Recent BI Intelligence, the analytics arm of Business Insider Inc., documents in stark detail the rise of … well, mobile everything. From how we pay, to how we interact, to how we live, everything seems to be centering more and more on mobile devices.
In a March 2014 report titled The Future of Mobile, BI Intelligence showed that mobile devices are flooding the global market. Back in 2009, smartphones, tablets and wearable devices each stood at around 5 million units shipped. By 2013, each type of mobile device was expected to exceed 1.2 billion units shipped globally.
The demand for phablets (basically large smartphones) in Asia is also skyrocketing. In the third quarter of 2012, a little over 3 million phablets were shipped in Asia; a year later, 24 million phablet units were shipped in that region. Meanwhile, wearable devices, such as smart watches, are also exploding in popularity, going from an under $2 billion market in the middle of 2012 to an estimated $8 billion market in 2016 and over a $12 billion market projected for 2018.
Over one-fifth of Internet traffic is now conducted via mobile devices, and mobile is driving all of Facebook's advertising revenue, according to BI, with that media giant's revenue from mobile growing from under $500 million at the beginning of 2013 to well over $1 billion by the end of that year.
About 25 percent of all e-commerce traffic is now conducted via mobile devices, but the category only accounts for 13 percent of U.S. e-commerce sales, BI said. However, retailers are seeing massive new traffic from mobile device users, with Amazon reaping the largest mobile user growth.
BI made the point that "Money follows eyeballs" and that "Eyeballs are moving to mobile." The U.S. consumer media market share breaks down to 38 percent for television in 2013 (down from 45 percent in 2009) and mobile reaching 20 percent consumer share in 2013 (up from 4 percent in 2009).
BI followed up that research with October 2014 data focused specifically on mobile payments. In The Future of Payments: 2014, BI said mobile in-store payment volume will reach about $750 billion by 2018, an increase of $189 billion from 2014, while mobile online commerce will rise to just under $600 billion in that time, up by $222 billion from today.
Consumers will continue to shift away from paying at traditional checkouts and toward mobile channels. Cash payments are also continuing to shrink incrementally, from over $1.4 billion in volume in 2014 to $1.34 billion by 2018, making for a compounded annual growth rate (CAGR) of minus 1.1 percent.
Overall, BI expects that in-store contactless mobile payments will experience a CAGR of 154 percent during the next four years. In 2013, the in-store mobile market was a paltry $1.8 billion in volume compared with the $189 billion forecasted by 2018. Peer-to-peer or person-to-person (P2P) mobile payments is also experiencing a boom, with a 68 percent CAGR expected from 2013 to 2018.
New mobile payment startups are flooding into the market to take advantage of the opportunity, and venture capitalists are fueling this expansion, with almost $500 million in funding provided for mobile payment ventures in the first quarter of 2014.
To keep up with this new, hungry competition, legacy payment providers are spending more on research and development. Combining statistics from the filings of three publicly traded payment firms – VeriFone Inc., Ingenico SA and PAX Technology Inc. – the three companies spent close to $100 million total during 2009 and 2010. By the second half of 2013, that number climbed to $174 million, with VeriFone leading the way at $96 million.
On the merchant end, 40 percent of small businesses have adopted mobile card reader technology, BI said, adding that 19 percent of consumers have made in-store payments via mobile readers. Also, merchants increasingly realize the importance of adopting technologies that make payments easier for their customers; 36 percent saw ease of payment as paramount in 2013, compared to 28 percent in 2012.
It seems that the stars are indeed aligning for a commercial marketplace dominated by all things mobile.
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