The Mobile Internet Economy in Europe

The Mobile Internet Economy in Europe

          
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The Mobile Internet Economy in Europe

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    Consumers Win Big

    The revenue numbers measured in the previous chapter are large. But they pale in comparison with what must be considered the real value of the mobile Internet: what all this activity is worth to the end user. Consumers, especially European consumers, are the big winners here. And the margin of victory runs into the trillions of euros.

    Europe has come under criticism for “missing out” on the digital and mobile boom; with a few exceptions, this story goes, most of the big names in these industries—Apple, Google, Facebook, Alibaba, and Samsung, among others—have emerged from the U.S. and Asia. Putting aside whether this story is true, it clearly hasn’t stopped European consumers, along with consumers in the rest of the world, from making full use of the benefits the mobile Internet offers.

    The consumer surplus from the mobile Internet in the EU5 alone is about €770 billion ($1 trillion) per year. The mobile Internet’s total annual consumer surplus across the 13 countries surveyed is approximately €2.8 trillion ($3.5 trillion). In the EU5, Android generates almost half of this surplus (€378 billion), iOS produces 30 percent (€234 billion), and the rest is divided among the other mobile operating systems. Across the 13 countries in our survey, Android is responsible for 58 percent of the surplus and Apple, 29 percent, reflecting Android’s popularity in most developing markets. (See Exhibit 4.)

    exhibit

    On a per capita basis, the average annual surplus in the EU5 is €4,700 ($5,900), almost 50 percent more than the €3,200 ($4,000) average surplus in the 13 markets surveyed. Europeans benefit from both lower costs and higher value. The surplus that consumers in the EU5 receive from the mobile Internet in terms of communication, consumption, commerce, and information is about 13 times what they pay, almost twice the average (of 7 times the amount paid) across the 13 markets. (See Exhibit 5.)

    exhibit

    German users generate the highest consumer surplus per person (€5,100), as well as the largest total consumer surplus in the EU5 (€199 billion). The UK has the second highest total surplus, followed by France. In Europe, as elsewhere, the Android operating system generates the largest surplus share, owing to the lower average cost—and generally high value—of Android devices and their resulting popularity. Apple’s iOS generates the largest surplus per person. (See Exhibit 6.)

    exhibit

    Consumers use their mobile devices for a wide variety of purposes. In Europe, the most valued feature is still phone calls, but this is followed closely by Web browsing, searching the Internet, and e-mail. Mapping capabilities, social networking, and financial functions are also very popular. (See Exhibit 7.)

    exhibit

    It’s no exaggeration to say that consumers everywhere have come to depend on the mobile Internet. Whether it’s for communication, consumption, commerce, or information, they are loathe to give up the capabilities that the mobile Internet confers. Large majorities of Europeans and other consumers would forgo most offline media (the one exception is TV) before forgoing mobile Internet access. Substantial majorities are also willing to give up such luxuries as fast food, chocolate, alcohol, coffee, and movies. Europeans are somewhat more restrained when it comes to such trade-offs and are more likely to put a higher value on cars, sex, and showering. (See Exhibit 8.) A significant minority of consumers (14 percent in the EU5) are not willing to give up their mobile Internet access at any price. As one person put it, “The Internet is part of my body. I feel the Internet running in my blood. I’d rather give up something else than this.”

    exhibit