviews of other shoppers. Fewer than a fifth of respondents said they read or write reviews on their smartphones while out and about. However, these reviews influence purchase decisions for over half of respondents, indicating that they may be more commonly read while at home rather than while on the go. The ability to read the reviews of other consumers on a smartphone is a particularly powerful tool for shoppers, and one that is likely to grow in popularity as peer opinions become more important in the purchase decision-making process. Chart 9 Frequency of Mobile Phone Activity in Stores 2012
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Source: Note:
Euromonitor Internationals Out and About survey of 2012 Responses to the question: When shopping in stores, how often do you use your mobile phone to check the following to get more information, check inventory, or compare prices?
Growing Popularity of Fitness Apps

From weight loss to medical questions, there is a growing range of health and fitness apps available for smartphones. Nevertheless, while it is evident that mobile health and fitness apps are transitioning into the mainstream, Euromonitor Internationals Analyst Pulse survey of January 2013 found that the vast majority of the global analysts and in-house researchers questioned still rely on traditional sources when it comes to health issues. Only 10% of respondents said they seek general health-related information from apps such as WebMD, with respondents aged 18-29 years comprising the majority of users. Although medical apps are on the rise, it was recently reported that apps that actually help diagnose or treating medical conditions will soon become subject to stricter guidance, in order to minimise the potential for errors and subsequent liability risks to peoples health. For this reason, many such medical apps are being considered for regulation as medical devices. Fitness apps, also used largely by younger people, are more popular, with Euromonitor Internationals Analyst Pulse survey finding that an average of 15% of respondents look to apps for diet and exercise advice. General fitness apps, such as MapMyRun, Workout Trainer and NikeFuel, were found among Euromonitor Internationals Analyst Pulse respondents to have the broadest appeal, with more than one quarter of women and one fifth of men having downloaded such apps. Women across all regions were found to be more than twice as likely as men to download weight management apps, such as Weight Watchers, Lose it! and Calorie Counter.
COMMERCIAL IMPACT Growth of Internet Enabled Devices
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Smartphones gain share at the expense of feature phones The most obvious market impact of the move towards mobile-centric lifestyles is a rapid rise in sales of smartphones, tablets, ultrabooks and hybrid devices, which allow consumers to have an anytime-anywhere computing experience. The market for PCs and portable devices changed dramatically over the review period. In 2007, the picture was very different to how it is now, with laptops and desktops being the two largest sectors in value terms, while tablets, netbooks and e-readers were still in their infancy. By 2012, smartphones had become by far the largest category, with sales reaching US$202.9 billion, following value growth of over 700% between 2007 and 2012. Androids rise to domination The growth of smartphones was largely at the expense of feature phones, as consumers increasingly desired connectivity. Within smartphones, Googles Android mobile operating system has been the major success story of the past two years. Unlike Apples iOS or Blackberrys proprietary operating system, Android is an open -source code that can be used by competing handset manufacturers and app developers. Leading players Samsung, Motorola, LG, HTC and others produce Android-powered handsets. This allows the use of Android on handsets across price segments. Nokia ditched its Symbian mobile phone operating software in 2011 and switched to the Windows platform. Two years later, it launched its successful Lumia 1020, which boasted a 41 megapixel camera. Windows is likely to expand as a mobile platform over the forecast period, following Microsofts merger with Nokia, announced in September 2013. Tablets catching up with laptops Tablets ranked third behind smartphones and laptops in 2012, with sales of US$52.7 million, following phenomenal growth. Despite their slow progress in the face of competition from tablets and netbooks, laptops remain the largest source of revenue for computer manufacturers. Laptop/tablet hybrid models are expected to maintain a price premium over clamshell designs, driving demand for laptops, especially in emerging markets. Both desktop computers and portable media players were hit by the rise in portable computers and smartphones. Sales in these sectors fell by 36% and 35%, respectively, between 2007 and 2012, to US$40.1 million and US$17.2 million. In the tablet and smartphone market, more consumers are entering the market due to the entry of more affordable devices, such as the iPad Mini. Desktop PCs have lost popularity as consumers require convenience and portability, while smartphones integrate many features previously performed by single function devices. For example, smartphones increasingly offer large amounts of storage for music, and mobile network data connectivity enables consumers to access streaming services. Despite e-books being available on smartphones and tablets, e-readers also made rapid progress over the review period, largely due to a massive push by Amazons Kindle. Sales of e readers reached US$2.6 billion in 2012, affecting the print publishing industry. While demand for e-readers is slowing in the US, due to companies like Amazon moving towards inexpensive tablets and away from e-ink type devices, increasing content availability, combined with a large number of economy priced products, continues to fuel demand for e-readers in Europe and Asia Pacific. Table 6 US$ million 2007 2012 % growth Global Sales of Selected Electronic Devices 2007/2012
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Smartphones Laptop computers Tablets and similar Desktop computers Portable media players Netbooks E-readers
24,316 76,903 253 62,281 26,568 73 55
202,860 94,615 52,707 40,087 17,174 9,322 2,598
734.3 23.0 20,741.0 -35.6 -35.4 12,758.2 4,589.5
China becomes largest smartphone market China and Japan both overtook the US during the review period to become the largest markets for smartphones in 2012, worth US$39.7 billion and US$20.5 billion, respectively. Nevertheless, the US market continued to grow strongly, with sales up by 258% since 2007, to US$13.6 billion. Japans progress was particularly spectacular, with growth exceeding 4,000%; but Chinas vast size, combined with its growing middle class consumer base, means there is more potential for growth in this market. Among the leading smartphone markets, South Korea, Mexico and Brazil witnessed the most dynamic growth. Sales in South Korea and Mexico were virtually non-existent in 2007 but had reached US$6.2 billion and US$3.3 billion, respectively, by 2012. Sales in Brazil rocketed from just US$27 million in 2007 to US$6.6 billion in 2012. However, limited network coverage in large rural areas, especially across major territories such as India and China, continues to pose challenges to growth in some markets. Chart 10 Leading Markets for Smartphones 2012
Source:
Lower prices drive sales in emerging markets Declining prices of components and high volume sales are enabling manufacturers to produce smartphones more cheaply and efficiently. This has led to a broadening of the price range of
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smartphones. While top-tier devices still sell for around US$700, there is a rapidly growing array of pay-as-you-go devices available for under US$200. Indeed, according to a June 2013 report from IDC, average selling prices for smartphones could decline from US$407 in 2012 to US$309 by 2017. Growth in emerging markets, in particular, is arising from consumers switching from feature phones to low-cost smartphones. Huaweis Android smartphone, on the market for less than US$100, has had success in Kenya, and several other manufacturers are launching similarly low-priced products across Africa, Southeast Asia, Latin America and India. Likewise, manufacturers such as Micromax Informatics and Olive Telecom have been introducing their own low-priced tablet PCs. Chinese internet companies, such as Alibaba and Baidu, have also launched cheap handsets using their own mobile platforms, while big brands, such as Lenovo, ZTE and Huawei, are also offering cheaper phones. Smartphones driven by innovation At the upper end of the market, smartphone development has focused on making products thinner and more powerful. For example, in summer 2013, LG unveiled what it claims to be the worlds slimmest full HD panel for handsets. Its new technology, Advanced One -Glass-Solution, has dual flexible circuits that sit between the panel and touch film, which is said to reduce the lines on the panel by 30%. LGs new panel measures just 2.2mm, with a 2.3mm bezel, and measures 5.2 inches (13.2cm) diagonally. The panel was developed in time for the launch of LGs Optimus G2. Meanwhile, Chinese manufacturer Huawei unveiled what it claims is the worlds slimmest smartphone, the Ascend P6, which is 6.2 mm thick (compared with 7.6mm for the iPhone). Moreover, its MagicTouch feature allows the screen to respond even when the user is wearing gloves, while its new power-saving technologies are said to improve the phones performance by more than 30% compared with smartphone batteries of equal size. It is reported that Huawei is focusing on pricing to build share in major European markets. In the UK, Ascend P6 is expected to cost just US$601, compared to US$828 for the iPhone 5. Manufacturers are also attempting to combat slowing sales in the high-end market with smaller versions of their smartphones that come with lower prices. For example, Samsung introduced the Galaxy S 4 Mini in May 2013. Analysts also expect Apple to introduce a smaller and less expensive iPhone, following its decision in 2012 to release the iPad Mini. Samsung leads the way in smartphones As the smartphone market is still relatively immature, companies are vying for market leadership and shares have changed frequently in recent years. Samsung has emerged as the strongest player, overtaking Apple in 2011 and increasing its volume share significantly to 32% in 2012. Samsung has established a sizeable presence in both Europe and China. The company claims to have sold 12.5 million smartphones in China in the first three months of 2013, placing it ahead of domestic rivals Huawei and Lenovo. Most of the smartphones sold by Samsung in China are mid-to-low end devices. The company has also invested heavily in customising its applications in China. Apples share grew slightly to just under 20% in 2012, but Nokias share p lunged from 15% in 2011 to just 6% in 2012. Its recent acquisition by Microsoft may lead to renewed growth, however. Both Google and Sony entered the smartphones market in 2012 and immediately captured global shares of 4% and 3%, respectively. Chinese manufacturer Huawei is an up-and-coming company that is expected to gain share rapidly in the future.
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Chart 11
Top 10 Global Smartphone Manufacturers by Retail Volume 2012
Source:
Apple loses its grip on tablets market Since Apple launched its first iPad in 2010, the tablet has gone from an early adopters must have to a common device used by consumers from all walks of life. Its success lies in the fact that it successfully bridges the gap between the laptop and a smartphone, having almost as much power and the larger screen of the former, with the convenient touch screen format of the latter. An increasing number of consumers are willing to pay for this ideal platform for delivering and consuming content both at home and on the go. Competitors like AsusTek Computer and Samsung were quick to enter the market with Android-based products, while 2011 saw the launch of Amazons attractively priced Kindle Fire. In response to consumer demand for smaller devices that were more portable than tablets but allowed for a better viewing experience than smartphones, several manufacturers have launched mini tablets. The first to arrive on the market were Googles Nexus 7 An droid tablet and Amazons Kindle Fire HD, each with 7-inch (17.8cm) displays. Their launch was followed by Apples release of the iPad Mini in 2012, which measures 7.9 inches (20cm), compared to the original 9.7-inch (24.6cm) version of iPad. The iPad Mini is thin and light and shows the design influence both of the iPhone 5 and of the new iPod Touch. The device was so popular that it sold out in record time in several markets. Indeed, in the US, the white version reportedly sold out within 20 minutes of its pre-order release. While Apple continued to account for half global tablet sales in 2012, this represented a significant decline on the 84% share recorded in 2010. Over the same period, Samsungs share rocketed from less than 5% to almost 18%, while Amazon had captured a 7% share by 2012. Chart 12 Top 10 Global Tablet Manufacturers by Retail Volume 2012
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Source:
Tablets become more affordable Cost has been a major factor affecting demand for tablets, but as the sector begins to mature and spread to emerging markets, prices are starting to come down. In July 2013, it was reported that, in the wake of HPs launch of its new tablet, Slate (which retails at US$139 in the US), Amazon had slashed prices of its Kindle HD tablets to as low as US$169 in the US and 139 in the UK, while Barnes & Noble cut the price of its Nook to as low as US$129 and announced plans to outsource production of its tablets. However, Apple has maintained the price of its iPad at around US$500. Microsoft aims at the high end of the market with its Surface (initially priced at US$500), but offers the product at a significant discount for educational buyers. Googles US$199 Nexus 7 tablet has a subsidised model in which advertising makes up the difference of any lost profits from the device itself. Regional brands of cheap tablets are making strong headway in emerging markets such as China, India and Russia. No-frills brands, such as Eben, Micromax and Texet, which in some cases are priced as low as US$80, accounted for an estimated quarter of the global tablet market in 2012, according to analysts. The US continues to dominate in tablets The US was by far the most developed market for tablets in 2012, with sales of US$23.2 billion. All markets have grown dramatically since 2007, as the technology is still relatively new. As the sector matures, most growth will come from emerging markets, driven by low cost tablets based on the Android operating system. China ranked second in 2012, with sales of US$4.2 billion. However, this is still very low for a country with 1.3 billion inhabitants, thus there is still massive potential for future growth. The only other markets with tablet sales of more than US$2 billion were Russia, the UK and Germany. Chart 13 Leading Markets for Tablets and Other Portable Computers 2012
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Source: Note:
Euromonitor International Includes portable computers designed primarily for touchscreen interface. Excludes laptops and netbooks
The emergence of hybrid devices As well as launching smaller tablets, such as the iPad Mini, manufacturers are also introducing hybrid all in one devices designed to combine the functionalities of a smartphone and tablet. The word phablet was coined to describe devices with a screen of 5.0 to 6.9 inches (1317cm) in size, which aim to eliminate the need for two devices. The category was pioneered by Samsung in 2011, with the launch of its 5.3 inch (13.5cm) Galaxy Note. By August 2012, the Galaxy Note had sold 10 million units globally. In January 2013, IHS reported that almost 26 million phablet devices were sold in 2012, and estimated that sales would grow to 60 million in 2013, and 146 million by 2016. In 2012, Asus launched the PadFone, a smartphone that is marketed with companion tablet dock and keyboard dock accessories intended to improve functionality and battery life. In August 2013, Sony launched its Xperia Z Ultra phablet, whose 6.4-inch (16.5cm) touchscreen allows users to take notes with either stylus or regular pencils and pens, even from a locked screen and during calls. The product is also dust-proof and water-resistant, as well as shatter-proof and scratch-resistant. It is paired with a smart Bluetooth handset accessory for easy call handling. Samsung has also launched its Galaxy Mega phablet in the US, Western Europe, Russia and South Korea. The product has a 6.3-inch (16cm) screen, and at the time of its launch in the US in August 2013, Samsung emphasised the mini-tablet quality of the device by claiming the Galaxy Mega is an optimal device for movies, books, music and games.
App Development
A market worth US$22 billion Another key outcome of the growing use of web-enabled devices is that it has created seemingly limitless opportunities for software developers to create new applications. The era of
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app stores revolutionised the way mobile content is distributed and accessed, providing content creators with a platform for more effective marketing and monetisation of products and services. According to a report from Distimo published at the end of 2012, there were more than 700,000 different apps available across both the Apple and Google platforms, producing a total market worth around US$22 billion. Moreover, the market continues to grow rapidly. The US is still the largest market, followed by Japan, the UK and Australia. Gaming is by far the most popular category of apps in terms of downloads, and generates the most revenue of all the different app types. Widgets and entertainment are the second largest categories. Previous research by IT researcher Gartner estimated that mobile app store downloads totalled 24.9 billion globally in 2011, of which free downloads accounted for 22.0 billion, or 88%, and paid-for downloads 2.9 billion. App developers The rapid growth in apps has led to a whole new class of software entrepreneurs, many of which are small businesses. Research conducted by ACT and Microsofts TechNet shows that the app economy has created between 400,000 and 600,000 jobs. At the same time, however, the app culture has negatively impacted a range of other industries, including video game hardware and software, publishing, CD, DVD and MP3 players, financial services, travel, education and even health and fitness services (Apples App Store currently offers over 9,000 mobile health apps, including around 1,500 cardio fitness apps, 1,300 diet apps, 1,000 stress and relaxation apps and 650 womens health apps). In-app purchase models will help monetise content One of the main challenges facing mobile content developers has been how to monetise content that has for the most part been previously available to consumers for free. In 2011, Gartner forecast that the number of free and paid-for downloads would soar over the next five years to reach almost 310 billion by 2016. Although as many as 93% of these will be free of charge, the 21.7 billion or so paid-for downloads will provide opportunities for marketers to gain direct revenue. In-app purchase business models, whereby the original app is downloaded for free but customers can then pay for additional items, may be the most effective way to convert casual app users into paying customers and retain them. The challenge for marketers in this case is to create a positive user experience and introduce continued product updates. Gartner estimates that in-app purchases will drive 41% of store revenue by 2016, as the number of downloads featuring in-app purchase will increase from 5% of total downloads in 2011 to 30% in 2016. Nevertheless, in-app purchases have been the subject of controversy recently, as children are inadvertently racking up huge bills on their parents credit cards. A survey carried out by Microsofts Windows Phone division in May 2013 found that in the UK, children purchasing smartphone and tablet apps without permission spend more than 30 million every month, with eight year-olds spending an average of 60 without permission. Payments for extra tools and ammunition in childrens games can be as much as 70 each. In the US, Apple recently reached a settlement to offer families free iTunes vouchers for any refund claim of up to US$30 and cash for any claim above that. Chart 14 Global Mobile App Store Downloads 2011-2016
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Source:
Euromonitor International from Gartner Inc
App Store remains the number one app destination Apple still dominates the apps market, with its App Store accounting for an estimated 25% of available apps in all stores in 2012. In June 2013, App Stores were used by 575 million iTunes account holders and supplied by over six million Apple developers. Other major players in the app market include Google, with Google Play, and Microsoft with its Windows Phone Marketplace. App stores operated by third parties are also increasingly popular, such as Amazons Appstore and Facebooks recently launched App Cent er. On an average day in November 2012, the Apple App Store generated US$15 million, while Google Play only produced an average daily revenue of US$3.5 million. However, between August and November 2012, Google grew at a rate of 43% in the worlds 20 large st countries, whereas the Apple App Store achieved only 21% growth over the same period. This is possibly due to the fact that Apple products are beyond the reach of many poorer consumers in developing markets. In China, there is reportedly a booming market for independent Android stores, due to the lack of presence of Google Play. Google Play appears to be particularly successful in Japan (where it sells almost as many apps as it does in the US) and South Korea. Android benefits in particular from its option of carrier billing for app purchases. Studies show that app purchases through mobile carriers have recorded significantly higher successful completions when compared to paying by credit or debit cards. This is also particularly notable in emerging markets such as Latin America and Asia Pacific, where low cost smartphone sales are beginning to soar.
Impact on the Video Games Market

Digital gaming grows at the expense of console games Gaming is one of the fastest growing categories in mobile, with huge g rowth seen in Apples iOS and Googles Android platforms. Mobile has brought gaming to a large audience, with many new gamers having never played on traditional gaming devices or computers. The rise in digital gaming at the expense of physical software is clear from the figures in Euromonitor Internationals database. Between 2007 and 2012, sales of digital gaming soared
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by 165% to reach a value of US$18.4 billion, while the video games software market edged up by just 2% over the same period, to US$29.4 billion. Mobile games post strongest growth Mobile games was the most dynamic category within digital games, witnessing growth of 339% to reach sales of US$5.6 billion by 2012. Mobile games tend to be cheap, typically priced between US$0.99 and US$1.99, and derive significant income from in-game/in-app purchases and advertising revenues. As an example of the phenomenal success of these games, it was reported in August 2013 that EAs Plants vs Zombies 2 game had registered 16 million downloads in the first fi ve days of its launch, making it the companys most successful mobile game launch. The app, which was launched for free, runs in seven languages and topped App Store charts in 137 countries. PC and console downloads, as well as online games, also made dramatic progress. Online games, which includes subscription payments for massively multiplayer online games (MMOs) and other game services requiring regular payment, saw sales double globally between 2007 and 2012, to US$8.7 billion. World of Warcraft (Activision Blizzard) remains one of the most subscribed to MMOs worldwide, while Moshi Monsters is extremely popular among children. Console manufacturers compete with lite games Video games software for PCs and hand-held consoles bore the brunt of the competition, with sales in these categories down by 12% and 7%, respectively, over the 2007-2012 period. Despite the launch of a raft of next-generation consoles in 2013, including Nintendos Wii U, Microsofts Xbox One and Sonys PS4 (both the latter being due for global release in November 2013), gaining new customers will remain a challenge to these companies in the face of the phenomenal success of mobile gaming. One option for the major console manufacturers might be to embrace the Android market, releasing popular games and/or characters to play lite versions of their console games as a way to hook casual consumers into wanting more. In 2012, Sony launched its new PlayStation Mobile platform for Vita and Android-based devices in nine countries, with more to follow. The service launched with 21 games. Once purchased, the content can be played on up to three different devices. Table 7 US$ million 2007 Video games software for hand-held consoles for PCs/Macs for static consoles Digital gaming PC and console downloads Online games Mobile games
Global Sales of Video Games 2007/2012
2012 29,377 6,548 3,328 19,501 18,413 4,132 8,656 5,625
% growth 2.4 -6.7 -12.4 9.1 164.5 208.2 99.5 338.5
28,684 7,015 3,800 17,869 6,962 1,341 4,338 1,283
Impact on Foodservice
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Luring customers with free web access Many consumer foodservice operators have taken advantage of the growing demand for free internet access by offering Wi-Fi in their establishments. At the end of 2011, McDonalds announced that customers in its 1,200 UK outlets were downloading 500 GB of data each day, and that the number of customers had doubled in the past year. Free internet access has become an important part of the service offering of coffee shop chains such as Starbucks, as they seek to make their restaurants more desirable spaces for customers who want to do more than simply grab a coffee to go, or to provide a comfortable working environment for students or teleworkers with their laptops. In August 2013, it was reported that Starbucks customers in the US would benefit from much faster internet speeds, as the company agreed a new partnership with Google to replace its previous contract with AT&T. Wi-Fi squatters One negative consequence of offering free Wi-Fi in coffee shops is that many have become virtual workplaces, with people camping out with their laptops several times a week and for hours at a time in order to avoid the solitude of working from home or to meet with colleagues on neutral ground. For some, the price of a couple of coffees while working in a caf is cheaper than renting office space. While big chains like Starbucks are happy to use Wi-Fi to attract customers, many independent outlets are worried about driving paying customers away due to a lack of seats. Some are finding creative ways to keep customers coming and going, while still offering a welcoming environment for Wi-Fi users. These include requiring access codes, enforcing time limits or charging for wireless use.
MARKETING OPPORTUNITIES Mobile Ad Revenues

The proliferation of smart devices has fundamentally changed the face of marketing and advertising. Gartner predicted that in 2013, mobile advertisements would collectively generate US$11.4 billion in revenues, up from almost US$9.8 million in 2012. By 2016, this is expected to rise to US$24.6 billion and represent some 4% of all advertising expenditure. The Asia Pacific region is the largest market for mobile advertisements and is expected to remain so in the short term, at least. Many free music streaming apps earn revenue from advertisements that are periodically interspersed into playlists. These advertisements are often targeted based on the location of the consumer, or even the type of music that they select. Other companies have become sponsors of online games, offering real-world incentives (such as a discount on a drink) to players. Some have also expanded their social media presence by regularly uploading informational and marketing videos to sites such as YouTube. Chart 15 Forecast Mobile Advertising Revenue by Region 2012/2016
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Source:
Euromonitor International from Gartner (November 2012)
Email Campaigns
Studies show that emails are increasingly read on smartphones and tablets, but companies using email marketing have been slow to take advantage of this. According to a recent study by digital communications company Yesmail Interactive, more than a third of emails are opened on a mobile device. However, the same study showed that more than 75% of marketers have only a basic mobile strategy that does not adapt email campaigns. At the same time, half of consumers in Yesmails survey claimed that mobile emails are difficult to read because they have to scroll too much (29% said the layouts of emails are wrong for their mobile screens). Companies looking to target mobile device users with email campaigns should make sure designs are both responsive (able to recognise the platform) and scalable (easily adaptable to any platform). Yesmail also advises that when developing email campaigns, marketers must adhere to the six-second rule. This refers to the amount of time consumers will pay attention to a commercial email in their inbox. The most successful mobile email campaigns therefore require large and bold text and logos that link back to websites, and modular sectioning that can be moved easily for different screens. the Value of Location-based Marketing Location replaces cookies According to a report from BI Intelligence, published in July 2013, location is the new cookie. While mobile does not support third-party cookies that travel easily and allow for straightforward tracking and data-gathering, location-based mobile technology offers marketers new ways to identify and track mobile audiences. With the aid of algorithms, consumers can be grouped into behavioural and demographic segments for targeting. This has led to companies increasing their investment in advertising via location-based services. Methods can range from geo-aware or geo-fenced advertising campaigns to hyperlocal efforts at Wi-Fi hotspots and location-based targeting of specific consumer segments. In a recent study of over 2,500 of its mobile marketing campaigns, Verve found that its location-
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based advertising efforts were about twice as effective as the mobile industry average clickthrough rate (CTR) of 0.4%. When a customer who has signed up for location services walks into a geofence, they are able to receive targeted messages from mobile apps. For instance, in the UK, drinks company Bulmers recently partnered with O2 to use location-based services to encourage customers to try Bulmers in their nearest pub. The marketing provider Placecast created geofences with a radius of 0.5 miles around over 1,000 pubs in the UK that sold Bulmers. When O2 subscribers fitting Bulmers target demographic walked past these areas, they were sent a message informing them where they could claim their offer on Bulmers cider. It was reported that during the four week campaign, more than 50% of recipients clicked the link in the message and around 25% of recipients bought Bulmers at the designated pub, while another 53% of recipients bought Bulmers at another pub. Encouraging users to check in One of the main challenges to location-based marketers is the fact that many consumers keep their location services, or their 3G/4G connections, switched off in order to save on battery life or due to privacy concerns. Without any 3G/4G, Wi-Fi or GPS connectivity, it is more difficult to detect the location of the user. Businesses could address this issue by including key messaging within their apps to encourage users to enable their location services. Companies must also ensure that their targeted messages are relevant to the user. This can be achieved by analysing user behaviour within the app and other channels, and collecting as much feedback as possible. Databases must be segmented based on user preferences rather than sending the same messages to an entire database. For example, by segmenting a group of users who have all purchased books by a certain author, a book chain could then send a discount on the authors next title when anyone in that group of users is near a store.
Viral Marketing
The importance of creating a buzz With the arrival of YouTube came a dynamic new type of advertising: that of the viral video campaign. Viral clips that have been an instant hit on YouTube have been instrumental in creating a buzz around brands both small and large across the world. Popular viral marketing campaigns typically consist of subtly branded video clips, images, interactive Flash games or puzzles, interesting stories and special offers, which consumers feel compelled to pass on to like-minded friends and contacts. These self-replicating clips thus gain credibility from peer-to-peer endorsement. The best examples take on an almost cult status, becoming the focus of discussion and re-telling, which results in more kudos and publicity for the relevant brand/product/service. Successful viral videos enable marketers to hold the attention of consumers for minutes rather than seconds. They provide an ideal way for smaller companies, which are unable to afford mainstream advertising, to gain global reach. According to Ad Ages Viral Video Chart (measured by True Reach), which focuses on brand driven social video advertising campaigns, the most viewed viral ad in 2012 was Invisible Childrens Kony 2012 clip, a short film by the non-profit organisation Invisible Children about the Ugandan war criminal Joseph Kony. Other leading advertisements varied in their content. Two of the top 10 contained stunts staged in outer space (Rovio and Red Bull), while two were launched in tandem with sporting events (M&Ms Just My Shell for the Super Bowl and P&Gs Proud Sponsor of Moms for the Olympic Games). The scale of these viral advertisements was greater than ever, with the top three all gaining more than 100 million views over the year. This was the first time any branded video had ever achieved this. Indeed, the top viral ad of 2011, VWs The Force, had 63 million views.
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Summary 7 Campaign
Top Brand-driven Social Video Advertising Campaigns of 2012 Number of views (million) 213.1 171.0 109.6 71.9 55.2 48.4 47.0 43.8 42.3 41.4
1. Kony 2012 (Invisible Children) 2. Stratos (Red Bull) 3. Angry Birds Space (Rovio) 4. Galaxy S III (Samsung) 5. The Beauty Inside (Intel/Toshiba) 6. Just My Shell (M&Ms) 7. Proud Sponsor of Moms 2012 (P&G) 8. Your Daily Dose of Drama (TNT) 9. LeBrons Day (Samsung) 10. Angry Birds Star Wars (Rovio)
Source: Euromonitor International from AdAge
Ratings Apps Increase Publicity for Small Businesses

The vast array of user-generated websites that contain consumer reviews and ratings has enabled millions of small companies especially those operating in the foodservice and tourism industries to receive free publicity. Tripadvisor.com, for example, has given many small, independently-owned businesses the chance to dramatically boost footfall and increase revenues on the basis of traveller recommendations. Many of these businesses would have been unable to afford any type of advertising, let alone the kind of global exposure they obtain from websites of this scale. Indeed, a recent study by US economists found that when a restaurant rating improved by just half a star on the ratings site Yelp.com it was very much more likely to be full at peak dining times. Of course, ratings and reviews can work both ways, and concerns that some unscrupulous retailers, hotels or restaurant owners are seeking to manipulate online ratings systems are still a key issue in the industry. However, consumers are becoming more savvy about differentiating between true and false reviews, by checking reviewers review history, by considering the authenticity of the reviewers experience or by taking heed of website warnings. According to US-based research company BIA/Kelsey, around 24% of small and midsize businesses in the US currently monitor what is being said about them online. They were expected to spend US$700 million on tools or platforms to monitor customer opinions on the internet in 2013 more than double the spending in the past 12 months. Some businesses pay specialists to help them eliminate bad reviews. US-based Profile Defenders, for example, charges US$5,000 to get rid of unwanted Yelp results. Other free services, such as Brandify by Microsoft and another by Yahoo, scan social media sites for mentions of a business. Owners can then follow up on any complaints directly with customers.
Getting the Best Out of Social Media

Engaging with customers It has become essential for companies to incorporate social media into their market strategies in order to reach todays mobile-centric audiences. In addition to placing mobile advertisements,
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companies are also monitoring online conversations about their brands and engaging in dialogue with customers in order to obtain valuable feedback on products and services. Pepsi is a particularly strong advocate of putting conversation at the centre of advertising. In 2012, the company partnered with Twitter to launch its Live for Now campaign. This made use of Twitters real-time data to develop programming. In addition to offering followers of @pepsi the chance to listen to weekly free music downloads from Amazon MP3 and download free codes for the store, fans could also watch a weekly video series based on the top music and artists trending on Twitter. The idea was to prompt conversations about the music, thus creating a more sharable, interactive experience. Pepsi followed this up by staging four major live-stream concerts by artists with large Twitter followings, which viewers could not only view on Twitter but also influence. The campaign was successful, in that, according to Pepsi, among music enthusiasts on Twitter, 30% of them talked about Pepsi in 2012, versus around 13% in 2011. In June 2013, Kelloggs employed what it describes as the worlds first Instashop. At marketing events in Sweden, the company allowed customers to buy a box of Special K with a hashtagged Instagram photo. Consumers took a photo of the product and uploaded it to Instagram; hashtagged the photo with #nyaspecialk; and swapped the photo for a box of Special K at the promotions checkout. Celebrity influence Companies are also increasingly using celebrities to push their brands on social media, either through their brand endorsement contracts or separately per tweet. Studies have shown that celebrity endorsement via big sites such as Twitter or Vine has a huge impact on a brands sales by increasing its visibility and giving it credibility in the eyes of fans. It is reported that rapper Snoop Dogg makes US$8,000 for a single Twitter tweet, while reality TV star Kim Kardashian receives US$10,000. The trend is spreading to emerging markets like India, where it is reported that many brands are in talks with high profile Bollywood and cricket celebrities regarding sponsored tweets or endorsement deals. Coca-Cola India used one of Indias most popular Bollywood actors, Salman Khan, to promote its Thums Up brand via his Facebook and Twitter pages in the summer of 2013. Khans Facebook page has a fan base of over 7.7 million, and he has 3.5 million Twitter followers. Crowdsourcing Successful crowdsourcing initiatives have helped many companies to drive brand development, and this is a method that will be employed increasingly in the future. Facebook offers immense opportunities for marketers to engage consumers through crowdsourcing efforts. Not only does this technique allow companies to tap consumers for new ideas, it has also been proven to result in greater customer satisfaction and can increase positive word of mouth by participants. In a recent example of mobile crowdsourcing, Citron launched a Facebook app in April 2013 that allowed users to help design a special edition of the companys new C1 city car, called the C1 Connexion. The app allowed users to provide input on six elements of the design, namely the number of doors, the exterior and interior colours, equipment such as Bluetooth or satnav, and alloy wheels. The combination of colours and features that were most popular were incorporated into the final design. Similarly, Levis launched a crowdsourcing campaign using iOSs Instagram in 2012 in order to find a new star for its marketing activities. The company asked people to upload images of themselves onto Instagram and tag them with #iamlevis. The winner starred in Levis 2012 Go Forth advertising campaign.
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KEY MARKET TRENDS Brazil

Mobile takes off The mobile revolution was initially slow to take off in Brazil, due to the problems of inadequate internet infrastructure, the high cost of devices and the low purchasing power of the majority of consumers. However, the market has been making up for lost time, and Brazil has witnessed substantial growth in mobile devices in the last couple of years. Despite the fact that only 48% of the Brazilian population were internet users in 2012 (up substantially from 31% in 2007), 54.4 billion people were subscribed to mobile internet services. This compared with just 1.9 billion in 2007, demonstrating significant growth. Euromonitor Internationals Out and About Survey of 2012 found that more than half of all Brazilian respondents (52%) had access to a smartphone. The cost of mobile use is reportedly dropping in Brazil, as carriers offer competitive pricing plans. The major carriers have data plans from 20 to 25 cents per day, with some even offering free access to data-heavy services like mobile video streaming. Cheaper data plans are attracting more mobile users and thus boosting sales of devices. As a result, the app market has grown rapidly. According to a recent report by Distimo, not only does Brazil have Latin Americas largest app market, but app revenues grew by a massive 83% in 2012. Habits and behaviour Notably, Brazilians have become avid social media users. According to the Out and About Survey, social media sites were the fourth most popular away-from-home mobile activity among Brazilian mobile phone users, after texting, email and taking photos, with 51% citing social media as an away-from-home activity. According to statistics from Socialbakers, Brazil registered the strongest growth in the world in the number of new Facebook users during 2012. The number of users reached 64.9 million at the end of the year, compared to just 35.2 million in January. Furthermore, with Facebooks recent introduction of the App Center in Brazil, many of these users are likely to access social media from their mobiles. Much of Facebooks growth has been at the expense of Googles Orkut, formerly the countrys leading social networking website. International players, such as LOral, Nike and Smirnoff, have already taken advantage of the social media fad and currently rank among the countrys top 10 brands on Facebook. Brazilians are also keen gamers: according to the Brazil National Gamers Society, there are 40 million gamers in Brazil across all platforms. While mobile gaming is only a recent phenomenon, with the Apple App Store starting to offer games only in April 2012, as many as 39% of Euromonitor Internationals Out and About respondents said they play games on their mobiles when away from home, and this is likely to increase strongly over the next few years. Chart 16 Brazil: Mobile Phone Activities Away From Home 2012
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Source: Note:
Euromonitor Internationals Out and About Survey 2012 Question: When you are away from home (shopping, attending social outings, dining out, or on vacation), what activities do you do on your mobile phone or smartphone?; excludes phone calls
Sales of mobile devices and games Brazils smartphones market soared by 166% in just two years from 2010 to 2012, reaching US$6.6 billion in the latter year. Consumers were initially deterred from buying smartphones due to their high costs, but as they became increasingly popular and are now seen as status symbols, many low-income Brazilians started buying so-called web phones, which are essentially advanced feature phones with Wi-Fi connections offering access to social networks. Due to the high number of pre-paid mobile phones in use in Brazil, the leading mobile telecommunications operators have been introducing pre-paid plans which include internet access, a privilege which was previously restricted to those customers on monthly subscription contracts. Unlike markets in the US and Europe, Android phones are the most popular devices in Brazil, mainly due to their lower prices. These accounted for almost 60% of volume sales in 2012, while iOS took a share of just 17%. However, Foxconn is planning to soon start manufacturing Apples iPhones in Brazil, which should lead to a dramatic fall in the price of Apple products. Tablets are still in their infancy in Brazil but sales rocketed from a small base of US$62 million in 2010 to US$971 million in 2012, taking its toll on the laptop and netbook segments. There is still enormous potential for growth in this sector. The mobile gaming sector is still largely untapped, partly due to the fact that most games are unable to bill for digital downloads via a credit card. This has led to a huge piracy problem in the country. There is nevertheless vast potential in this area, due to Brazilians love of gaming and increased smartphone use. Experts agree that it will be essential for developers looking to enter this market to provide games in the Brazilian language (Portuguese), due to language barriers. Table 8 US$ million 2010 2011 2012 % growth 2010/2012 165.5 Brazil: Sales of Mobile Devices and Games 2010-2012
Smartphones
2,502
4,777
6,642
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Laptops Tablets Netbooks Mobile games

3,480 62 484 14
4,251 418 415 16
4,106 971 212 16
18.0 1,461.3 -56.1 14.2
Chart 17 % volume share
Brazil: Smartphone Operating Systems 2012
Source:
China
Cheap models drive growth The adoption of web-enabled devices has burgeoned in China, in line with the countrys economic progress and the launch of new, cheaper models that are affordable for low-income consumers, such as urban factory workers. Between 2007 and 2012, the number of mobile internet subscriptions in China soared from 5.0 million to 233.4 million, placing it behind only the US in terms of total subscriptions. According to a Bloomberg Business Week report published in September 2013, 61% of the smartphones purchased on Alibabas online retailing website are models selling for less than RMB1,000 (US$160); while local manufacture Xiaomi reportedly sold 100,000 units of its RMB799 Hongmi model in less than two minutes on its release in August 2013. Euromonitor Internationals Out and About Survey of 2012 found that China was among the highest scoring countries when it came to smartphone ownership. More than three quarters of Chinese respondents (76%) said they have access to a smartphone, compared to just 21% with a feature phone. Habits and behaviour Euromonitor Internationals Out and About Survey of 2012 revealed that Chinese respondents were more likely to text from their mobile phone while away than those in almost any other country. This was the most popular activity, selected by 87% of Chinese respondents.
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Chinese respondents also scored highest when it came to checking news sites on their phones, with a substantial 69% claiming they undertake this activity when away from home. Gaming is extremely popular in China, and as many as 51% of respondents were found to play games on their mobile phone. Until now, internet cafs have been chock-a-bloc with young men playing multiplayer online games such as World of Warcraft. This is changing, as the rapid growth in smartphones use means consumers are moving increasingly towards mobile games. Social media: a competitive market Although fewer than half of Chinese mobile phone users (46%) said they look at social media sites on their mobile phone, this is still a relatively high proportion. While most of the major Western social networking websites are blocked in China, the country has its own, heavily censored, equivalents, which are used extensively. In March 2013, research company Go Globe estimated that there were 597 million people active on social media in China. The company puts Tencents QZone as the most popular site, with an estimated 712 million users. This is followed by Tencent Weibo and Sina Weibo, Chinas answers to Twitter, with 507 million and 500 million users, respectively. The Chinese equivalent to YouTube is Youku, which announced in March 2012 that it would acquire rival Tudou. On the rise are messaging apps based on the Whatsapp model, such as WeChat, Line and KakaoTalk, which are competing fiercely to get onto the smartphones of young Chinese. WeChat recently updated to its 5.0 version, which has new features such as animated stickers from its Sticker Shop, allowing users to save favourite content clippings from chats and Moments, and the Hold Together function that lets users easily add friends nearby. It has also expanded its scanning feature from QR code to OCR, translation, street view recognition, and product image reading. Meanwhile, in August 2013, China Telecom announced the launch of its new mobile IM product, Yixin. Unlike WeChat, the other party does not need to have Yixin to receive messages. It is important for companies in China to gain a presence in social media, since Go Globes research found that each of Chinas social media users follows at le ast eight brands on average. According to Go Globes research, 57% of social media users are male and 43% female. The largest age group is 26-30 (30%) of users, followed by 31-35 year-olds (21%) and 19-25 yearolds (19%). Those aged 36-40 represent 12% of users, and those aged 40+ 18%. Summary 8 Website QZone Tencent Weibo Sina Weibo WeChat Pengyou 51.com Renren Douban Kaixin001 Jiayuan
Source:
China: Leading Social Networking Websites 2013 Type Number of users (million) Social networking Microblogging Microblogging Messaging Social networking Gaming community Social networking Music, film, books and hobbies Social networking Dating 712 507 500 300 259 200 172 172 113 73
Euromonitor International from Go Globe
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Chart 18
China: Mobile Phone Activities Away From Home 2012
Source: Note:
Sales of mobile devices and games The market for smartphones in China reached US$39.7 billion in 2012, making it by far the largest market in the world in value terms. This followed extraordinary growth of 251% since 2010, which stemmed from the rapid growth in cheap models. Indeed, the market share of cheap smartphones priced from US$60-110 reportedly soared to 27% in 2012. An example of a successful low-cost domestic brand is Coolpad (Yulong Computer Telecommunication Scientific Co). By mid-2013, Coolpad was reported to be the third largest smartphone brand in China, behind Samsung and Lenovo, surpassing both international and domestic giants such as Apple and Huawei. Traditionally marketed to businessmen and government officials due to its heightened privacy protection functions, from 2009 Coolpad was more aggressively marketed to lower-to-middle income customers. In just one year 2012 Yulong rolled out 48 different models of smartphones, with their prices ranging from less than US$50 to US$500. Android is the dominant operating system in China, with as much as 70% of smartphones sales using this system. Its recent rise has been largely at the expense of Symbian, the previous market leader, due to Nokias ongoing downturn in smartphones and the companys shift to the Windows operating system. Amazon launches paid-for apps In May 2013, the BBC reported that Amazon had become the first Western technology company to offer paid-for Android apps in China. Meanwhile, Googles Chinese store offers only free apps. Amazons apps are likely to be well-received, given that domestic offerings have had issues with malicious software. It is possible that Amazons move into paid-for apps is paving the way for the company to launch its Kindle e-readers in China.
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The younger tablets segment was even more dynamic, with sales rising from just US$356 million in 2010 to US$4.2 billion in 2012. This made China the second largest tablets market in the world, behind the US. As with mobile phones, tablet sales have been driven by cheaper models running on the Android system. Chinas mobile games market is still embryonic, with sales valued at just U S$81 million in 2012. However, analysts believe the market is poised for significant growth, as gamers swarm to smartphones from social and browser-based games. Research firm Niko claims there are almost 80,000 development studios currently in operation in China, which are releasing around 100 new games every day. Table 9 US$ million 2010 2011 2012 % growth 2010/2012 250.5 18.6 1,075.3 -44.4 325.7 China: Sales of Mobile Devices and Games 2010-2012
Smartphones Laptops Tablets Netbooks Mobile games

11,333 14,106 356 3,162 19
23,808 15,138 2,595 2,864 44
39,723 16,735 4,188 1,759 81
China: Smartphone Operating Systems 2012
Source:
France
Free dynamises the market As in other developed markets, the use of connected devices has already reached a high level in France, but nevertheless continues to grow. Mobile internet subscriptions increased
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from 5.9 million to 33.1 million in the five years to 2012, while Euromonitor Internationals Out and About Survey of 2012 revealed that 54% of the French population had access to a smartphone. The use of smartphones escalated from January 2012, when the internet service provider Free entered the telecoms market. Free immediately launched a 3G mobile monthly subscription plan priced at 19.99, with unlimited voice, SMS and data, in an attempt to take market share from the well-established competitors, namely Bouygues Telecom, Orange (France Telecom) and SFR. In response, the latter were forced to lower their plan prices, but the network restrictions of these companies means they have no hope of matching Frees prices unless they make radical changes to their mobile infrastructures. One major advantage that Free has is its five million Wi-Fi access points (compared with France Telecoms hotspot network of just 30,000 hot spots, for example), which it claims is the largest Wi-Fi network in the world. Following Frees market entry, the University of Paris-Dauphine and Mdiamtries annual French digital economy survey found that some 60% of mobile users now have contracts of less than 30 per month. Contracts of 11-20 and under 10 are showing the strongest growth, while those costing from 31-80 are declining rapidly. Habits and behaviour According to Euromonitor Internationals Out and About Survey of 2012, checking news sites was one of the most popular away-from-home mobile phone activity among French respondents, behind texting, email and taking photos. 41% of respondents said they check news sites, while a slightly lower percentage (40%) use social media. Most analysts and researchers are in agreement that social networking is not as popular in France as in other Western countries, and is experiencing slower growth. According to eMarketer, there were 21.9 million social network users in France, and this is expected to rise to 23.6 million in 2013. However, an increasing number of users are switching to access via smartphones. eMarketer estimates that the number of mobile social users grew by 54% in 2012 alone, to 7.5 million, and will reach 11.3 million by the end of 2013. Twitter attracts older users Facebook is by far the most popular social networking website, with 34.3 million unique visitors in December 2012, according to comScore. While Twitter only had 5.6 million unique visitors, comScore noted a strong rise in older users. The number of Twitter visitors in the over55s age group doubled in 2012, to 1.3 million (though a large number of these will have accessed the site via a desktop computer rather than smartphone). This made it the largest Twitter group, with 15-24 year-olds ranking second, with 1.2 million visitors. It is interesting to note that a December 2011 Ifop report, Observatoire des rseaux sociaux found that 16% of social network users in France followed at least one brand on a social site, and 21% of that subset followed six or more. On average, those who followed at least one brand followed about five. M-commerce is not yet highly developed in France, with only 17% of Euromonitor Internationals Out and About respondents saying they shop online on their mobile phones while away from home. A recent survey of mobile phone users by the University of Paris-Dauphine and Mdiamtrie found that although a third of respondents said they had made goods purchases online (via any device) in the month prior to the survey, just 8% had done so from their mobile. This is thought to be due to a combination of lack of available or smartly designed shopping apps and lack of data speed. Summary 9 France: Leading Social Networking Websites, December 2012
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Website Facebook Skyrock Twitter LinkedIn Viadeo Trombi Tumblr Copains dAvant Badoo Nomao
Source:
Type Social networking social networking Microblogging Business networking Business networking Uniting old friends Social networking/microblogging Uniting old friends Dating Local search and networking
Euromonitor International from comScore MediaMetrix
Number of unique visitors (million) 34.3 8.6 5.6 4.4 3.7 3.6 2.6 2.6 2.5 2.0
Chart 20
France: Mobile Phone Activities Away From Home
Source: Note:
Sales of mobile devices and games While the French market for smartphones is far more mature than in the emerging markets, sales nevertheless rose by a substantial 40% in value between 2010 and 2012. Moreover, the tablets category is still burgeoning, having grown by 344% over the same period, to almost US$1.5 billion.
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Apple products have always been very popular in France, but Android OS smartphones have made significant progress recently and accounted for more than half of volume sales in 2012 (54%). In spring 2013, the French government proposed imposing a tax on smartphones, tablets and computers as a way of financing and protecting French cultural activity. The proceeds of the tax, which would start at 1% before possibly rising to 4%, would be distributed to musicians, filmmakers and authors to compensate them for their loss of royalties in the age of free culture on the internet. If and when this becomes legislation, it is unlikely to have a major effect on device sales, as demand remains strong. The French market for mobile games is well developed, with sales reaching US$329 million in 2012. A 2012 study by Newzoo/Distimo estimated that the number of mobile gamers in France grew from 12.8 million to 14.3 million over the year, of whom 62% played on smartphones and 14% on tablets. Even greater was the rise in paying players, by 35% to 3.5 million. Nevertheless, the survey found that France had significantly fewer mobile gamers than Germany (23.5 million) and the UK (23.9 million). The Newzoo study found that most gaming in France takes place on Apple devices, such as the iPhone or iPad. French players were found to spend in total eight times more on iOS games than on Android games. This is partly because Apple requires users to connect their credit card information directly to their account, thus creating a seamless purchase experience. Table 10 US$ million 2010 2011 2012 % growth 2010/2012 1.6 39.9 344.3 -31.2 44.8 France: Sales of Mobile Devices and Games 2010-2012
Laptops Smartphones Tablets Netbooks Mobile games

3,496 2,246 332 699 227
4,157 2,992 864 454 301
3,552 3,142 1,475 481 329
France: Smartphone Operating Systems 2012
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Germany
Flexible plans drive market growth As in France, smartphone and tablet use in Germany is widespread. Mobile internet subscriptions reached 33.6 million in 2012, up from 9.2 million in 2007. According to Euromonitor Internationals Out and About Survey of 2 012, 43% of the population had access to a smartphone. The market has been driven by lower unit prices and more flexible mobile plans. The number of pay-as-you-go operators has risen rapidly, with companies such as Simyo, Blau and Discotel attracting customers with offers that involve maximum flexibility and little or no commitment. Furthermore, the transition to cloud computing has been rapid in Germany. According to the IT industry lobby BITKOM, companies in Germany expected to generate revenues of some 4.6 from cloud computing products in 2013, up by 53% compared with 2012. Habits and behaviour In the Out and About Survey, Germany scored relatively low compared to other countries when it came to mobile phone activities other than texting and email. Only 27% of respondents said they use social media sites, which ties in with other findings that Germans are more cautious than their neighbours about using social media. According to a study by eMarketer, of the EU-5 countries of France, Germany, Italy, Spain and the UK, Germany had the lowest social media penetration among internet users, at 51.1% in 2012. Security issues are a major concern for German consumers. In 2011, the federal state of Schleswig-Holstein prohibited all businesses from using Facebook fan pages and Like social plug-ins, claiming that it infringed data protection laws. On a more positive note, users in Germany are active with brands on social media sites. According to an April 2013 survey conducted by Tomorrow Focus Media, 66.8% of those who followed brands on social media read the posts and messages of brands or products that they followed. Furthermore, 29.6% shared posts and 26% commented on these sites.
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According to comScore, Facebook dominates the social networking scene in Germany, with 38.6 million unique visitors in December 2012. It was followed at some distance by Google Plus (5.6 million) and Xing, with 4.2 million. Facebook users are mainly aged between 18 and 34 years, which reflects the high population of young, mobile-centric urban professionals. Socialbakers.com, an analytics company that reports data directly from Facebooks API, estimated that 26% of Facebook users were aged 18-24 years and 27% were 25-34 in April 2012. Germans make use of QR German consumers seem increasingly to be taking advantage of m-commerce technology. While only 15% of German respondents in Euromonitor Internationals Out and About survey said they shop online on their mobiles while away from home, comScore claims that Germans are among Europes largest users of QR codes. According to comScore, there were 5.1 million QR code users Germany in July 2012, compared with 3.3 million in the UK and 3.4 million in Spain. Only 16% of Out and About respondents in Germany said they play games on their phone. Nevertheless, mobile gaming is a fast and growing sector. A 2012 study by Newzoo/Distimo estimated that there were a substantial 23.5 million mobile gamers in Germany. According to a study published by Socialnomics in November 2012, Germany, along with the UK, is Europes leading market for online gambling particularly social casino gambling. The research showed that almost 20% of the time devoted to playing online casino games in both the UK and Germany takes place through social networking sites. Furthermore, online gaming sites, such as Belle Rock Entertainment, are now optimised for mobiles. This has led to significant growth in the number of consumers gambling via their smartphones, and this is particularly prevalent in Germany. Summary 10 Website Facebook Google Plus Xing Stayfriends Twitter Odnoklassniki Ask.fm LinkedIn Tumblr Wer-kennt-wen
Source:
Germany: Leading Social Networking Websites, December 2012 Type Number of unique visitors (million) Social networking website Social networking website Business networking Uniting old friends Microblogging Uniting old friends Social networking website Business networking Social networking/microblogging Uniting old friends 38.6 5.6 4.2 3.5 3.1 2.9 2.8 2.7 2.6 2.5
Euromonitor International from comScore MediaMetrix
Chart 22
Germany: Mobile Phone Activities Away From Home 2012
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Source: Note:
Sales of mobile devices and games Germany was Europes largest market for smartphones in 2012 and ranked fifth in the world in terms of value sales, at US$8.8 billion. This followed dramatic growth of 142% since 2010, driven by price declines, which opened up the market to a wider consumer base. Over the review period, as in most other countries, Android became the leading operating system in smartphones, overtaking Symbian to command a share of almost 57% in 2012. Android is popular in Germany due to its easy connectivity with Windows, whereas Ap ples iOS requires the installation of iTunes. The tablets sector was more dynamic but from a smaller base, with sales rising by 268% to US$2.0 billion between 2010 and 2012. This took its toll on laptops, which fell by 5% in value, to US$3.5 billion. Table 11 US$ million 2010 2011 2012 % growth 2010/2012 141.6 -4.8 267.6 -38.1 31.3 Germany: Sales of Mobile Devices and Games 2010-2012
Smartphones Laptops Tablets Netbooks Mobile games

3,625 3,726 551 717 46
7,188 3,939 1,420 569 55
8,757 3,548 2,026 444 60
Germany: Smartphone Operating Systems 2012
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India
Mobile use widespread among urban youth While per capita sales of web-enabled devices are still negligible in India, due to high poverty rates among rural consumers, in particular, smartphones and tablets are becoming more mainstream among the urban, youthful consumer base. Those without internet access at home are able to access the web via the increasingly widely available mobile internet and Wi-Fi connections in public places. 3G services cover all of Indias major towns and cities, and 4G was launched i n early 2012. Between 2007 and 2012, the number of mobile internet subscriptions soared from just 1.8 million to 61.7 million. Habits and behaviour Euromonitor Internationals Out and About Survey of 2012 revealed that the favourite mobile phone activity among Indian consumers, apart from texting, email and taking photos, is gaming. As many as 47% of mobile phone users said they play games on their mobiles while away from home, while 43% use social media websites. It is reported that the last two years have seen very rapid growth in social media in India, especially among the young. According to a report by iCRossing, Facebook has almost 36 million users, of whom 50% are under 50, while Twitter has almost 15 million users each in India. Lately, social networking has caused political problems due to its use as a vehicle of propaganda. Chart 24 India: Mobile Phone Activities Away From Home 2012
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Source: Note:
Sales of mobile devices and games Sales of smartphones are still relatively small in India, given its vast population. Nevertheless, they almost doubled over the 2010-2012 period, to US$3.8 billion, as the availability of cheaper models opened up the market to a wider consumer base. The vast majority of sales in India are phone-only. Consumers buy only the handset from the operator and then obtain a network connection usually pre-paid separately from a telecom service provider showroom. Very few smartphones in India run on the iOS system, which accounted for less than 3% of volume sales in 2012. Android dominates the market, with a share of 67%, as its ease of use and availability of many free applications attracts the youth segment, in particular. No kias Symbian accounted for a further 16% of volume sales in 2012, but has lost share rapidly in recent years. Microvendors fuel growth Growth in the Indian smartphone market has been fuelled up to now largely by the big global players, such as Apple and Samsung, which pushed their phones through better distribution networks. However, the Indian companies Micromax, Karbonn and Spice have recently been enjoying massive growth of 200-500% per annum. So-called microvendors, such as Lemon Mobile, which mainl y deal in Android phones, have seen sales rocket. Technology research company IDC recently estimated that local smartphone manufacturers in India have outperformed most foreign players, and together accounted for over 30% of the smartphone market in the country in the first quarter of 2013. Although mobile gaming is very popular in India, revenues are as yet extremely low because most games are free. This is partly due to low credit card penetration. Nevertheless, several games companies have partnered with app stores, such as Nokia Ovi and Google Play. Table 12 US$ million India: Sales of Mobile Devices and Games 2010-2012
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2010
2011
2012
% growth 2010/2012 97.9 3.0 2,472.6 52.9 -16.4
Smartphones Laptops Tablets Mobile games Netbooks

1,934 1,084 14 60 85
3,294 1,312 69 80 87
3,827 1,117 347 91 71
India: Smartphone Operating Systems 2012
Source:
Japan
A well developed market Japan is one of the worlds most developed markets for smart devices, and its mobile apps market is among the largest in the world. Back in 2007, Japan ranked ahead of all other countries in terms of mobile internet subscriptions, at 51.4 million. It has since been overtaken by the US and China, although in 2012 an impressive 133.2 million people were subscribed to mobile internet in Japan. Furthermore, households spent an average of US$390 on smartphones in that year. According to a government survey of around 20,000 households in June 2013, smartphone ownership had jumped to almost 50% of households by the end of 2012, up from just 29% the previous year and 10% in 2010. At the same time, household tablet ownership rose to 15% from just under 9% in 2011.
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Apps are big business Japans Mobile Content Forum (MCF) estimates that the entire mobile content business was worth US$8.8 billion in 2012, and, according to the application analytics provider AppAnnie, the average number of apps downloaded per user is 41 in Japan, compared to just 29 for US users. The Japanese earthquake in 2011 produced a hit app for smartphones. Over two million people downloaded an earthquake alarm app, Yurekuru Call, as people in Japan became extremely wary of potential earthquakes in early 2012. Due to the popularity of the app, smartphone awareness has continued to increase. Habits and behaviour A government household survey of June 2013 found that around 31% of households used smartphones as their device of choice to access the internet, which was almost double the rate of 16% registered in the previous year. Tablets were used for web-related purposes by 8% of homes, up from 4% in 2011. Social media is very popular in Japan. Twitter reportedly saw a surge in use following the earthquake and tsunami disaster of 2011, while the number of Facebook users leapt by 174% in 2012, to 17.2 million. Its rise has been largely at the expense of domestic rival Mixi, which has around 20 million active users and was formerly the main social networking website used by students. A newcomer, Line, which was designed especially for use with smartphones, was also highly successful in 2012, gaining 36.4 million users in Japan within just a year. It benefits from its unique Stamp cartoon form of emoticons, since Japanese mobile users have always been fans of emoji (text-base emoticons) and decome (e-mail decoration images). Sales of mobile devices and games Both smartphones and tablets made extraordinary progress over the 2010-2012 period. with sales up 280% and 288%, respectively. The smartphones sector was worth US$20.5 billion in 2012, making it the second largest in the world, behind China. Historically, Japan was at the forefront of mobile phone technology, but its domestic players have been hit by heavy competition from the likes of Apple and Samsung and have failed to expand their smartphone operations into new markets. In 2013, two of Japans leading smartphone manufacturers, NEC Corp and Panasonic, announced their intentions to withdraw from the consumer market. By 2012, there were still only three operating systems available in Japan, with the vast majority of products running on Android and iOS. Android became the dominant operating system in 2011, due to heavy promotions by leading companies such as NTT Docomo and KDDI, which focus on Android smartphones. This left Softbank as the sole iOS smartphone promoter. Windows had a small share of 1.7% in 2012. Japans mobile gaming market has traditionally been one of the most active in the world. Its gaming powerhouses, such as GREE, GungHo and DeNA, have conquered international markets and remain at the forefront of global games development. Sales of mobile games reached US$1.4 billion in 2012, according to Euromonitor Internationals toys and games database, having risen by 31% since 2010. A notable feature of the Japanese market for mobile games is its particularly high level of monetisation. According to AppAnnie, the average revenue per iOS download in Japan is as high as US$1.90, far higher than in any other country (by comparison, revenue per download in the US is US$0.67 and in the UK, US$0.49). Japans most popular game by far is GungHos Puzzle & Dragons, which has recorded over 9 million downloads. Table 13 Japan: Sales of Mobile Devices and Games 2010-2012
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US$ million 2010 2011 2012 % growth 2010/2012 280.1 -10.3 287.7 30.7 -53.7

5,391 4,975 487 1,061 522
16,006 4,790 1,396 1,283 312
20,492 4,465 1,887 1,386 242
Japan: Smartphone Operating Systems 2012
Source:
UK
Leading Europe in smartphone use Recent data from the UKs communications regulator Ofcom suggest that the UK is leading Europe in terms of smartphone users. In 2013, it claimed they accounted for 46% of all mobile phone users, representing a consumer base of 28 million. Euromonitor Internationals database confirms that mobile internet subscriptions were higher than in Germany and France in 2012, at 45.2 million, having risen from 11.6 million in 2007. According to Euromonitor Internationals Out and About Survey of 2012, 61% of respondents had access to a smartphone, which was also the highest level recorded among the European countries surveyed. Most smartphones users in the UK are on contracts. However, operators in 2013 began to clamp down on their unlimited mobile data offerings. These contra cts, introduced with the iPhone in 2007, are gradually being replaced by tighter data caps of around 500MB per month. This is making Wi-Fi hotspots increasingly sought after.
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Wi-Fi spots proliferate Recent research by The Cloud (part of BSkyB) shows that some 10 million people in the UK log onto a public Wi-Fi hot-spot every week when away from the home. Part of this rise in usage is that so many people now have access to Wi-Fi hot-spot networks for free through arrangements with their broadband operator. The Cloud itself, the UKs largest high street Wi-Fi provider, gives Sky broadband customers free access to its network of more than 18,000 hot spots, and claims to have more than 7 million registered users, connecting for over 200 million minutes a week. According to The Clouds research, 22% of consumers use Wi-Fi away from home each week, with 6% logging on every day. Among the 25-34-year age group, this rises to 33% each week and 9% every day. However, older consumers are also frequent users of Wi-Fi hotspots: 19% of 45-54 year-olds use public Wi-Fi at least once a week, as do 10% of people aged 55 or older. London has the greatest proportion of high street Wi-Fi users (47%), but users in Nottingham, Cardiff and Sheffield spend at least 50% longer online in a typical session. Overall, 35% over users log on for more than 15 minutes on average, and 8% for more than half an hour. Habits and behaviour Behind texting, email and taking photos, going on social media sites was the next most popular activity among UK respondents on the move in Euromonitor Internationals Out and About survey, with 44% doing this. A further 27% said they play games on their mobile phone while away from home. A Pew study published in December 2012 also found that the UK was the most social networked country of the 21 countries covered by its survey. Moreover, Facebook claims that the UK is its largest user base, with 33.3 million users in 2012. According to eMarketer, 15.9 million people used social networks on their smartphones in 2012, and this is expected to rise to 20.4 million in 2013. Europes leading market for mobile games A Newzoo/Distimo study of mobile gaming found that the UK was also the largest mobile games market in Europe in 2012, as well as one of the fastest growing. It estimates that the number of mobile gamers in the UK grew from 20.2 million to 23.9 million over 2012, of whom 75% played on smartphones and 17% on tablets. In positive news for the gaming industry, Newzoo found that the number of paying players increased by 24%, to 9.2 million, or 39% of all mobile gamers. Most of this was spent on iOS games. In tablet gaming, the iPad is by far the dominant brand, with a share of 71%. The share of Android game revenues was found to be the lowest of all countries studied, at just 6%. However, this is expected to rise after the launch of the Kindle Fire, going by US trends. Although only 13% of respondents in the Out and About survey said they shop on their mobile phones while away from home, other studies show that shopping via mobile phones is becoming increasingly popular in the UK and is posing an ever greater threat to the high street. A Deloitte survey of 1,000 adults in the UK in 2013 found that 57% of shoppers use their smart devices to check the availability of products, and 50% to buy products. Young people are the most likely to shop with mobile devices, suggesting that this trend will accelerate in the future: 48% of 16-24 year-olds choose to shop via apps, compared with just 14% of those aged 45-64. The survey found that, overall, one third of shoppers had already used an online wallet and 12% use contactless technology to pay for items. Chart 27 UK: Mobile Phone Activities Away From Home 2012
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Source: Note:
Sales of mobile devices and games While the UK market for smartphones is relatively mature, with sales having grown in value by just 24% over 2010-2012, the tablets category is still expanding rapidly. Tablet sales leapt by 360% in the same two years, to reach US$2.0 billion. Android has become the UKs leading operating system for smartphones, and had a volume share of almost 49% in 2012. Samsung and HTC continue to expand the Android territory and have recently focused on launching more affordable products. For example, in September 2013, HTC launched the Desire 601, a mid-range smartphone that includes many of the same features as the companys flagship HTC One device, but with slightly lower specs and a plastic body. Euromonitor International data show that sales of mobile games rocketed by 143% between 2010 and 2012, to US$445 million. This growth was largely at the expense of console games. Table 14 US$ million 2010 2011 2012 % growth 2010/2012 24.0 -9.4 359.8 142.6 -63.3 UK: Sales of Mobile Devices and Games 2010-2012

2,713 3,540 443 184 1,147
3,252 3,483 1,178 309 802
3,365 3,206 2,037 445 421
Chart 28
UK: Smartphone Operating Systems 2012
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% volume share
Source:
US
More than two hours a day spent on mobile activities US consumers are spending increasing amounts of time on their mobile devices and are the worlds largest users of tablets. A study released by eMarketer in August 2013 found that US adults spent an average of 2 hours and 21 minutes per day on non-voice mobile activities, including mobile internet usage on phones and tablets. This was longer than they spent online on desktops and laptops, and nearly an hour more than they had spent on mobile a year previously. When compared with watching TV, time spent with mobile was found to represent just over half of TVs share of total media time. According to comScores 2013 Mobile Future in Focus report, smartphones and tablets were owned by 125 million and 50 million US consumers, respectively, and smartphones surpassed 50% penetration. Indeed, ComScore claimed in June 2012 that tablets have reached critical mass in the US, with almost 24% of smartphone owners also being regular tablet users. The company suggested that video playback was the leading reason for smartphone owners turning to tablets. Due to their larger screens, some 53% of tablet users spent some time on their device watching or streaming video of some kind, but this applied to only 20% of smartphone users. A Pew Internet & American Life Project survey of May 2013 found that 34% of US consumers owned a tablet that month, representing a jump of nine percentage points in nine months. Those with incomes below US$30,000 saw penetration double over the same time period, from 10% to 20%. Among the age groups, the largest jump came from those aged 30 to 49 years, with tablets owned by 44% of this demographic as of May 2013. The iPad remained the dominant tablet, with just over half of households with tablets reporting having one. The next most popular device was Amazons Kindle Fire, which was launched in 2011 and was owned by 31% of households. A further 19% of tablet homes had a Samsung Galaxy.
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Habits and behaviour In Euromonitor Internationals Out and About survey of 2012, 50% of US respondents said they have access to a mobile phone. After email and texting, using social media sites was the next most common activity, with more than half (54%) of mobile phone users saying they do this. According to Nielsen and NM Incites latest Social Media Report, US consumers continue to spend more time on social networks than on any other category of sites around 20% of their time online via a PC and 30% of time online via mobile. The research also found that total time spent on social media across PCs and mobile devices increased by 37% to 121 billion minutes in the year to July 2012. Social media via mobile apps and mobile web grew the strongest, by 63%. Pinterest sees fastest growth in social media Facebook was by far the most visited social network in the US, both via mobile web (74.3 million visitors) and via mobile apps (78.4 million users). Pinterest was the fastest growing social networking website in 2012, seeing the largest year-on-year increase in both unique audience and time spent across PC, mobile web and apps. Euromonitor Internationals Out and About survey found that, along with Chinese and Indian respondents, US respondents were most likely to check prices online (35%). 35% also said they play games on their phone while away from home. According to Newzoo research, in March 2012 there were 100 million mobile gamers in the US, up 35% over the previous year. This included 21 million tablet gamers. The study also found that 4.2 million iOS games are downloaded per day in the US. Summary 11 Website Facebook Twitter Blogger Pinterest WordPress LinkedIn Tumblr Wikia Reddit MySpace
Source:
US: Leading Mobile Social Networking Websites, 2012 Type Unique mobile web visitors (million) Social networking website Microblogging Blogging Social networking website Blogging Business networking Social networking/microblogging Wikis Social news and entertainment Social networking website 74.3 42.4 20.0 14.3 12.0 9.7 8.5 5.3 4.3 3.5
Euromonitor International from Nielsen
Chart 29
US: Mobile Phone Activities Away From Home 2012
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Sales of mobile devices and games The US market for smart devices is the most mature in the world and this is the only market in which tablets have gained higher sales than smartphones. In 2012, the tablets category was valued at US$23.2 billion, representing a spectacular jump of 346% over 2010 levels. This was largely at the expense of netbooks, which slumped by 61% in value over the same period. Smartphones continued to grow strongly between 2010 and 2012, increasing in value by 77%. With Symbian being near-negligible the US market, the Android system accounted for the majority of volume sales of smartphones in 2012, at 56%. Most of the remaining sales consisted of iOS-run products. Mobile games is another very fast growing segment in the US, with sales almost doubling between 2010 and 2012, from US$479 million to US$936 million. Table 15 US$ million 2010 2011 2012 % growth 2010/2012 345.5 76.6 0.4 -60.8 95.2 US: Sales of Mobile Devices and Games 2010-2012
Tablets Smartphones Laptops Netbooks Mobile games

5,217 7,710 12,220 2,863 479
15,964 11,216 12,033 1,813 720
23,246 13,612 12,267 1,122 936
US: Smartphone Operating Systems 2012
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FUTURE OUTLOOK Trends To Watch

Reliance on smart devices will intensify Not only is the trend towards mobile cocooning here to stay, it is likely to intensify in the future, especially as it catches on increasingly in emerging markets. Consumers all over the world are likely to spend larger amounts of time immersed in their own worlds, as mobile devices become more innovative, more powerful, more affordable and more convenient. Usership levels are at their highest among the younger generation who were born into the digital age. For these new consumers, mobiles and tablets are an integral part of their lifestyle that will stay with them and influence every aspect of their lives, from communication, learning and day-to-day tasks to travel, shopping, fitness and entertainment. For everyone, lives will be increasingly controlled by mobiles, with bank cards, loyalty cards, travel cards and boarding passes gradually disappearing from physical wallets and becoming integrated into smartphone software. Small and mighty All this spells tremendous potential for growth in sales of web-enabled devices, such as smartphones, e-readers and tablets, in addition to software, such as apps, video and audio content and mobile games. Innovations such as 4G, mobile devices that function more like desktops, mobile payments and increased security will drive the smartphones market in the future. Indeed, there is likely to come a time when processors are so small and energy efficient that smartphones will have enough processing power to carry out any task. Nevertheless, while consumers lives may be made easier by their devices and apps, the risks involved in losing a smartphone or inadvertently downloading malware will become greater, as larger amounts of personal data are stored on it. More sophisticated apps are likely to be developed that can locate a phone or even destroy it, while protecting passwords and identity.
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Budget brands will drive growth in emerging markets Falling prices of lower end products will open up the market for basic smartphones to a much wider consumer base in emerging markets. Companies will need to adapt their strategies accordingly for these new consumers. They will typically be highly value conscious and will seek simple tariff options and unlimited, time-based and content-based packages. In order to compete with the slew of low-cost Android systems in emerging markets, Apple unveiled a new, budget iPhone model in September 2013. The iPhone 5C comes in a range of bright colours and features a new HD Facetime camera, an 8-megapixel rear camera, a 4-inch (10cm) Retina display and improved battery. It is made of polycarbonate plastic and is reinforced with a steel frame, which acts as the phones antenna. The rise of smartphones will continue negatively to affect sales of feature phones, as well as portable media players and imaging devices, as smartphones integrate features previously performed by single function devices. Euromonitor International predicts that 2013 will mark the first year when volume sales of smartphones surpass those of feature phones. Sales of feature phones have been declining since peaking at just over a billion units in 2010. By 2017, sales are expected to be around 640 million units. Android to further increase dominance The accelerating shift towards low cost models will benefit cheaper brands like Huawei and ZTE, as well as companies like Samsung Corp with product portfolios spanning a wide price range. With rapidly declining sales of Symbian devices, and slow uptake of Windows and BlackBerry 10 smartphones in most of these markets, Android is likely to remain dominant in the early part of the forecast period. It remains to be seen how successful Windows will be in penetrating the smartphones market following Microsofts recent merger with Nokia. Microsoft agreed a deal to buy Finlands Nokias mobile phone business in a massive deal worth 5.4 billion in September 2013. Despite having been in partnership with Microsoft since 2011, Nokia had fallen behind rivals Samsung and Apple, while Microsoft was slow into the mobile market. Microsoft has big ambitions to transform itself from a company known mainly for software and PCs to one that focuses on devices and services. Since going into partnership with Nokia it has progressed from having no phones business prior to 2011 to selling 7.4 million smart Windows phones. It launched its Surface tablet PCs in 2012, but sales of the devices have been relatively slow. Tablets will replace laptops While the US market for tablets may be reaching saturation, there is still huge potential in other developed markets, as well as emerging ones. In value terms, sales per household reached US$192 in the US in 2012 but were still less than US$100 in all the major European markets and just US$10 in China, suggesting that there is still plenty of room for expansion. The proliferation of tablets based on the Android operating system is expected to impact both developed and emerging markets over the forecast period. At the same time, demand for iPads and iPad Minis will remain strong, due to the premium image of the brand and its position as a status symbol among the rising middle classes in emerging markets. The increased adoption of tablets is likely to diminish further the need for PCs, laptops and output peripherals, as tablet devices will be designed to be reliant on a rapidly expanding array of cloud services and are compatible with televisions for home use. Therefore, sales of monitors, desktops, laptops and printers will continue declining. Another area that will undoubtedly develop further over the forecast period is that of ultramobile devices, such as ultrabooks (eg Chromebook), tablet/laptop combos (eg Lenovos
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IdeaPad Yoga, a laptop which flips over to become a Windows 8 tablet); jumbo smartphones, or phablets, such as Samsungs Galaxy Note or Asuss PadFone; and mini tablets, such as the iPad Mini. But product life cycles will lengthen One factor which may slow growth of smartphones and tablets in markets that are starting to rely on replacement purchases is that new software will be developed to extend the life of these devices. This means that users will be less inclined to spend money upgrading them. Nevertheless, Euromonitor International forecasts that sales of smartphones will increase by a substantial 123% in volume terms over the five year period from 2012 to 1017. Growth is likely to slow gradually as the market matures, especially as smartphones face competition in developed markets from wearable devices such as Google Glass and smart watches. Analysts believe that tablets are one day likely to become a mainstay of households, in the same way as PCs were in the past. By 2013, Euromonitor International predicts that tablet sales will have overtaken sales of laptops by volume. However, tablets will compete for market share over the forecast period with large smartphones with screens of at least five inches (13cm), in addition to wearable devices. For this reason, tablet growth may start to slow towards the end of the forecast period. Chart 31 Forecast Sales of Smartphones and Tablets by Volume 2012/2017
Source:
The future is faster In response to the growing demand for higher network speeds and anywhere, anytime connection, the forecast period is likely to see the wider availability of 4G and a proliferation of Wi-Fi spots in public places, and in cafs, restaurants and leisure outlets. Some carriers and smartphone manufacturers have even begun working on the fifth generation of mobile data, or 5G, although these speeds are not likely to be available to consumers before around 2020. In May 2013, Samsung announced that it had successfully run
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tests that had achieved an incredible 1Gbps download speed (theoretically, the maximum expected speed from 4G is around 75Mbps). Wi-Fi will also be gradually introduced by airlines as part of the in-flight service for passengers. According to a report published by routehappy.com in 2013, 38% of all domestic flights in the US offer Wi-Fi, while 9% are in the process of introducing it. European and Asian airlines have been much slower to introduce Wi-Fi than their US counterparts. In 2013, only Norwegian and Turkish Airlines offered a free service, while Air France, KLM and Air China were still trialling Wi-Fi. British Airways announced that it was thinking about beginning tests for in-flight Wi-Fi on one of its planes by the end of 2013, while Lufthansa offers this service only on intercontinental flights. Smartphones of the future Future developments in smartphones will see more advanced and innovative features, with brands focusing on particular USPs in order to distinguish themselves from the crowd. For example, in September 2013, Sony unveiled its Xperia Z1 smartphone, featuring an unprecedented 20.7 megapixel camera with detachable lens, as well as real-time video streaming to Facebook. Apples soon-to-be-released iPhone 5S is rumoured to feature a fingerprint scanner, which will be accommodated under a raised scratch-free, sapphire home button. Samsungs Galaxy Note 3, also launched in September 2013, boasts an enhanced stylus (the S Pen) with actions. For example, the user can write a phone number and, using the phones handwriting recognition, it is automatically added to the phone book, or if it is already a contact will call them. The pen can also be used to help organise notes, for example, and categorise apps simply by drawing a circle around them. Mobile devices are also likely to take different forms in the future, as the search continues for the ultimate in convenience. Wearable devices, such as Google Glass and smart watches, will be launched on the consumer market during the early part of the forecast period and may eventually become mainstream. In the autumn of 2013, for example, Samsung unveiled its Galaxy Gear smartwatch. The wrist-mounted device has a solid touchscreen, runs Android apps and can sync with a smartphone to make phone calls and access the web. The US price will be US$299. Google Glass: the ultimate cocoon? Googles Google Glass has been one of the most talked about new developments, which could be commercialised as early as 2014. The device puts the concept of augmented reality into practice by incorporating a computer into an optical head-mounted display (OHMD). A camera, display, touchpad, battery and microphone are all built into spectacle frames to enable the user to place a display in their field of vision, film, take pictures, search and translate on the go. Bluetooth and Wi-Fi are also built in. Google Glass displays information by way of a prism screen, in the same way as a smartphone in a hands-free format. Its convenience lies partly in its ability to interact with the internet via natural language voice commands. To activate the device, users need only tilt their head upwards or tap the touchpad and say OK Glass. Once the device is activated, wearers can give further commands, such as take a picture, record a video, hangout with X, give me directions to X or send a message to X. Google Glass can also provide sound, with boneinduction technology. This vibrates the wearers skull to create sound which is transmitted to the ears. The device does not have GPS, but it will be possible to couple it with a phone via the MyGlass app. As well as sharing GPS data, this means messages can be received, viewed on the display, and answered using the microphone and Googles voice -to-text functionality.
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Glass uses many existing Google apps, such as Google Now, Google Maps, Google+ and Gmail, in addition to a variety of free apps (Glassware) that are built by third-party developers. Privacy implications of Glass Concerns have been raised by various sources regarding the intrusion of privacy and the etiquette and ethics of using Google Glass in public and recording people without their permission. Privacy advocates are concerned that users may be able to identify strangers in public using facial recognition, or surreptitiously record and broadcast private conversations. Some companies in the US have already posted anti-Google Glass signs in their establishments. Google claims to have put strict privacy rules in place regarding Glass. Apps may not use or sell personal information for purposes beyond the application, unless they get specific opt-in consent from the user. Furthermore, Glass has an automatic 10 second limit to all recorded videos, while a recording light above the camera alerts others to the fact that the device is filming. It is rumoured that a locking mechanism will lock the device down when not in use, which will help keep user data private. Apple and Microsoft are said to be working on their own equivalents of Glass, while Sony has gone so far as to patent a similar offering. Vuzix, Oakley and Baidu are also among the potential Glass rivals. Opportunities for app development Apps developers have been highly creative to date and it is likely that the future will see a whole range of innovative apps come to market. A study carried out by Apigee in February 2013 found that across 760 smartphone owners in France, Germany, Spain, the UK and US, the app capability respondents wished for most was remote control of items in the home, such as lights, air conditioning, locks and garage doors (46%). As many as 61% of American respondents desired this function. Opportunities for app development for Google Glass are virtually limitless. Google Hangout software allows the user to video conference with friends and show them what they are looking at. Already, the Evernote app lets users send their grocery lists to Glass so they can access them while they are shopping. Zillow Z-0.25%s app shows users information such as when a house was last sold, estimated price and photos, and gives users the ability to connect with the real estate agent if available. Airlines can beam flight details while at the airport, while Google Maps gives users directions. In-app purchases will help monetise mobile games In 2011, Gartner forecast that app downloads would reach almost 310 billion by 2016. Although as many as 93% of these will be free of charge, the 21.7 billion or so paid-for downloads will provide opportunities for marketers to gain direct revenue. In-app purchase business models are thought to be the most effective way to convert casual app users into paying customers. The challenge for marketers in this case is to create a positive user experience and introduce continued product updates. Gartner estimates that in-app purchases would drive 41% of store revenue by 2016, as the number of downloads featuring inapp purchase will increase from 5% of total downloads in 2011 to 30% in 2016. In-car connectivity Mobile cocooning will extend further to cars in the coming years, as in-vehicle connectivity and entertainment will see widespread adoption and become increasingly sophisticated. A 2013 JD Power study found that more than half of vehicle owners said their next car would definitely or probably include wireless connectivity, or the ability to sync with their smartphones.
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In September 2013, Nissan announced the launch of its Nismo smartwatch for drivers, which monitors the performance of the vehicle as well as measuring the users heart rate, temperature and other biometrics. The watch can be connected to the cars on -board computer system to allow users to monitor vehicle telemetry and performance data. Users can also receive tailored messages from Nissan via the gadget. App makers are also developing auto products accordingly. New apps that are aimed at in-car use include Glympse, which gives the users contacts a glimp se of their location and allows contacts to track the user in real time for a set duration (similar to Snapchat but for location sharing); Amazons Rhapsody; audio-response app Kaliki; and the USA Today in-dash news reader. Developers of in-car apps face the challenge of making products as safe as possible in order to avoid driver distraction. In early 2013, the US Department of Transportation issued Phase I recommendations for limiting in-vehicle telemetry/infotainment/phone distractions. Suggestions included reducing complexity, operations, visuals in and out of the drivers field of vision, social media and browsing. Phase II will focus on mobile devices brought into a car, and Phase III will deal with voice-command technology. Such restrictions to not apply to passengers, however, and there is still plenty of scope for back seat entertainment. Mobile shopping set to grow Internet shopping is a strong growth area and as consumers continue to shift away from PCs to mobile web access, m-commerce will no longer be the preserve of the young. Consumers will become more accustomed to accessing product information, reviews and price comparisons from their smartphone or tablet while shopping and will be less likely to rely on in-store displays or salespeople. To continue appealing to tech-savvy shoppers, retailers must focus on improving in-store technology, as well as the overall shopper experience. Some retailers have even begun to distribute Apple iPads to shoppers when they enter the store, often with pre-determined apps and websites open for ease (and control) of information access. Contactless payment yet to develop One area that has until now had difficulty in breaking into the mainstream is that of payment by mobile, but this is set to change over the forecast period. In the UK, several foodservice chains, such as McDonalds, Starbucks and Nandos, have already installed contactless readers. Other retailers already accepting contactless payment include IKEA, Boots, the Post Office and WH Smith. Credit card companies have issued their own contactless services, such as MasterCards PayPass and Visas PayWave, while Barclaycard offers PayTag, an NFC-equipped sticker that can turn any mobile phone into a contactless payment device. Mobile phone manufacturers such as HTC, Samsung, Google and LG have manufactured NFC-enabled handsets to provide an alternative method of payment. It is also rumoured that the US Patent and Trademark Office has issued a patent to Apple for a system that uses NFC for its soon-to-be-introduced iWallet. Globally, more tap-and-pay devices will come onto the market over the next few years, and experts predict that the mobile payments sector will become a US$1 trillion industry by 2017. Mobile advertising to take share from traditional media Social and mobile will continue to be at the heart of digital innovation over the forecast period, but many companies still appear to be stuck in a desktop mentality, leaving their products and services at risk of becoming irrelevant to a new digital savvy generation. The most successful
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companies of the future will be those that embrace more flexible thinking and more flexible content at every level. It is said that while more than 10% of consumer time is spent with the mobile phone, only 1% of advertising spend is allocated to mobile. This is likely to change as companies catch on to the power of mobile advertising. Mobile will continue to redefine the way consumers and brands interact. The future is likely to see growth in more personalised advertising formats on mobile and social websites, including location-based special promotions linked to shopping or entertainment, and sponsored messages. A recent study by Berg Insight estimated that location-enabled adspend would increase to 33% of total mobile adspend by 2017, up from 8% in 2012. Companies must, however, be sensitive in their approach to advertising within what people perceive to be their personal space. Promotions must be relevant and well-tailored, and companies must be transparent about the using or selling of personal data. Retailers need to encourage consumers to check-in at the places they go by offering treats, such as exclusive previews or behind-the-scenes content. Viral marketing campaigns via YouTube and other social media will also continue to offer excellent opportunities for brands to gain visibility and spread their message globally within a short space of time, providing they capture the imagination of viewers. The most successful campaigns are generally those that elicit a powerful emotional response and make viewers immediately want to share the clip with friends. However, marketers must take measures to ensure that videos are likely to be seen and shared by their target audience. Social networking presence essential for reaching the young Social networking websites have become an essential way for companies to connect with existing and potential consumers, and build brand awareness. This will continue to be the case in the future, as more and more people shift from traditional media and communication methods to mobile formats. Despite the absence of Facebook and Twitter from the Chinese market, these two websites are likely to remain the most visited social media sites globally in the forecast period and will increasingly be accessed via handheld devices, whether via apps or mobile web. However, their popularity may wane in the face of a new wave of innovative social media apps. Mobile first websites that are on the up include those that allow users to communicate with any of their contacts, anywhere in the world, with almost any content mix and at any time. These include iMessage, WhatsApp, LINE, WeChat and KakaoTalk. Also increasingly popular are media-sharing apps, such as Vine, Snapchat and Instagram.

Mobile Cocooning How Growing Reliance On Smart Devices Is Influencing Consumer Behaviour

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MOBILE COCOONING: HOW GROWING RELIANCE ON SMART DEVICES IS INFLUENCING CONSUMER BEHAVIOUR

Euromonitor International September 2013

LIST OF CONTENTS AND TABLES

App Dependency .................................................................................................................... 22 Summary 2 Summary 3

People Power ......................................................................................................................... 29 Entertainment on the Move ..................................................................................................... 30

Smart Travel ........................................................................................................................... 32 Summary 6 Selected Travel Apps 2013 ........................................................................ 33

Summary 10 Chart 22 Table 11 Chart 23

Global Sales of Selected Electronic Devices 2012

INTRODUCTION Cocooning on the Move

Euromonitor Internationals Analyst Pulse survey of July 2013

DEMAND FACTORS Expansion of the Internet

Internet Users as % Population by Country 2007/2012/2017

Internet Retailing by Country 2007/2012

Increased Adoption of Smart Devices

Growth in Wireless Access

Higher Network Speeds

Expanding Access To Wi-fi

the Transition To Cloud Computing

Security and Privacy Concerns

Euromonitor Internationals Analyst Pulse survey of July 2013

Digital Versus Traditional Media

Mobile Phone Activities

% smartphone population using in last month 54 44 35 30 27 22 22 17 11 6

networking Shazam Flickr Yelp Vine

Music identifier Media sharing Reviews Media sharing

Euromonitor International Analyst Pulse survey, July 2013

Social Networking Behaviour

Euromonitor Internationals Global Youth Survey 2011

278,747 251,582 241,226 142,980 51,759 14,824

6.9 30.4 44.7 36.1 5.1 41.1

Fastest Growing Facebook Countries 2012

Entertainment on the Move

Country base UK US France Taiwan Finland US Sweden Australia US US

Euromonitor International from App Annie Index

Euromonitor International from App Annie Index

FlightTrack Pro XE Currency Packing Pro

MapMyHike GPS Hiking

iHandy Translator Pro

World Clock WhatsApp

MetrO Tipulator FourSquare

Growing Popularity of Fitness Apps

COMMERCIAL IMPACT Growth of Internet Enabled Devices

24,316 76,903 253 62,281 26,568 73 55

202,860 94,615 52,707 40,087 17,174 9,322 2,598

734.3 23.0 20,741.0 -35.6 -35.4 12,758.2 4,589.5

Top 10 Global Smartphone Manufacturers by Retail Volume 2012

Euromonitor International from Gartner Inc

Impact on the Video Games Market

Global Sales of Video Games 2007/2012

2012 29,377 6,548 3,328 19,501 18,413 4,132 8,656 5,625

% growth 2.4 -6.7 -12.4 9.1 164.5 208.2 99.5 338.5

28,684 7,015 3,800 17,869 6,962 1,341 4,338 1,283

MARKETING OPPORTUNITIES Mobile Ad Revenues

Euromonitor International from Gartner (November 2012)

Ratings Apps Increase Publicity for Small Businesses

Getting the Best Out of Social Media

KEY MARKET TRENDS Brazil

Laptops Tablets Netbooks Mobile games

4,251 418 415 16

4,106 971 212 16

18.0 1,461.3 -56.1 14.2

Chart 17 % volume share

Brazil: Smartphone Operating Systems 2012