VCs and innovators need to wake up: A new wave of mobile growth is under way

Lately, there’s a growing consensus that innovation and growth in mobile is over. It’s said that investment money has dried up, ideas from entrepreneurs aren’t pouring in at the same velocity, the app economy has stalled, etc.

That perspective is short-sighted and incorrect. Mobile technologies and services are only becoming more pervasive in our lives and remain the engine that drives new innovation. In fact, VCs and innovators must wake up to the fact that a new wave of exponential growth is just getting started.

Why many people think mobile is over

Fueling the misguided sentiment that mobile is on the decline are three ideas perpetuated by investors, analysts and media alike:

  1. Corporate results shared by Facebook stating that contribution of mobile sales to overall revenue has flattened;
  2. Consumer’s attention has consolidated to a small handful of apps owned by corporate behemoths,  the implication being there is no room for anyone else; and
  3. The perception that mobile is now too ordinary to be a revolutionary, or explosive market force.

The downstream effect of this collective thinking results in entrepreneurs shifting their pursuits to what they think “could” be the next great platform. Truebridge says “AI is the next mobile.”  VCs are more interested in AI, AR/VR, Blockchain, IoT and (umm?) chatbots than they are mobile investments.

What tends to be glossed over is that all these new platforms inexorably rely on mobile and that ‘mobile’ and ‘data’ produced by mobile are the essential modifiers to attract smart money.

The arguments don’t add up

To be clear, total revenue from mobile ad sales on Facebook increased by 58% in 2016. The reason net revenue flattened is operational inefficiency, which speaks more to Facebook’s failure to scale its mobile business than it does comment on mobile’s growth capacity as a whole.

As for VCs flaunting in-app time as the key mobile metric — we don’t use this metric as a measure of success in practically any other medium (e.g. TV or web). If we did, the same VCs might trouble themselves to note that a) mobile now draws more of our attention each day than any of these other mediums.

The other argument – that mobile is just too darn common now to be revolutionary – makes even less sense.

Henry Ford built the Quadricycle in 1896. It had 2 gears, no reverse and was steered by a tiller. The first commercially viable version of an automobile came 12 years later. From there, the core platform was iterated upon, leading to seat belts, gas stations, highways, drive-ins, bitching sound systems, backseat makeout sessions, the Indy 500, the Prius, Talladega Nights: The Ballad of Ricky Bobby, Uber, automated cars, etc.

In other words, by becoming common and widespread, the core platform (automobiles/mobile),  provides the foundation for ongoing revolution. Ignoring this is shortsighted and a disservice to the greater discussion.

The true indicator we should all be paying attention to is mobile economy and the usage patterns that drive it.

We are an on-demand people; Mobile exemplifies this

The correct measure for mobile is not total time in-app, but the numbers of apps used, because successful mobile experiences are fast!

Do you want to take 10 seconds, or 2 minutes to order a car to pick you up?  A night of bar-hopping or a few swipes on Tinder to find a date? In other words, don’t use the same measurement of time used by our parents and grandparents to gauge mobile consumption — It is precisely the simplicity of mobile that makes it pervasive.

Don’t care for qualitative observations? Here’s a quantitative perspective:

AppAnnie says mobile app economy will grow to $6.3 trillion by 2021, about 5x from 2016 levels. In the same time frame:

  • The number of people using apps will double to more than 6.3 billion;
  • Mobile users will spend 2x as much time in apps (about 3.5 trillion hours); and
  • Users will come to spend at about 3x the 2016 rate.

Globally, mobile ad spending, which already accounts for more than half of ad revenues, will double from current levels to about $200 billion by 2019. mCommerce and mobile payments are booming and going bigger. We also know that mobile shopping conversion rates were up in Q4 2016 over the previous year (1.35 to 1.55%).

Entire industries (finance, travel, retail) have been indelibly changed by the growth of mobile. Marketers everywhere rely on hashing mobile device IDs to other user touchpoints in order to monetize.

I could go on, but you get the idea.

Every reasonable indication has it that people will always use their mobiles, as long as they work well, and work fast. Anything else is hyperbole.

The much bigger picture

Part of the ‘mobile is dead’ hype is the responsibility of VCs (who know better) and media (who sometimes don’t), pumping ‘the next big thing’, which is AR/VR and AI.

But think for a moment: our mobile phones are the greatest source of data on our lives. Frankly, the future of AI is more dependent on the strength of mobile than the other way around.  And for VR and AR to succeed, they must still rely on data gathered from and experiences transmitted to mobile devices in order to work. Ditto for almost all aspects of location-based marketing and contextual commerce.

Far from being on the downside of mobile’s curve, I think we’ve barely reached the inflection point.

Mobile is already so huge, it can be tough to imagine it growing. But look at how ingrained in our life it is. People develop back problems from using their phones all day. Millennials sleep with their smartphones. We use them to control our homes, figure out how to get around, entertain ourselves, organize our social lives, learn, study and explore our world.

Mobile is the world’s freaking umbilical cord, and we, the people, have demonstrated no interest in cutting it. I’d argue we’re just getting to mobile’s meaningful use cases.

mCommerce is still relatively non-existent. Recognizable mCommerce apps and sites are not abundant outside of Amazon, Walmart (acquired and Wish. Where are the other brands we know and love from the web?

The most obvious and disruptive use cases are at work, since everyone has a phone, and enterprises don’t have to incur operating expense to put them to work! Mobile solutions for shipping, warehouse management, insurance claims adjustment and the like will soon bridge the digital-physical divide for every industry.

In fact, mobile usage and engagement will only go up, because more people will soon have better devices, connected at higher speeds, delivering increasingly personalized content and experiences.

Our cars will start and be monitored via our mobile devices. AI will be fed by data generated by mobile.  All industries will realize every workforce is now mobile.  AR and VR experiences will flow over wireless spectrum and run on devices connected to our mobile phones — this is the way it’s going to be for a long time to come.

Any ‘thought leader’ that says otherwise is simply wrong.