THE

ONLY
digital report
The Internet is changing economies, creating
wealth, and altering what the world looks like today.
As the pace of technology picks up, the impact of
the Internet is only becoming greater.

To break down all of thetrends with the Internetand

what the world should expect in the next year, Mary
Meeker, a venture capitalist who specialises in
technology and the Internet, presented the facts on

you need to
everything from changes in the cloud and healthcare
to how media is being affected.

read this year

We summarise the data on each trend here.
 1. 2016 2017

Global Internet Trends 10%

2017 is proving to be a year of change when it comes to Internet trends around the globe. Growth
Meeker pointed out that while there has been solid Internet user growth around the
globe, smartphone sales growth is slowing. Last year, there was a 10% growth in global
smartphone shipments, but this year growth slowed down to just 3%, giving off the
impression that those who want a smartphone already have one. And when it comes to 3%
global Internet usage, it is becoming more accessible at a steady paceboth this year Growth
and last year there was 10% growth of Internet users around the world.

And then there is how individuals all over the world are accessing the Internet. Time spent
on the Internet has more than doubled since 2008, moving from just 2.7 hours being
spent surfing the web to 5.6 hours each day. Most of this escalation is due to much more
time spent using the Internet on mobile devices, with the use of laptops and desktop not
dropping significantlyproof that mobile devices are seen as an additional device Smartphone Smartphone
rather than a replacement. SALES SALES

X2
Read: A global leaders guide to the Internet of Things

Internet usage Internet usage

2008 2017

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 2.
Online Advertising and Commerce
Online advertising growth has mainly been driven by mobile devices. So just as mobile Internet usage

400 million
is growing more steadily than desktop Internet usage, mobile advertising spending is overtaking
desktop advertising spending. In 2009, $23 billion was spent on desktop advertising. This
number grew to roughly $38 billion through 2015. Since last year, however, that number began mobile users in 2016
to drop as more emphasis is being placed on mobile advertising spending, which has grown from
BLOCKED ADS
$1 billion in 2010 to $38 billion in 2016.

A change in tides is not just occurring on different personal devices; there is also a shift in
advertising methods. In 1995, television was far and away the main route for publicity, with roughly
$80 billion being spent globally on television advertisements. At that time, no money was spent
on Internet advertising. This has quickly changed, and in the next year, Internet advertising will
likely overtake television advertising, providing a significant opportunity for mobile products.

There is one major hurdle that is still disrupting advertisers: ad blocking. Ad blocking software use
is growing, both for desktop users and for mobile users. For desktop, this number has increased
from about 20 million users blocking ads globally in 2009 to about 30 million users in 2016.
And for mobile users, this growth is even more astonishing, fromabout 150 million users blocking
ads in 2015 to almost 400 million in 2016. And ad blocking is the highest where data costs are
the highest. In China, 1% of users block desktop ads, and 13% block mobile ads. In India, 1% block
desktop ads and 28% block mobile ads. In Indonesia, the numbers jump, with 8% of users blocking
desktop ads and 58% blocking mobile ads.

Read: The future of digital retail

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 2.
There are bright spots for advertisers, though. Some of the bigger
platforms that provide advertising opportunities, like Google and
Facebook, are delivering valuable insights and analytics to advertisers
so that they can spend more effectively on ads through measuring what
works and what doesnt work, as well as enhancing how ads are targeted.
For example, companies like Google and Uber are beginning to use
location-aware ads. In other words, when consumers are near a certain
store, ads for that store will pop up to encourage purchases. Another
example can be seen through partnerships. Some stores are teaming up
with Google and, through the use of augmented reality apps, are helping
consumers find the products that they need in their stores. For example, if
a customer walks into a grocery store with a shopping list, they simply open
the app, type in the product that they need, and the app will guide them
through the store to the product. This kind of spending on advertising
is becoming more and more common with a wider variety of businesses
because it creates a much more positive customer experience.

There are also changing trends in customer service. Instead of customers

being forced to call in or wait for a reply to an email, there is now real-time
online chatting. This type of service delivers on the consumer demand
for easier access and faster response times. And this type of customer
service is fairly recent. Since the beginning of 2014, only a few million real-
time online customer service chat conversations had been started. At the
Read: The future of digital retail
end of 2016, this number had nearly reached 400 million globally.

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 3.
Interactive Games
Just as the world of advertising is seeing changing trends, gaming is too. Over at about 58 million. In 2016, this figure escalated to reach 161 million. Many of
the last 45 years, gaming has undergone a transition from a solitary activity to these viewers are millennials, due to the fact that millennials prefer e-sports to
one done in small groups to being done online with millions of other people. In traditional sports. And because of this, not only is the prize money growing, but
the last year, the gaming industry has grown by 9%, now earning $100 billion sports and media companies are buying rights and franchises in e-sports, making
in a single year. And the number of gamers around the world has also increased. the sector very lucrative.
In 1995, there were 100 million gamers in the world. There are now 2.6 billion.
This type of digital activity around the world is creating enormous amounts of
And these gamers spend more time playing games than on any other platform,
data. In 2005, humans created
includingFacebook, Instagram, and Snapchat.
roughly 100 billion gigabytes.
One of the reasons for this growth is that the In 2016, this number rocketed
educational sector and business sector has seen up to 14 trillion gigabytes. By
positive attributes of gaming. Gamification has 2025, that number is expected
been proven to assist in teaching everything to reach 163 trillion gigabytes.
from trial and error and workflow to exploration All of the data will need to be
and analysis. For instance, in athletics, when stored somewhere, creating a
gaming is implemented into machine learning- tremendous opportunity for the
analysed footage or workout equipment, athlete data storage sector.
performance is improved. This is exactly why
more and more apps, whether for dating, learning
a language, or personal finance, are gamifying
the app experience.

E-sports are also becoming more popular. In

2012, the number of e-sports viewers globally sat

Read: more about the global gaming market

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 4.
Media Consumption consumers
How individuals listen to music is changing. The radio is no longer the best way to discover prefer short,
new musicInternet-connected music services are. Applications like Pandora and Spotify are uninterrupted
finding more and more consumers who are willing to pay for their services. To effectively make this
transformation from free-listener to paid subscriber, the services rely on factors like converting
content
through free trials, advertisement avoidance through subscriptions, and mobile access. Over the
past year, these services have noticed that listeners priorities are changing too. They now place
the most importance on the services music catalogue size, the ability to discover new music
through the service, and capacity to listen on multiple devices.

And the impact of the Internet is spreading much further in media than just music. Many people
are ditching the traditional way of watching television by ending their cable subscription. Instead,
they are opting for one or two of the many online streaming platforms that are on the market.
This change is for a variety of reasons, but the most prevalent are the fact that cable is simply too
expensive, the necessity of using an Internet streaming service to have access to certain shows,
an antenna already provides access to the basic channels on television, and they prefer to binge
watch whole seasons.

Another major media change can be seen in how consumers are consuming content. For example,
around the world in 2012, most of the mobile video share was provided by YouTube, HTTP/SSL,
and others. Their proportion of this content has gone down, and social media apps like Facebook,
Instagram, and SnapChat, as well as Netflix, and Google Cloud are beginning to drive more
mobile video growth. This is likely due to consumers preferring short, uninterrupted content,
along with easier discovery.

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 5.
The Cloud
Globally, customers are spending less on traditional data
centres. Since 2013, their share of the IT infrastructure spend
has dropped from 76% to 63%. And taking its place are
public and private clouds. Public clouds have increased
Unfortunately, this growth in the cloud is
their percentage of total IT infrastructure spend from 14%
not all good. Security concerns, when it
to 22%, and private clouds have moved from 9% to 15%.
comes to data breaches and hackers,
Google Cloud, Azure, and Amazons AWS are driving this
have escalated significantly. Spammers
change, proving to clients that they provide an easier
have increased the amount of phishing
ability to change vendors, as well as better governance and
and malicious attacks. By the end of
compliance. This switch also enables the use of APIs, edge
2016, more than 100 million identities
computing, browser extensions, analytics databases, and
had been exposed through this rapid
containers.
escalation of data breaches. And while
And when it comes to filling the cloud up with information spam without malicious attachments
and media, enterprise companies are shifting their focus MALICIOUS has increased by 150% between the
from developers to designers. While they still see the need
for great developers, they are also beginning to understand
that consumers expect to have excellent experiences on the
SPAM beginning of 2015 and the end of 2016,
there has been an even greater increase
in spam with malicious attachmentsa

350
interface. This can be seen quite clearly in companies like % rise of 350% in the same period.
IBM who, in 2010, had a designer to developer ratio of 1 to UP
72. This number changed drastically to 1 designer to every
8 developers and, for mobile projects, 1 designer to every
3 developers. Read: 14 up-and-coming trends
about cloud computing

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 6.
China: Leading the way
TOP INTERACTIVE
As far as the Chinese economy is concerned, technology is king. And this is a major change from 10 years gaming market in IT
ago. In 2005, public wealth was most heavily created through the health care sector and the consumer the world main contributor
to wealth creation
staples sector, with information technology falling far behind. Now, even though health care is still a major
contributor to wealth creation, information technology has taken the number one spot. This change is
mainly due to the fact that consumer confidence has grown, allowing non-state-owned enterprises to
thrive and the service sector to grow.

Another impressive aspect of the Chinese Internet market is the growth of mobile users. As previously
discussed, the growth of mobile users is beginning to slow. It was 10% and, in the last year, it slowed down
to 3%. This is mainly because the majority of individuals in the world who want a smartphone already have
one. But this is not the case for China. Their mobile Internet user market has been growing steadily for
nearly a decade. In 2008, the amount of users sat at just over 100 million. By 2010, this number reached
300 million. In 2012, China surpassed the 400 million mobile Internet user mark and, in 2014, they hit 550 2016
million. And the growth is only continuing, with a strong 12% growth rate that is expected to continue,
showing that there are still many potential Chinese mobile Internet users.

Where consumers in China get their entertainment is another telling sign of recent trends. In 2016, an
$
23
000,000,000
unexpected change occurred: Individuals spent more time on their phones than watching television.
Most of this mobile usage was spent on Tencent, with WeChat and QQ accounting for the vast majority of
ONLINE GAME
the time, while Tencent games, videos, news, and music also considerably contributed. annual revenue of INDIVIDUALS
about $23 billion spend more time on
Just as the rest of the world has embraced online gaming, China is leading the way. In fact, in 2016, it
their phones than
became the top interactive game market in the world. A major difference between China and much watching television
of the rest of the world is that consumers in China are much more willing to pay extra to interact with live
streaming stars. And this willingness has grown rapidly in the last few years, with online games, in 2011,
creating an annual revenue of about $8 billion. By 2016, this number had grown to about $23 billion. By
contrast, over the same period, the annual revenue in the United States only increased by about $3 billion.

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 6.
China is also leading the world in a new form of sharing. Just as much of the rest of the world is enjoying
home sharing and car sharing through Internet sensations like Uber and AirBnB, China has added bike
sharing to the listand it is doing well. The industry has seen 100% growth month over month, has
2016
started serving more than 20 million users, and is quickly catching up to car sharing in the amount of
trips completed in a quarter. bike sharing

A major area of commerce that is changing in China is how transactions are being carried out. When it
20 million
comes to smaller payments, the Chinese are opting to use mobile payment options, such as WeChat
users
Pay and AliPay. In 2012, mobile payments were rare in China. By 2013, the mobile payment volume had
risen to about $200 billion. In 2014, the mobile payment transaction volume passed the $1 trillion mark
and then doubled in 2015 and again in 2016, with $6 trillion in mobile payments being made in the last
year. It is because of this that many giants in the Chinese tech industry are starting to diversify into the $6 trillion
financial sector. in mobile payment
transactions
And it is not just payments that are going mobile in China. Shopping is now being done on mobile more
than in-person across the countrythe switch from brick-and-mortar is happening faster in China than
anywhere else in the world. Some of the bigger online stores, like Alibaba, are closing in on 600 million
mobile users per month.
$700 billion
Spending is going up too. In 2012, desktop and mobile purchases on B2C eCommerce companies
in desktop and
created nearly $200 billion in gross merchandise value. This went up to almost $300 billion in 2013, $400 mobile purchases
billion in 2014, $550 billion in 2015, and almost $700 billion in 2016. Another trend that has come to light
is the move from desktop to mobile when it comes to these eCommerce B2C purchases in China. Since
2014, there has been a shift from a majority of purchases being made on desktops to, in 2016, a majority
of purchases being made on mobile. When it comes down to it, eCommerce is growing faster in China fastest
than just about anywhere else in the world. In the United States, said commerce only grew 15%, and growing
yet in China, it grew an astounding 24%. Global eCommerce

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 7. The Internet
is expected to
expand throughout
India: The Start-up Hub India over the next
few years
When it comes to the Internet boom, India is not far behind China. One of the drivers behind increased
Internet usage in India is the drop in data cost. Since 2015, prices have dropped to 1.3% of the average
annual GDP per capita, cut in half from 3% prior to 2015. This lowering of cost has allowed 355 million
people across India to be active Internet users, a number that only broke the 200 million mark in 2015.
Strong economy
Another reason that there are more Internet users is that the hardware required for Internet use is
becoming more affordable in India. Chinese hardware makers are creating strong competition in India.
At the end of 2014, China-based smartphone vendors only made up about 15% of the smartphone
shipments in India. They now make up more than half of the market share in the country and are only Solid growth of
getting bigger. Internet users

Within India, there is also excitement over venture capital funding. Between 2013 and 2017, there has
been a significantly increased interest in investing in Internet start-ups throughout the country. This
has helped drive aggressive growth and create exciting competition. While 2016 saw a slowdown in the Growth in
mobile purchases
investments, it was far from abandonment by investors. In 2013, the industry had $1.4 billion invested
in its various start-ups. This number jumped to $5.1 billion in 2014 and then onto $7.6 billion in 2015.
Investments dropped to $4.7 billion in 2016, but these type of investments are not expected to drop
again significantly over the next year. A government focused
on pro-digital policies
Overall, when the statistics and figures are all added up, with a strong economy, solid growth of Internet
users, growth in mobile purchases, and a government focused on pro-digital policies, the Internet is
only expected to expand throughout India over the next few years rapidly.

Read: The worlds top 10 start-up hubs

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 8.
Healthcare
To put it simply, technology is improving healthcare. More and more
physician offices are adopting electronic health records and, due to technology
advancements and increased affordability, more patients have more thorough
clinical data elements in their medical records. This is due to everything from
increased medical research and new health apps to a greater willingness to
share health data and enhanced data monitoring to more wearable devices and
easier access to 3D scans.
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The healthcare industry is also dramatically improving because sequencing a
human genome is now more accessible than ever. In 2001, it cost about $100
million to sequence a human genome. In 2008, the cost dropped below $1
million and, by the end of 2015, it only cost about $1,000. Additionally, the time
to sequence a human genome has also dropped. In 2007, the Illumina (Solexa)
Genome Analyzer took 10 months to sequence a genome. In 2015, Illuminas X10
could sequence a genome in just over a single day. A significantly reduced cost
and decreased time to sequence has led to an exponential increase in genomic
knowledge that, in turn, has led to wider access to personalised medicine.
 9.
Global Public And Private Internet Companies
When the global market capitalisation leaderboard is reviewed, it becomes pretty clear that the The Internet is
Internet is king. Most of the giants of the tech industry only saw growth in the last year, and the top KING
five companies on the list are Apple, Google, Microsoft, Amazon, and Facebookall tech companies.
And the surprising aspect of this is viewing the transformation that all of these Internet companies have
made since their inception. While Apple entered the market as a personal computer maker, it is now a
media marketplace, a cloud service, and a multi-device maker. Amazon hit the Internet as a bookseller
and has transformed into a global B2B, B2C, and C2C marketplace, as well as a creator of digital content,
a music platform, and so much more. Google, Facebook, Tencent, and Alibaba have all followed a
similar path and are all in competition with one another in every big market from e-commerce and
hardware to messaging and advertising.

In previous decades, most money invested in tech companies came from technology IPO volume. This
was the case throughout the 1990s, and it began to change in the 2000s. Since then, most financing
volume has come from private marketswith the exception of 2014, which saw significant success in
blockbuster IPOs.

Another encouraging trend in the world of Internet companies is the lack of any potential bubble, such
as the previous disaster of the dotcom bubble. This decade has seen a strong trend of increasing
amounts of money spent on acquisitions, with the exception of 2012 which saw a dip in both the number
of acquisitions and the amount spent on them. Otherwise, though, merger and acquisition volume
increased from $100 billion globally in 2010 to $365 billion in 2015. And while in 2016 volume in dollars
dipped down to $336 billion, the amount of acquisitions went up from 414 in 2015 to 439 in 2016.

The Internet is changing. It is changing the world, the people in it, and how we do
business. These changes are essential to keep up with.

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