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Internet Highlights November 10, 2006

Posted by rajAT in internet, merry meeker.

Users / Usage — Yahoo! has base of 418MM+ unique monthly visitors (+19% Y/Y with 24% Y/Y page view growth, CQ3)

Customer Acquisition — Google (500K – 1MM advertisers / vendors, and rising); 30%+ clicks (and rising) on sponsored links – effective targeting should continue to improve + drive rising monetization

Commerce / Payments — PayPal (123MM accounts, +41% Y/Y, CQ3) + Shopping.com has 40MM+ products in 325+ categories

Advertising — 8% of total US advertising online in 2006E growing to estimated 13%+ within 5 years – Google + Yahoo! = key drivers + beneficiaries

Significant targeting / conversion improvements (related to technology improvements + data leverage) — could bolster annual global revenue per unique user of $9 for Google (+42% Y/Y) and $10 for Yahoo! (+29% Y/Y) 2-3x in next 5 years

Personalization — Recommendation engines improve monetization – examples include Amazon.com + Yahoo! Music

Communications / Telephony — Skype (136MM registered users, +20% Q/Q, CQ3 — may be fastest growing product in history). Based on CQ1 data, Skype traffic = ~7% of global international long distance minutes. Global mobile data services revenue (ex. messaging) has $10 ARPU (and rising). If Skype were a carrier, global registered user level would rank it #3 behind China Mobile (274MM subscribers) and Vodafone (187MM). IM (instant messaging) + SMS / MMS showing strong growth

Video — ~60% of Internet traffic may be P2P file sharing of unmonetized video — ramp in tagging (for search) + partnerships + monetization – note recent moves by likes of ABC / CBS / FOX / NBA / Sony / Warner / Universal / Google / Yahoo!. Challenges (especially related to copyright and infrastructure stress) are significant, but over time, consumer demand should rule and content creators should benefit

Local — Google ‘Long Tail’ + eBay Classifieds (19MM+ unique visitors, +140% Y/Y, CQ2) – traction emerging

Community / Social Media — Likes of Wikipedia, MySpace, YouTube, Yahoo! Flickr + Yahoo! Answers have experienced extraordinary growth. CyWorld (Korea) + TenCent (China) monetizing. 57MM blogs – doubling every 7 months, per Technorati. 1B cameraenabled
mobiles within 1 year – ‘citizen journalism’ in infancy

Mobile — While 17% of global Internet users (32% in N. America) have residential broadband, 8% of global mobile phone subscribers use 3G. American Idol – 63MM votes (via mobiles + Internet) in final 4-hour round, China’s Super Girl – 12MM votes (primarily mobiles) in final 3- hour round. Mobile data services (bolstered by 2.5G & ex. messaging) revenue ~$20B, comparable to online advertising revenue — illustrates potential monetization opportunity for broadband Internet!

(Source Merry Meeker @ Morgan Stanley)



1. bb - January 29, 2007


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