Meeker 2012 – What should small software businesses do?

KPCB operating system trends
Credit: KPCB

Mary Meeker’s annual Internet Trends presentation is always an attention getter.

For some, a wake-up-call, for others… a reminder.

No matter what it is for you, there’s some valuable trend info there worth looking at in the context of your software business.

“Rapid mobile adoption still in early stages.”

Think about that for a moment. Apple has more than 100 million mobile devices sold (65 million iPads in 8 quarters) and dominates US smartphone sales. Android does the same for the rest of the world…and we’re still in the “early stages”.

This isn’t a surprise, but it’s a common mistake for entrepreneurs to feel like if they aren’t first, they’re worst – and for some, that they shouldn’t even try. Someone has to be first – and sometimes their most important achievement is to show everyone else that the market is viable.

It’s still very early for mobile, despite what you might gather from industry doomers, but there’s plenty of time to be the second mouse who gets the cheese.

Look around your clients’ offices. Are their salespeople 100% mobile? If they have any kind of fleet, are their drivers/pilots? What about their warehouse / lot / logistics people? Are their in-house pickers on mobile devices yet? What about their salespeople? Can they enter a lead, produce and email a quote and close a sale – including accepting a check, depositing a check, getting a contract signature, emailing the signed contract and/or taking a credit card – from their mobile phone?

All of those things can be done today with a phone. You can even deposit a check with your stodgy old bank’s mobile phone app.

What about your product line?

Can they use their mobile phone to perform core functionality like this in your software? My guess is… Probably not.

Some of your software might never be on a mobile device in its current form. Yet parts of it might make sense, particularly for outside sales and other mobile workers. One thing is almost certain: This kind of mobile flexibility will be difficult to avoid in the future because customers will demand it or move to someone else who delivers it.

One of the more challenging aspects of the move to mobile is the cross-architecture requirements. A few years back, you could dictate mobile hardware because phones couldn’t do the work. You’d have customers buy expensive ruggedized Symbol devices and that allowed you to control the scope of development.

Not anymore. Today, you need to be ready to consider adding iOS, Android, WinRT, Java, HTML5 and who knows what else to your development efforts. Now maybe you don’t start development on all of those at once but you’d better be considering how each of them apply in your market.

If you aren’t, are you ready to give up the testimonial-writing, market-leading customers in your client base? They’ll often be the ones who move first to new solutions that leverage advanced technology – even if it’s just to do a pilot and set their next long-term strategy.

Globally, only 18% of people have mobile access, but the growth rate was 37% over the last year. In the U.S., 29% have a tablet compared to 2% three years ago.

Rethink your apps.

“8% growth in internet users, driven by emerging markets”

79% of the U.S. population has internet access today, while only 10% of the population of India has it.

Of that 10%, 44 million use a smartphone. The rest use a mix of desktop/laptop and cell phone. For those who get to the net via mobile device, it doesn’t always happen on a smartphone. Meeker noted that 200 million farmers in India receive ag subsidies via their cell phone.

Intuit recognized this situation early on by having business development people in place in India. One of their success stories there is a service that delivers daily pricing information to farmers via text message. They’re adding 20,000 users a week to this text message based service, which helps farmers get more for their produce at market.

“Suddenly” the translation to Farsi and adaptation to “non-smart” cell phones seems more interesting…

For U.S. software companies, these are areas of concern. At 79%, our climb only has so much headroom left. International is a natural next step given the growth numbers.The U.S. is number eight in growth rate of new internet users, behind China, India, Indonesia, Philippines, Nigeria, Mexico and Russia.

Why worry? Because small U.S. software companies tend to avoid internationalization. Grab 10 small software company product downloads off the net. How many of them support other languages? Other currencies? Other taxation systems?

If internationalization is a problem, how functional is business development outside the U.S. for American companies? How else will you get accurate business development knowledge in those countries? Add to that, many countries have barriers to outside companies building a presence inside their borders – just like the U.S. does.

This is an area of great potential, but it doesn’t come without serious work. It isn’t as simple as running your product’s text strings through Google Translate.

Don’t forget Android. In 13 quarters, Android has lined up 250MM mobile phone users, with the majority outside the U.S.  Combine that with a different platform with many different screen formats and this is where you mull over your answer to “How bad do you want it?” when looking at the potential return.

Smartphone upside

As the smartphone enters the developing world en mass, there’s still a big upside. In the U.S., we think we’ve seen it all. Globally, there are 953 million smartphone subscribers. Seems like a lot, after all that’s about 3 times the size of the U.S. population.

Yet for all mobile phones, the smartphone subscribers number jumps to 6.1 billion (see image below). Compare those two numbers carefully when considering your near term app strategy.

Many would suggest you build a smartphone app for these developing markets ASAP. I suggest you consider where you are now before taking that step. In particular, think about “the reason to get a sale“.

Show me

Many will read these numbers and think “Yeah, but…”  The “but” is about where the buyers are and where the traffic is.

Currently 10% of global internet traffic is mobile. It was 4% two years ago.

What about buyers? Meeker said 8% of e-commerce is mobile-based and that the click through rate on mobile is still 1/5th of what desktop click through is.

8% globally is a big number and has little choice but to go up. Can your site handle it? Can your clients’ sites?

In India, there is now more mobile-based internet traffic than there is traffic from desktops/laptops. Breathe that in before your next long-term product strategy meeting.

Reimagination

These three graphics tell a lot of stories. There is one thing they don’t say.

One thing these graphics don’t say is “Who’s next?”

Spring Training

That’s how early things are. Meeker called it “Spring Training” because there are so many opportunities related to the net and mobile that the season really hasn’t started. Maybe in the U.S., we’re jaded to the opportunity that remains because we have this habit of assuming that everyone is like we are. 15 minutes on your tech support line will clear that up.

For those willing to think and work differently…different results are possible. Look back over these slides and my comments. How will they, how could they impact your business?

Thanks to KPCB, I’ve included the slide deck here…

The other shoe

Meeker’s talk wasn’t all good news. She referred to KPCB’s now-famous (and sobering) USA Inc. video/report that looks at the financial performance of the U.S. as if it was a business. Regardless of your politics, it’s worth a look. An October 2012 USA Inc slide deck is here and the 2011 video is here.