Baidu Mobile Services Group
& Baidu Business Analysis Dept.
Mobile Internet
Development Trends Report
u
The Mobile Internet Development Trends Report is based on sta@s@cs provided by Baidu
Mobile Search, Baidu Mobile Assistant, Baidu Mobile Sta@s@cs, and other related data
mining. It provides data-‐based insight into major trends of the mobile Internet in China.
u
The Report consists of two parts: a review of the Mobile Internet market in 2014, and
insight into behavior of people born aPer 2000—the “Post-‐Millennials”
Part I: Review of the Mobile Internet Market in 2014
1. The China smartphone market and compe@@on among manufacturers
2. The Return of the King: leadership in Chinese mobile search
3. The old structure of BAT and the new baWlefield
Part II: Insight into the Behavior of Post-‐Millennials Related to Mobile Internet
Services
4. Behaviors of exis@ng and Post-‐Millennial mobile Internet users
5. Ten characteris@cs of Post-‐Millennial Internet users
Overvi
Review of the Mobile Internet Market in 2014
1. The Chinese smartphone market and compeGGon among manufacturers
2. The Return of the King: Leadership in Chinese Mobile Search
3. The old structure of BAT and the new baMlefield
Pa
rt
1.
The Chinese smartphone
market and compeGGon
among manufacturers
•
Smartphone market
•
CompeGGve landscape for
manufacturers
1. Smartphone market :
u Growth of the smartphone market slowed conspicuously in 2014. The benefits
from the growing ac@ve user base are expected to end in 2015.
u Smartphone user scale and usage ac@vity far outweigh that of tablets. Tablet
devices are mainly used for entertainment.
2. CompeGGon among manufacturers:
u In 2014, Apple won over a number of high-‐end Android users and grew its
market share with the launch of the large-‐screen iPhone 6
u In 2014, domes@c Android manufacturers showed robust growth, while the
market growth of interna@onal smartphone manufacturers such as Samsung has been declining.
1.1
The smartphone market* slowed in 2014. Benefits from the growing acGve user base
are expected to end in 2015.
Figure 1 : The scale of the smartphone market (number of daily ac@ve smartphones)
(12Q2 – 14Q4, unit：0.1 billion) 5 3 2 1 4 6 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4
* Smartphone market refers to the number of daily ac@ve smartphones (connec@ng to the Internet at least once a day) out of the total smartphone market.
* Internet-‐connected phones refers to daily ac@ve devices (connec@ng to the Internet at least once a day ) out of the total market of all types of mobile phones (including feature
phones)
Quarterly average growth rate in
2012—36%
Quarterly average growth rate in
2013—14%
Quarterly average growth rate in
2014—6%
Smartphones account for
91% of the total number of Internet-‐connected Phones*
Smartphone user scale and usage acGvity far outweigh that of tablet users. Tablet
devices are mainly used for entertainment.
Smartphone volume
Usage rate of apps
3.0 Gmes higher
9.3 Gmes higher
Figure 2: Comparison of smartphone volume and usage rate of apps between tablet and smartphone
(14Q4, unit: 0.1 billion, %)
Top 3 app types for
tablet users
Top 3 app types for
smartphone users
In 2014, the iPhone 6 won over a number of high-‐end Android users, and
domesGc Android manufacturers grew market share.
14Q2 79% 13% 78% 15% Android iPhone Others 14Q4 Windows
Figure 4: Market share of Android manufacturers in the total smartphone market
(14Q2 vs 14Q4) 58% 36% Chinese manufacturers Other interna@onal manufacturers Samsung 6% 14Q2 14Q4 39% 52% 14Q3: The launch of large-‐screen
iPhone 6 increased Apple’s market share
Figure 3: Device volume of different opera@ng systems in the total smartphone market
(14Q2 vs 14Q4)
1.3
2.
Leadership in
Chinese mobile
search
•
Search’s importance as
a gateway
•
Search traffic trends
1. Search’s importance as a gateway:
u Mobile search apps are the second most widely used apps aPer social
messaging apps.
u Mobile and PC search developed along similar lines—but mobile has grown
faster.
u Demand for mobile search is robust, with the average number of searches per
user steadily increasing.
2. Search traffic trends:
u Baidu has a nearly 80% traffic market share in mobile search, covering 90% of
total mobile users.
u Baidu mobile traffic has surpassed the PC traffic even as PC traffic has
increased. Baidu embraces a new mobile age.
Mobile search apps are the second most widely used apps a\er social messaging.
Figure 5: DAU of apps by type (14Q4, unit: 0.1 billion) Search Social messaging Cloud storage Map naviga@on App store Life service Browser Online music
Games Online Reading
Video News
2.1
Online payment Online shopping EntertainmentMobile and PC search developed along similar lines—but mobile has grown
faster.
2005 2004 200393%
86%
74%
2014 2013 2012Figure 6: PC search users/percentage of total PC Internet users (2003-‐2005, unit: 0.1 billion)
Figure 7 : Mobile search users/percentage of total mobile Internet users
(2012-‐2014, unit: 0.1 billion) Number of PC
Internet users Number of PC
Search users Number of mobile search users Number of mobile Internet users
87%
80%
73%
2.2
1.1
6.0
Demand for mobile search is robust, with the average number of searches per
user growing steadily.
13H1 13H2
12H1 12H2 14H1 14H2
Figure 8: Mobile searches per user per day on Baidu Search (12H1 – 14H2)
2.3
Over the last 3 years, the number of mobile
searches per user per day
has increased by
Baidu has a nearly 80% traffic market share in mobile search, covering 90% of
total mobile users.
Figure 9: Baidu Mobile Search market share (2012-‐2014)
Figure 10: Percentage of mobile users who have/ have not used Baidu Mobile Search
(14Q4)
Others
Baidu
2013
2012
2014
10%
Have used Baidu Search
90%
Have not used Baidu Search
Baidu’s market share
has increased by 14 percentage points over the last two years.
Mobile traffic surpassed PC traffic: Baidu embraces a new Mobile Age
Figure 11: Baidu PC and mobile search traffic composi@on (13Q1 -‐ 14Q4, unit: %) 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 20% 60% 80% 100% 40%
Percentage of
mobile traffic
Percentage of
PC traffic
2.5
3
. The old structure of
BAT and the new
baMlefield
•
Old structure
•
New baMlefield
1. Old structure:
u The Top 3 apps take 70% of user market share in most ver@cals.
u 17 out of the top 20 mobile apps are developed by BAT. Baidu, Alibaba and Tencent are
showing an even stronger presence in mobile than they did in PC.
u BAT hold an even stronger presence in mobile than PC, taking 60% of @me spent on
mobile devices.
2. New baMlefield:
u BAT have started a new baWle with their “super plamorm apps”, aiming to “connect
people with services.”
u BAT’s “super plamorm apps” cover most high-‐frequency lifestyle services.
u Users prefer using a “super plamorm app” to look for services, rather than installing
individual apps that offer a singular service.
u Baidu is well-‐posi@oned in lifestyle services, connec@ng people with offline services.
APP store Online payment Social messaging Online shopping Map naviga@on News Search Life service Reading Online video Browser Cloud storage Games
The top 3 apps take 70% of user market share in most verGcals.
Figure 12: User market share of the top 3 apps in each ver@cal (14Q4, unit: %)
<50% >70%
Total shares of top 3 apps Others
3.1
The rise and fall of apps in
2014
WiFi is a
daily life
necessity. I am proud that I am free.
Wanna go home for CNY?
Shoot, shoot, shoot, I can’t stop.
Big boss!
This is a fast changing age.
No comments, you know
Wechat bullied me. One microblog is enough.
I am not an
App store.
Super Curriculum
Kuaishou
Chubao phone Wi-‐Fi Master Key
Smart train Gcket MYOTee Tencent microblog Wandoujia Line
Figure 13 The Top 5 fastest growing and the most quickly declining apps in 2014 (by DAU)
Fastest
Growing
TOP 5 Apps
3.2
Most quickly
declining
TOP 5 Apps
17 out of the top 20 mobile apps are developed by BAT. Baidu, Alibaba and
Tencent have a stronger presence in mobile than PC.
Figure 14: Top 20 mobile apps and PC websites (by number of users)
(14Q4)
BAT
PC
13
7
3
17
Others
Mobile
* BAT refers to three Internet companies in China—Baidu, Alibaba, Tencent.
BAT hold an even stronger presence in mobile than PC, taking 60% of Gme spent on
mobile devices.
Others BAT 14Q4 13Q4Figure 16 User @me spent on BAT PC/mobile products (14Q4)
PC
Others BAT
Mobile Figure15: User @me spent on BAT mobile products
(13Q4 vs 14Q4)
3.4
A\er a
round
of user acquisiGon
compeGGon, BAT accelerated moneGzing
their
mobile business and started
looking for new market opportuniGes.
23% BAT Total Internet revenue(China) 81% 19% 77%
Total mobile Internet revenue (China) Others
Figure 17: BAT revenue shares comparison (14Q4) Mobile revenue PC revenue Tencent Baidu 71% 36% 29% 23% Ali 77% 64%
Figure 18: BAT mobile revenue contribu@on (14Q3)
3.5
The next baMlefield: BAT “super plakorm apps.” The three companies are striving
to connect people with offline services.
Mobile Baidu
Taobao
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21
3.0 1.5 3.5 0 0.5 1.0 Hotel booking
Flight @ckets booking
Cinema @cket
Food delivery
Penetra@on % Group purchase
Ren@ng Job-‐hun@ng Frequency of use ( /month) Hospital registra@on
Beauty & cosme@cs Car rental Taxi-‐hailing
Tickets
Housekeeping
All high-‐frequency life services have been covered by BAT “super plakorm apps”.
• PenetraGon refers to the percentage of mobile Internet users who have used a par@cular service.
• Frequency of use is how frequent a user uses a par@cular service.
Figure 19: Penetra@on* and frequency* of use of life services provided by mobile apps
(14Q4)
3.7
Highest demand
services
Users are more open to consume online on mobile devices than on PCs, parGcularly
for life services.
78%
22% Haven’t used before
PC Have used before
Mobile 35% 65%
Figure 21: Percentage of users who have/have not used life services on PC/mobile end
(14Q4) Figure 20: Openness to pay on PC vs. mobile
(14Q4) Music
PC Mobile
Reading Life service Games
30 Gmes
higher 2.4 Gmes higher 1.1 Gmes higher 1.5 Gmes higher
Users are more willing to search on BAT “super plakorm apps” for different life services,
rather than installing individual apps that provide a singular service.
Average number of app ac@va@ons per person
Individual apps
Super plamorm apps
Reten@on rate Figure 22: Super plamorm apps vs. Individual apps
(14Q4)
Figure 23: Why users choose super plamorm apps over individual apps
(14Q4) Demand is weak
Online payment is unsafe. 34%
29%
Services provided are limited
Occupy too much storage
3.9
Baidu is well-‐posiGoned in lifestyle services, connecGng people with offline services.
MulGple life service
Clients
Group buy Food delivery Movie Gckets Taxi-‐hailing Hotel booking Scenic spot Gckets Flight Gckets Car renGng Show Gckets
……
Mobile
Baidu &
Baidu
Connect
Merchants Third-‐party plakorms Value-‐added service providers ……
...
3.10
Use
rs’ de
m
ands f
or
var
ious lif
e se
rvic
es
Baidu’s
lif
e
se
rv
ic
e
re
sour
ce
s
Baidu Connect has become a popular service among tourists, who can buy Gckets
to
scenic
spots by typing @ and the name of a desGnaGon into Mobile Baidu
search app.
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26
Chinese Post-‐Millennial Mobile Behavior
4. Set behaviors of exisGng users and emergence of Post-‐Millennials
5. User behavior of Post-‐Millennials
Pa
rt
II
4
. Set behaviors of
exisGng users and
emergence of Post-‐
Millennials
•
Set behaviors of exisGng users
•
DrasGc change in user base
structure
1. ExisGng users’ behaviors are set:
u Replacing old phones with new ones was the driving factor of sales in
smartphone. New user purchases only account for 30% of the total sales of smartphones.
u No significant differences observed in ac@vi@es of exis@ng users before and
aPer their phone replacement—which means their behavior is approaching stasis.
2. DrasGc change in the structure of new smartphone user base:
u New user base structure is different, with elderly and young users growing
faster.
u Users born aPer 2000 are much more ac@ve than those born in the 1950s.
The Post-‐Millennials will become the major force in the future mobile Internet.
Replacing old phones with new ones was the major factor driving smartphone
sales in 2014. New user purchases only account for 30% of the total sales.
Figure 24: New purchases vs. old phone replacement in China, 2014 (13H1 – 14H2) Replacement New purchase 69% 31% 14H2 13H2 14H1 48% 58% 52% 42% 13H1 55% 45%
4.1
No significant difference observed in acGviGes of exisGng users before and a\er
phone replacement: behavior is approaching stasis.
Figure 26: Installa@on of apps before and aPer phone replacement
(14Q4) Before
replacement
Apps used on old phones Newly installed apps
22%
78%
Figure 25: User @me spent on mobile devices before and aPer phone replacement
(14Q4 )
*The Gme that users spend on mobile devices refers to the accumulated @me that the smartphone users spend on all kinds of apps in a day, excluding the
@me on text messages and phone calls.
154 min/day 155 min/day
4.2
New user base structure is different, with elderly and young users growing
faster.
Post-‐Millennials 15% 13% 18% 79% 67% Exis@ng users The rest 8% Born before 1950s New usersFigure 27: Age groups of smartphone users (14Q4)
* Post-‐Millennial users refer to children under 14 years old, while users born before 1950s are people beyond 65 years old.
Post-‐Millennials are mostly
children age 6 to 15. They are
students from Grade 1 to
Grade 9, with an average age
of 12.
Users born a\er 2000 are much more acGve than those born before 1950. The
post-‐2000s will become the main force in the future mobile Internet.
Figure 28: Average @me spent on smartphones (14Q4)
Born before 1950
Post-‐
Millennials
Figure 29: Average number of app downloads (14Q4)
1.2 Gmes
higher 2.7 Gmes higher
4.4
Post-‐
Millennials
Born before 1950
5
. CharacterisGcs of the
Post-‐Millennials
•
10 behavioral characterisGcs
•
4 development trends
1. CharacterisGcs of users born a\er 2000
u They are not the decision makers: Post-‐Millennials pay aWen@on to fashionable, emerging
brands, but tend to make similar purchase choices as other users—parents are buying or giving second-‐hand phones.
u MulGple devices: Percentage of users with both smartphones and tablets among Post-‐
Millennials is higher than average.
u Trying new things: Post-‐Millennials are more willing to try new and long-‐tail apps.
u Work & entertainment: Apart from educa@on apps, Post-‐Millennials show strong interest in
games, music apps and app stores.
u Younger game fans: Post-‐Millennials prefer RPG and EDU games while show liWle interest in
board games.
u Night owls: They spend more @me on mobile devices at night hours due to school hours. u Weekend effect: They spend more @me on entertainment during weekends than on
weekdays.
u Pre-‐exam effect: Before major exams, Post-‐Millennials tend to remove social and
entertainment apps from their phones.
u Search pioneers: They are more interested in online search and they are the major users of
voice and visual search.
u Mobile lovers: Mobile search has become an essen@al part in the life for the Post-‐Millennials.
Key Points>
2. Development trends of mobile Internet driven by Post-‐Millennials:
u MulG-‐device and cross-‐device more common
u More products and brands that appeal to the younger generaGon u Seasonality (weekends, pre and post-‐exams, holidays) prominent u Voice and visual search becoming mainstream
Not decision makers: Post-‐Millennials pay aMenGon to fashionable and new brands,
but tend to make similar choices to regular users when purchasing a mobile phone.
Figure 30:
Top 5 Smartphone brands that Post-‐Millennials favor and actually buy (14Q4) Samsung 8% 11% 20% MI 34% MEIZU Others 23% iPhone
Brands that Post-‐ Millennials are interested in Huawei 4% 7% Samsung 10% Others MI Lenovo 32% 11% iPhone Brands that they use 32% 8% Huawei Lenovo MI Samsung Smartphone market 34% 29% 15% Others iPhone 5% Huawei 8% 9%
5.1
Most Post-‐Millennials
have no say in purchase
decisions. Their parents
buy them phones or give
them hand-‐me-‐downs.
MulGple devices: percentage of users having both smartphones and tablets among
Post-‐Millenniails is higher than average.
Post-‐Millenniails All ne@zens
Figure 31: Propor@on of Post-‐Millennials who have tablets
(14Q4)
Figure 32: Time that Post-‐Millennials spend on tablets and smartphones (14Q4) 17% 19% Others Games Video 74% 14% Tablet 64% Smartphone 12% 1.7 Gmes higher
5.2
Trying new things: Post-‐Millennials more willing to try new and long-‐tail apps.
Figure 33: apps that smartphone users download (14Q4)
Post-‐
Millenniails The whole market Top 1000 apps*
Other apps*
Top 1000 APPs: the top 1000 Apps installed in Andriod devices; other Apps, besides the top 1000.
Post-‐Millennials demand for download unpopular apps is
1.3 Gmes stronger than other users.
Work & Entertainment: Besides educaGon app, Post-‐Millennials show great
interest in games, music apps and app stores.
Average @me spent on Apps Usage rate Time spent On apps Security Games Cloud storage Online shopping
Map & naviga@on
Work & study
Social chat Life service Online payment Online video Entertainment App store Online music News Reading
Figure 34: Post-‐Millennial use rate and and average usage @me Average
usage rate
5.4
Post-‐Millennials prefer RPG and EDU games while shows liMle interest in board
games.
6% 14% 11% 3% Post-‐ Millennials overall market Role playing Ac@on and shoo@ng games Puzzle games EDU games Others Board games
Figure 35: Types of apps that smartphone users download(14Q4)
Post-‐Millennials spend more Gme on mobile devices at night due to school hours.
The whole market
Post-‐Millennials
Sleeping
At class
Gewng up
& on the
way to
school
Midday
rest
At class
entertainment Sleeping
Homework &
Figure 36: Post-‐Millennial mobile Internet ac@vity: workdays (14Q4)
They spend more Gme on entertainment during the weekends.
135min/day
168 min/day
Weekend
Workday
Others
Games
14%
11%
15%
Video
Figure 37: Time spent by Post-‐Millennials on mobile Internet on weekends and on workdays
(14Q4)
Figure 38: Time spent on different apps at weekends and on workdays
(14Q4)
5.7
Before major exams, they tend to remove a many social and entertainment apps
from their phones.
Figure 39: Top 3 app types removed before exams Social/ messaging Games Reading +42% +27% +17%
The whole market Post-‐Millenniails
Figure 40: 57% of apps removed before exams are reinstalled one week aPer the exams
57%
Post-‐Millennials tend to remove apps
before exams and reinstall them a\er
exams.
Post-‐Millennials are more interested in online searches, and are the major users
of voice and visual search.
Post-‐Millennials
All
users
Figure 41: Average searches per day (14Q4)
Figure 42: Post-‐Millennial users of Baidu voice and visual search (14Q4)
1.3 Gmes higher
66%
User structure of voice and visual
search queries 34%
User structure of mobile search Others 17% 83% Post-‐ Millenniails
Post-‐Millennials account for 17% of the total mobile online search users, but account for 34% of total voice and visual search queries.
Mobile search has become an essenGal part of life for Post-‐Millennials.
Movies & anima@ons
Others
Educa@on & training
48%
5% Q&A about life and love
Games
Books & documents
Post-‐Millenniails 3% All users 67% 3% 7% f(x)=a-‐2/2∧x 1 Solve for x One Piece My Li9le Pony
Will a girl wearing glasses turn ugly when she grows up?
Why do I have dark circles under my eyes? I am only 14.
Figure 43: Mobile searches performed by Post-‐Millenniails
(14Q4)
5.10
Trend: Post-‐Millennials, as the majority of mobile Internet users in the
future, will shape the
development trends of the mobile Internet.
I. MulG-‐device and cross-‐device
The Post-‐Millenniails, born in the mobile era, are used to switching from smartphone to tablet and to PC. Their demand for trans-‐device usage is very strong.
II.
Products and brands catering to
the younger generaGon
The younger genera@on is a major target when a smartphone brand or an app wants to acquire new users. The young are always more willing to
embrace new things.
IV. Voice and visual search dominates
Post-‐Millennials exhibit a stronger desire to use voice and visual search. In just a few years, voice and visual will replace text search to become the
mainstream means of online search for the Post-‐ Millenniails.
III. Seasonality
With the propor@on of Post-‐Millennial users
increasing, the overall mobile Internet development is seeing more seasonality: fluctua@ons in different seasons, e.g. on weekends/before & aPer exams/ summer & winter breaks.
Time: 2012.6.1-‐2014.12.31
Data: Baidu Mobile Search(hWp://m.baidu.com)Baidu Mobile Assistant(hWp://as.baidu.com and client products, Baidu Mobile Sta@s@cs(hWp://mtj.baidu.com), related user research and data mining；
StaGsGcs:
Source of the data used in this report:
u Analysis of results pages produced by Baidu Mobile Search. Baidu Mobile Search is an important gateway from which mobile
users get access to Internet resources. It has more than 100 million visitors per day.
u Analysis of the distribu@on of apps launched or jointly produced by Baidu Mobile Assistant
u Analysis of apps and devices powered by Baidu Mobile Sta@s@cs. At present, Baidu covers more than 100 million mobile
devices.
u Online and offline research and analysis on users conducted by Baidu Business Analysis Dept.
Graphs & Charts：
The double slash sign in some of the column charts is designed to shorten the length of high columns and creates a beWer reading experience.
The report is jointly produced by Baidu Mobile Service Group and Baidu Business Analysis Dept. Informa@on herein is for references only. Based on the sta@s@cs provided by Baidu Mobile Search, Baidu Mobile Assistant, and Baidu Mobile Sta@s@cs, other related data mining as well as data from the research and analysis on users, the report is designed to reflect the general development trend of mobile Internet in China. We do not guarantee 100% accuracy and completeness of the data in the report. The report shall not be used as the basis of investment decisions, nor should it be regarded as obligatory or a legal basis or evidence, no maWer explicit or implicit. Baidu Mobile Cloud Business Dept. will supplement, correct and revise relevant informa@on at a regular basis, but we do not guarantee a prompt release of the informa@on updates. Baidu disclaims any responsibility for direct/indirect investment profit and loss resulted from the informa@on herein.
Copyright therein is reserved by Baidu Mobile Service Group. No further redistribu@on is permiWed without a wriWen permission from Baidu. If quoted and republished, sources of the informa@on shall be indicated as Baidu Mobile Service Group. Quota@ons, omissions or revisions that are inconsistent with the views herein shall not be permiWed.
The power of interpreta@on and revision of the disclaimer shall be vested in Baidu Mobile Service Group. For more informa@on about mobile Internet, please visit hWp://developer.baidu.com/.
Baidu Mobile Service Group & Baidu Business Analysis Dep. Address: 10 Shangdi 10th St., Haidian District, Beijing
Postal code: 100085
