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Wednesday, May 14, 2014

Mobile Subscriptions are at 100% of the World Population - 7.1 Billion

As reported by Tomi Ahonen's Almanac: Where are we in mobile stats in 2014?

The mobile subscription rate is at or very very nearly at 100%. For 7.1 Billion people alive that means 7.1 Billion mobile phone subscriptions worldwide. Not everyone has a mobile account or number - babies don't have mobile phones so some of us have two or more accounts. Hong Kong is past 200% penetration rate for example. But globally yes, we are now at 100%. 7.1 Billion mobile phone accounts in use worldwide.


So first, some context. The PC: Take every type of PC, including desktops, laptops, net-books and tablet PCs and add them together. What do we have? 1.5 Billion in use worldwide. Mobile is nearly 5 times larger. Televisions: Sure - We are now at 2 Billion TV sets in use globally. But mobile has 3.5 times users. What of 'paid' TV viewers - i.e. cable and satellite TV accounts? That's only 1 Billion. Mobile has 7 times more paying customers. Land-line phones? There are only 1.1 Billion of those left. Mobile is more than six times bigger.

Then lets talk about those numbers. 7.1 Billion mobile subscriptions doesn't mean 'unique users' and not all represent 'handsets in use'. The number of unique users is now 4.5 Billion or 63% of all humans alive are actually users of mobile phones. The remaining 2.6 Billion accounts are second or third accounts for the same user. And many of us have two phones. What is the number of phones in use? We are at 5.4 Billion mobile handsets in use around the world. So out of the unique user number (4.5 Billion) 900 million carry two phones. So 20% of us, one in five who has a mobile subscription or account, actually walks around with two phones (and at least two accounts).

Total active mobile subscriptions or accounts . . .  7.1 B (was 6.7 B in 2011, growth 6%)
Unique mobile users . . . . . . . . . . . . . . . . . 
 . . . . . . . 4.5 B (was 4.3 B in 2011, growth 5%)
Actual mobile phones in use . . . . . . . . . . . . . . . . . . 5.4 B (was 5.2 B in 2011, growth 4%)

The industry grew 7% in total revenues last year and the global mobile industry is now worth $1.56 Trillion dollars annually. That breaks down so, that $1.15 Trillion is service revenues (our phone calls, messages, internet access, music, games, advertising, apps etc). $280 Billion is handset sales (mostly smartphones) and another $125 Billion is 'other hardware' that includes a wide range from networking equipment to accessories.

Of the service revenues those highly hyped smartphone apps are still only a tiny corner of the opportunity. The mobile operators/carriers still make the majority of the service revenues and two giants dominate that space - voice calls and messaging. Voice calls were worth $673 Billion dollars in 2013 while messaging was worth $199 Billion dollars. And no, most of that was not 'OTT services' like Whatsapp. SMS text messaging was worth $130 Billion dollars and MMS another $46 Billion dollars in 2013, for the lion's share of messaging revenue worldwide. Please note that an increasing portion of both SMS and MMS is now content (like voting for TV shows), advertising and commerce revenues (coupons etc).


So lets talk phones. 5.4 Billion mobile phones in use worldwide. The industry sold 1.8 Billion new mobile phones just last year alone. And more than half of the new sales are now smartphones (990 million were in 2013). In the installed base, already 31% of all mobile phones in use are smartphones (1.7 Billion units) and this year will sell about 1.2 Billion more with roughly half going to replace older smartphones and half going to first-time smartphone owners. But before you lament those 'dumbphones' they aren't that dumb these days. 44% of all phones in use have WiFi capability. 67% can install apps via Java. Four out of five has a memory card slot. Nine out of ten phones in the world can receive MMS multimedia messages (And 100% can do SMS text messaging obviously).

The migration to smartphones continues at rapid pace. Three regions - advanced Asia-Pacific, Europe and North America have passed the mid-point so there are smartphones for more than half of the population. The Middle East is nearing the mid-point. Lagging in the migration rate come Latin America, developing parts of Asia, and Africa. Monitoring the market share wars on a quarterly basis, Android has now utterly won the smartphone platform war with over 80% of new sales. Apple's iPhone has peaked and is in gradual decline at about 15% with the remnant few percent split among Windows, Blackberry and miscellaneous others. In the installed base the past large sales of Symbian and Blackberry still place them ahead of Windows, with Windows lingering in fifth ranking among smartphone operating systems by actual devices in use. Android and iPhone obviously dominate the installed base as well.


An easily-muddled statistic, the internet or 'browsing' user base and which platform they use is prone to very wild swings of legitimate reporting of the statistics. It depends on whether you count primary use or all use (many of us will access web content from several device types, our laptops, our tablets, our smartphones etc). And the reporting is often coming from systems which do not measure all use, or which miscalculate part of the use (often iOS measurements cannot differentiate between iPhones - ie smartphones vs iPads ie tablets and iPod Touch ie PDA uses). But when we allow multiple uses, and look at all 'browser' type of access to 'internet content' such as Facebook, Google, Twitter, YouTube, Amazon etc - then the usage in 2013 was like this:

There are 2.9 Billion users of the internet when any device and type is allowed including accessing from internet cafe and other shared devices.

48% of the internet users will use both a PC of some kind (which includes tablets) and a mobile phone
42% will not use a PC and will only access the internet on a mobile phone (smartphone or dumbphone)
and 10% will not use a mobile phone and only access the internet on some type of PC (including tablet)

Of mobile phones used to access internet content, the numbers build like this. 1.6 Billion use a smartphone. 2.2 Billion use an HTML based mobile browser (including smartphones and dumbphones). And 2.6 Billion use any type of mobile browser including WAP and HTML (this of course therefore includes smartphones too). You can see there is a lot of chance to offer confusing and 'disagreeing' numbers just by browsing before we consider say app downloads.


So the OTT content revolution has really taken off led by Whatsapp. But still the total user base is modest. OTT services across all OTT types have only 1.4 Billion users. That compares with 5.8 Billion users of SMS and 3.3 Billion users of MMS. The total traffic, user count and even revenues of SMS still grew in 2013 while OTT services grabbed the majority of total mobile messaging traffic. The heavy users who send more than 100 messages per day will shift most of that traffic rather rapidly to more cost-effective (and user-friendly) messaging platforms. But even heavy Whatsapp users will usually not abandon SMS they only greatly diminish its use. For advertisers and brands, obviously, SMS is the only way to reach every economically viable person on the planet, with MMS a near-universal second choice.


The total non-voice 'data' opportunity in mobile is now nearing 500 Billion dollars in value. 40% of that is now from messaging and 60% from 'value-add data' which includes media content, apps and many other elements like the sales commission from m-commerce. 290 Billion dollars is the total value of mobile media content. The big media opportunities in mobile are social media, TV and video, gaming, search, news and virtual goods. Music has passed its peak and mobile music revenues are now in decline. Several areas of smaller size are growing fast led by m-health and m-education. Smartphone apps are only a tiny slice of this space with most income earned by apps built for gaming.


Then we have advertising. Mobile ads keep growing at rates of nearly 100% per year and across all mobile ad income types passed 30 Billion dollars in value in 2013. This includes the often-reported banner ad revenues and the less-often included messaging revenues and the in-app advertising. 


And finally a few words about the so-called 'Rich World' vs the 'Emerging World'. The spoils of the digital miracle are not spread evenly. But even here the 'best story' in digital for the Emerging World is of course mobile. Of the 7.1 Billion mobile subscriptions, we in the 'West' have 2.1 Billion mobile subscriptions for a 175% mobile penetration rate. The Emerging World with 5.9 Billion people have 5.0 Billion subscriptions for an 85% penetration rate. In the Industrialized World 97% of all phones in use are camera-phones vs 76% in the Emerging World. 82% of the mobile subscriptions in the Industrialized Countries have migrated to 3G while only 18% of the accounts in the Emerging World have done so. 53% of handsets in the West are smartphones while only 21% in the rest of the world are so. And did you know many actually buy used handsets? Only 3% of mobile phones in the Industrialized World are second-hand phones (these tend to be hand-me-down phones we give to our young kids). But in the Emerging World 17% of all phones in use are second-hand phones (often shipped from more affluent countries).


Then lets do the 'if measured only by their mobile business' chart of the biggest players. So for example Apple we remove the Macs and iPads and iPods and iTunes, only the iPhone and its app store revenues. For Samsung we remove the flat screen TVs and PCs and all sorts of consumer electronics. For Vodafone we remove the fixed land-line telecoms business etc. When we measure the largest companies on the planet by purely their mobile income we get this chart:


1 (3) Apple iPhone, USA, smartphones . . . .  $ 112 B
2 (4) Samsung Galaxy, S Korea, handsets . . $ 103 B
3 (1) China Mobile, China, operator . . . . . . .  $ 91 B
4 (2) Verizon Wireless, USA, operator  . . . . . $ 82 B
5 (5) AT&T Wireless, USA, operator . . . . . . . $ 65 B
6 (6) Vodafone Mobile, UK, operator . . . . . .  $ 58 B
7 (7) Telefonica Movil, Spain, operator . . . . . $ 52 B
8 (9) T-Mobile, Germany, operator . . . . . . . . . $ 50 B
9 (8) NTT DoCoMo, Japan, operator . . . . . . . $ 49 B
10 (10) Orange Mobile, France, operator . . . .$ 44 B

Note: All except China Mobile in the above chart are 'virtual companies' with different names to reflect their mobile businesses and their mobile branding.

So the two big smartphone makers Apple and Samsung have kicked the big mobile operators from the top slots. No big surprise here, as the trend was clearly forming for the past few years. Meanwhile operators struggle with flat revenues or even declining revenues as voice calls and messaging revenues are under increasing threats from OTT services like Skype and Whatsapp.