Welcome to a special edition of This Week in Modern Software, or TWiMS, our weekly analysis of the most interesting and important news, stories, and events in the world of modern software and analytics.
This week, we’re devoting all of TWiMS to covering six trends laid out in Mary Meeker’s highly influential “State of the Internet” report, which she presented this week at Code Conference. (You can watch her presentation here.) As it is every year, Meeker’s annual report is a whopper—213 slides this time—and we simply couldn’t do it justice in a single item. Instead, we’re doing deep dives into the six trends outlined in Meeker’s report that are most relevant to the modern software world.
Global Internet Trends—Mary Meeker’s 2016 Internet Trends Report (via Recode)
What it’s about: Meeker’s presentation leads off with her Global Internet Trends breakdown. There are currently some 3 billion internet users worldwide, but growth has slowed considerably. The crazy gold rush since the first dot-com boom is effectively over, according to Meeker. If you exclude India, as Meeker did in her chart, year-over-growth is effectively holding steady at 9%. In fact, Meeker says, it’s actually decelerating just about everywhere but India. And Meeker notes a related global internet trend: The smartphone, the device that helped fuel the latest growth phases of internet usage, is also pumping the brakes. Global smartphone users grew 21% last year, compared with 31% in the previous year. Smartphone shipments are slowing “dramatically,” according to Meeker. They grew just 10% in 2015, down from 21% in 2014.
Why you should care: Slowing growth is a sign of the internet’s maturity, and that’s not necessarily a bad thing. But as Meeker says in her presentation: “New users are going to continue to be harder to find.” That’s a big wake-up call for software companies and everyone who delivers products and services online. Despite India’s continued growth, tech companies may no longer be able to rely on the rapid expansion of global internet users to fuel their own growth. With the easy pickings gone, this could exacerbate an already hyper-competitive industry, in which one company’s “new” users will increasingly be someone else’s former customers. But while the net’s user growth might be slowing, the other trends Meeker highlights demonstrate that the web and mobile are far from static. They’re going to evolve in potentially dramatic ways, with plenty of new terrain for software to conquer.
- Mary Meeker: This Time It’s the Internet Itself That’s Slowing Down—Recode
- Internet Boom Times Are Over, Says Mary Meeker’s Influential Report—Bloomberg
- Internet Growth Is Flat. Phone Sales Are Meh. Hello, 2016.—WIRED
- The 15 Most Important Slides in Mary Meeker’s Internet Trends Report—The Washington Post
- Mary Meeker’s Internet Trends Report: 5 Takeaways—ZDNet
What it’s about: Our collective love—especially among the Millennial generation—of online visual experiences just keeps growing in both usage and sophistication. Facebook, Snapchat, and Instagram are the leading social platforms among Millennials, and Meeker says Snapchat hit the trifecta of “communications plus video plus platform.” Meeker notes that Generation Z, which follows the Millennials, will continue to drive demand for visual engagement online. In fact, a key difference between Millennials and their younger brethren is that the former still love to text, while the latter typically prefer to communicate via images. Messaging apps are also growing rapidly, Meeker says, led by WhatsApp, Facebook Messenger, and WeChat. Moreover, they might soon be your phone’s primary interface.
Why you should care: The popularity of images and video on social media and elsewhere online shouldn’t catch anyone by surprise. But Meeker’s slides confirm that there is still plenty of room for growth, increasing sophistication of the technologies and platforms behind the scenes, and significant business opportunities ahead. The exponential growth and evolution of mobile messaging apps deserves a closer look, she says, with increasingly intelligent messaging apps becoming much more than venues for chatting with friends; they’re enabling deeper conversations and creating significant new business opportunities. Meeker offers an example of a mobile user engaging in a “conversational commerce” transaction, which begins with an image on Instagram, moves to an online chat, and ends with a purchase. Perhaps the biggest deal of all? Meeker’s report fuels the notion that messaging apps, increasingly powered by AI chatbots, will become the new mobile gateway. Meeker compared the current smartphone homescreen to the portals of Web 1.0—soon to be replaced by something better.
What it’s about: Just as messaging apps are changing how we use our smartphones, voice is altering how humans interact with computers overall. We are less dependent on touch interfaces as voice interactions mature and become more common, an evolution that affects all manner of online activities. One in five searches on a U.S.-based Android device are now voice-based, for example, and Meeker cites a prediction from Baidu chief scientist Andrew Ng that by 2020 half of all online searches will be conducted by voice or image. The game changer, according to Ng: when voice interfaces go from 95% to 99% accuracy.
Why you should care: The move to voice and image search changes the game for developers, UX designers, and some of the biggest names in tech. Meeker notes that Android adoption continues to outpace Apple’s iOS. But multiple observers point out that another Meeker slide comparing flagging iPhone sales with surging Amazon Echo shipments suggest that Android is not Apple’s real problem. “That juxtaposition might seem strange, but Meeker was making a point,” WIRED’s Davey Alba writes. “It’s a sign that using voice as a way to command your tech is steadily gaining traction.” Competing voice assistants like Apple’s Siri and Microsoft’s Cortana are likely to become less device-specific, used to interact with all our computing devices, not just smartphones. Oh, and count your car on that list of “computing devices”—Meeker calls cars “a new paradigm in computer-human interaction,” and she predicts that increasing computerization of cars will spark a renaissance for the U.S. automotive industry.
- The iPhone’s Biggest Threat Isn’t Android—It’s Amazon’s Echo—WIRED
- Mary Meeker Thinks Apple Is the Past, Amazon Is the Future—Business Insider
- The Future Belongs to Amazon, Not Apple—ZDNet
What it’s about: Mary Meeker covers her final three trends in lightning round fashion, and so will we. China, which boasts the world’s largest internet user base, offers up some critical lessons for American tech companies. That’s because, based on data from Hillhouse Capital, Meeker says Chinese companies are beating their U.S. counterparts on several important internet metrics, including online advertising and e-commerce.
Why you should care: Chinese e-commerce sites dominate retailer rankings (by revenue), and they’re growing faster than U.S. e-commerce sites. As messaging and chat apps ascend to the online and mobile thrones, American developers might want to study China’s playbook—nearly one in three WeChat users has made a purchase on the platform. Chinese users are far more likely to pull out their smartphone to pay for stuff, too. The average monthly transaction volume of WeChat Payment users is more than double the average number of debit card transactions among U.S. cardholders. WeChat Chinese New Year payments skyrocketed to 8 billion in 2015, up from 1 billion in 2014. New internet user growth might be slowing in China, as it is just about everywhere else—but it’s apparent that China is ahead of the game in important areas such as chat, mobile payments, social commerce, and more.
Public / Private Company Data—ITR 2016
What it’s about: Here, Meeker offers her annual breakdown of both public and private internet firms and how they’re continuing to impact the broader business world in major ways. Unsurprisingly, internet-related disruption continues at full throttle. While “many of us have been around the internet for a long period of time,” as Meeker says, it’s important to remember that the net’s impacts are really just beginning to be felt.
Why you should care: It’s an exciting time to be in the software business. Meeker notes that the current crop of tech leaders is growing faster than their predecessors did when they arrived on the scene: Uber is growing faster than eBay did, JD.com is growing faster than Amazon did, Slack is growing faster than Salesforce.com did. Meeker’s Top 20 Internet companies by market cap is always worth a look (slide 187), and continues to point to China as a major technology leader. Meeker closes her onstage presentation with a moral of sorts, particularly amid swirling discussions of a tech bubble: “There are pockets of overvaluation but there are pockets of undervaluation,” too, she says. And while there may be few true winners in tech, the top 20 list underlines another of her closing points: Those that win, win big.
Data as a Platform / Data Privacy—ITR 2016
What it’s about: Meeker’s 213-slide deck closes with some 20 slides on the massive and growing importance of data, particularly the concept of data as platform. Data—and the number of things that generate data—continues to grow rapidly, while data infrastructure costs continue to fall. Perhaps most compelling is slide 198, which charts the evolution of data as a platform during the past decade. The current “third wave”—moving from data evolution to data revolution—is an age of mass data intelligence, characterized by pervasive data systems, big/fast storage, and data instruments in the business. It’s fascinating to see how far data and data-related tools have come in a relatively short period of time.
Why you should care: Meeker includes a great quote from Looker CEO Frank Bien on just how crucial data and analytics have become: “Data is moving from something you use outside the workstream to becoming something a part of the business app itself. It’s how the new knowledge worker is actually performing their job.” Indeed, we’re entering a golden age of data, one with—as Meeker’s slides illustrate—increasingly sophisticated tools for analytics, monitoring, and CRM and other critical business needs. And, as Meeker’s deck suggests at various points, we’re really just getting started. Data nerds, this section is worth a closer look.
Bonus! The 5 Stories That Would Have Made TWiMS If Not for Mary Meeker:
Microservice Architecture Is the Agile Architecture—Infoworld
Just as agile development is designed to address engineering bottlenecks, microservices addresses a similar architectural bottleneck—from the upcoming book Microservice Architecture co-authored by Matt McLarty.
Salesforce Buys Demandware for $2.8B, Taking a Big Step Into E-Commerce—TechCrunch
The massive deal pushes Salesforce from helping optimize the sales process into “the business of sales itself.”
Why Wearables Won’t Make Us Smarter, Faster, or More Productive—Fast Company
Apparently, even the best technology is “no match for the psychological forces of inattention and inertia.”
Microsoft to Open Windows Holographic to Virtual Reality—ZDNet
Microsoft seems to be hoping that the move will “enable a gamut of mixed reality scenarios.”
Techies Are Trying to Turn the NBA Into the World’s Biggest Sports League—WIRED
All the top sports leagues, from the NBA to MLB, are looking to technology and analytics to help teams compete against each other, and for fan interest.
Want to suggest something that we should cover in the next edition of TWiMS? Email us at email@example.com.