Apple, Facebook, and the "state of the web"

China: the great mobile opportunity

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Last week, Internet analyst turned venture capitalist Mary Meeker presented one the best PowerPoint presentations I'll peruse all year. In what has become known as the "State of the Web" address, Meeker covered a wide range of tech topics. While I won't try to summarise the entire thing in one sitting, I will shed some light on a few stats from her presentation that should resonate for both Apple (Nasdaq: AAPL) and Facebook (Nasdaq: FB) investors.

Global smartphone adoption
While I knew there was significant upside in the penetration of smartphones worldwide, I was astounded to learn that smart-devices account for a scant 16% of total mobile phone subscriptions around the globe. When looking at statistics for China, the growth opportunity is amazing, as 3G penetration stands at only 6% after doubling in the past year. That one stat alone highlights the great mobile opportunity ahead in China, and for Apple, one huge catalyst for accelerating growth in China appears to be taking shape.

China Mobile (NYSE: CHL), the country's largest wireless carrier, which boasts 670 million subscribers and is about three times the size of the next-largest carrier, China Unicom, recently announced that it is in discussions with Apple to officially carry the iPhone. Seems a little late, doesn't it? The problem has been China Mobile's unique 3G network standard TD-SCDMA, which isn't compatible with current iPhones.

However, China Mobile customers are so enamored of the phone that more than 15 million have paid exorbitant retail prices to use unlocked iPhones on the company's archaic 2G network. Thankfully, Qualcomm's (Nasdaq: QCOM) next-generation Gobi baseband chip, which will play well with China Mobile's network, is widely expected in the next iPhone. Given customer enthusiasm for tortoise-like 2G speeds, it doesn't take a genius to understand the opportunity presented by a carrier-subsidised, network-compatible version.

Monetising mobile
It's no secret that monetising mobile is one of Facebook's biggest challenges. In fact, I've read about it so much I'm sick of hearing the two words used in succession. Unfortunately for Facebook shareholders, the statistics offered by Meeker don't paint a very bright future for monetis… I mean… generating revenue from smartphone users. With advertising accounting for 85% of total revenue, Facebook is already widely aware of the 20%-80% discount mobile ads receive relative to desktop delivery.

However, there is still a large gap to fill in reconciling mobile ad spending with the amount of attention the mobile medium receives from consumers. Currently, mobile accounts for 1% of total advertising spending despite commanding about 10% of consumer attention. Conventional wisdom suggests that mobile spending will converge with the attention percentage over time, similar to how it has played out with desktop Internet ad spending.

However, I think there could be a major flaw with that thinking. Mobile presents some unique challenges for advertisers given its small form-factor, and doesn't lend itself to the plethora of formats offered to desktop advertisers. On the other hand, it also offers unique opportunities such as highly targeted location-based advertising. Time will tell, but monetising mobile without bugging users is sure to be one tough nut to crack for Facebook.

If you're in the market for some high yielding ASX shares, look no further than our "Secure Your Future with 3 Rock-Solid Dividend Stocks" report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

 More reading

The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A version of this article, written by Brenton Flynn, originally appeared on

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »