Rutberg & Co Research on mobile internet

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A debate topic during our meetings at MWC was the degree to which substantial new companies will emerge from the mobile Internet, similar to the emergence of Hotmail, Google, Skype, and Facebook in the PC Internet.  All of the carrier and vendor executives in our conversations viewed that the Internet incumbents were best positioned for the mobile Internet (we were surprised by the unanimity of opinion in this).  Rationale included: 1) consumer familiarity with known brands, 2) scale of Internet incumbent traffic and users, 3) challenges in mobile Internet customer acquisition and usage, and 4) vision that mobile is not a "different" or "second" Internet but rather a part of a new multi-platform environment.

  

We disagree with this perspective.  In our view, in the short-term, we believe there are "two Internets," such that meaningful new mobile Internet players are getting created and built.  The evidence for this thesis is limited, so the argument is inherently difficult to substantiate.  Early indicators for us include the growth of new mobile Internet players (with traffic as great as 1 billion views per month), as well as the meaningfulness of difference in even incumbents' mobile and online presentations.  A specific metric to monitor will be the number and valuations of mobile Internet exits, if any, of $500MM+ over the next three to four years.  Again, evidence is early, but we anticipate several.

   

Separately, over the medium- and long-term, we agree that there is "one Internet", across the multiple platforms.  However, we have a different take on that Internet.  Today, the predominant use case for the Internet is fixed, i.e. sitting in front of a desktop or notebook.  In the future, we believe that that will be the minority use case.  Rather, the majority use case will be regular interactions throughout the day with mobile and other platforms.  Over the long-term, there is "one Internet", but we believe it has fundamentally different experiences and capabilities than those of the Internet today.