News broke yesterday that there are now more than 1bn smartphones in use. It took sixteen years to get to the first billion and analysts forecast the next billion will come in three years.
There are a couple of interesting things about this news. Firstly and most obviously the market for mobile services is huge and growing at an accelerating rate, putting a strong tailwind behind businesses in this sector. When I’m talking about our portfolio company StrikeAd, which operates in the realtime mobile advertising ecoystem I like to quote Mary Meeker’s statistic that 10% of media consumption is on mobile, but only 1% of media spend. A doubling of smartphones in the next three years suggests that will move to 20%, and that is without taking into account the effect of improving networks and devices.
Secondly it’s a great example of the accelerating pace of change. Sixteen years to the first billion and less than 20% of that time to get to the second billion. Even if you take the very conservative position of saying that smartphones started with the launch of the iPhone in January 2007, the increase in the pace of change is still dramatic. Also interesting is how much faster we have adopted smartphones than just about any other new technology – nearly 5x faster than the computer, and 10x faster than the telephone. Curiously, the television was adopted at a similar rate to the smartphone, which is remarkable given how long ago it was invented.
This increasing pace of change makes speed and flexibility increasingly important, playing to the core strength of startups as they compete with large corporations. At the same time the cost of innovation is declining making the balance sheet strength of large corporations less important.