Proving the Business Case for the Internet of Things

Better than sex: Europe to see mobile internet revenues double by 2017

Steve Rogerson
January 7, 2015
By 2017, mobile internet revenues in the top five countries in Europe will have more than doubled to about €230bn – an annual growth rate of 25% – according to a report from Boston Consulting Group (BCG). This is comparable to the growth of those revenues in China and the USA.
Such is the popularity in Europe that more than half of consumers would give up alcohol before the mobile internet and 17% would give up sex first.
The mobile internet today is generating annual revenues of €92bn and a consumer benefit, or surplus, of about €770bn for Europe’s top five economies. And the mobile internet has created 250,000 jobs in these five countries – Germany, France, the UK, Italy and Spain.
Revenues are growing quickly, according to the report “The Mobile Internet Economy in Europe”. This is being fuelled by competition among the various mobile internet ecosystems. The resulting innovation and choice lead to better devices and falling prices for consumers.
The single largest contributor to growth will be the apps, content and services component of the ecosystem, driven by the rapid expansion of mobile shopping and advertising.
On a per capita basis in these countries, the average consumer surplus – the perceived value that consumers themselves believe they receive over and above what they pay for devices, apps, services and access – is about €4700 a year. Consumers in Germany receive the biggest average surplus at €5136, followed by France (€5072), the UK (€4657), Italy (€4307) and Spain (€4025).
“Competition throughout the mobile internet ecosystem is driving innovation, growth, jobs and a continually improving experience for consumers and businesses,” said Dominic Field, a BCG partner and co-author of the report. “Increasing mobile access everywhere is leading to new uses of the internet – in fields from banking to education and from health care to the delivery of public services – further propelling growth. Policy makers can help keep the mobile internet economy moving by pursuing proven policy goals that encourage continued improvement in these areas as well as innovation, value creation, and consumer welfare and choice.”
Competition occurs at every layer of the mobile ecosystem, among service providers, enablement platforms and companies providing apps, content and services. Competition is particularly intense and evolution especially fast paced among device manufacturers and operating system companies.
As recently as 2010, the Blackberry and Symbian platforms accounted for almost half of smartphone sales; they now represent less than 5%. Today, Apple's iOS, Google's Android and Microsoft's Windows Phone are fighting for market share while keeping an eye on newer entrants, such as Amazon's Fire, Nokia's X platform, Xiaomi MIUI, Firefox and Tizen, which are further augmenting user choice and competition. All this leads to faster innovation, more capable devices, and lower prices.
A big part of the mobile internet success story is the flourishing app economy. There have been more than 200 billion cumulative downloads from the various app stores since the first app was developed in 2008. More than 100 billion downloads took place in 2013 alone, of which around 20 billion were in the EU. Leading app-store operators paid developers more than $15bn between June 2013 and July 2014. The report notes that some of the world's largest and most successful developers of mobile gaming apps are in Europe.
“In Europe, growth of the mobile internet economy is propelled by increasing affordability and accessibility, as well as by advances in technology and infrastructure,” said Matt Brittin, vice president for northern and central Europe operations at Google, which commissioned the BCG report. He noted that average selling prices for smartphones in Europe were projected to fall by nearly 38%t by 2017, considerably faster than they will fall globally.
Large majorities of European consumers would forgo most offline media, with the exception of television, before losing mobile internet access. More than half would give up alcohol and almost 50% are willing for forgo coffee, movies and exercise to keep their mobile internet access. One in five is willing to give up his or her car and 17% would abstain from sex. A significant minority of consumers (14%) are not willing to give up their mobile internet access at any price.