The internet is much in evidence at the CLSA Investors' Forum in Hong Kong this week with two keynote sessions devoted to the topic.
Your caffeine rush is wearing off and I’m the only thing standing between you and lunch, said Daniel Alegre in his opening remarks. Both may have been true, but that did not deter the audience from giving Alegre their undivided attention. The ballroom where the talk was held was packed to capacity, prompting CLSA to send latecomers to another room to watch a live TV feed. And no wonder, as the man who oversees Google’s sales and operations for the Asia-Pacific region was discussing a topic close to their hearts – why the internet looks increasingly like Asia.
The change in the region in the eight years since he arrived here has been huge, said Alegre in the first of two internet-themed talks during the forum. In his early days he was pounding the pavement regarding the importance of the internet but now “the pavement is pounding back”.
“Online and offline engagements have become completely interchangeable,” began Alegre. Mobile phones are no longer communication devices but have become extensions of human beings, he said, citing the example of the Philippines where last year 150 million transactions with a total value exceeding $10 billion were done via mobile phones.
Asia is using technology for social interactions more effectively than the West, evidenced by the number of Facebook and Twitter users in the region. When Michael Jackson died in 2009, a record for tweets was set at 453 per second, he cited. This was eclipsed when Japan witnessed an unfortunate earthquake and 3,283 tweets per second were sent. Also in Japan, 6,929 tweets per second were registered over the New Year, equal to the number of tweets across the entire east coast of the US for the same occasion.
In Japan, 34% of internet users use their mobile phones for social networking, followed by Korea and Singapore. All three of these countries are much further ahead than the US and UK in terms of mobile social networking. The fast-growing penetration of mobile telephony in Asia is creating an opportunity for advertisers. This year it is estimated that $2 billion will be spent on mobile advertising and Google predicts that will double to $4 billion by 2015. Some 40 million smartphones were sold in Asia-Pacific last year, compared to 35 million in Europe and 33 million in the US.
McKinsey has worked with Google to gauge the fiscal impact of the internet on different world economies. In the UK, 7.2% of GDP is attributable to the internet, while in Hong Kong the comparable number is 5.9%, in Korea 4.6% and in China 2.6%. “These numbers will perpetually increase,” said Alegre, referring to the increasing primacy of the use of the internet in daily life.
“We get lots of questions from investors about why we are putting so much money into Android when we directly generate no revenue,” he said. “We believe in open architecture of the internet – we generate revenue from people.”
Google founder Eric Schmidt instructed the Android development team to work with OEMs (original equipment manufacturers) to try to drop Smartphone prices by $70 to $100, as the only way to increase penetration to the mass level is by making products affordable.
Google launched its Personfinder program during the Haiti earthquake to enable missing people to communicate their whereabouts. At the time 55,100 records were created. During the New Zealand earthquake 116,000 records were created and the Japanese earthquake saw 670,000 records created. Alegre also highlighted how effective Google has been in using crowdsourcing, the outsourcing of tasks to an unidentified group of people. Map Maker, which Google launched in 2008, has taken off because the Google community has added information. For example, a map of a city in Pakistan for which Google initially only had the name, has become much more detailed since Map Maker was launched. The map was used by the Pakistani government last year to track survivors of a landslide.
Alegre’s talk was followed by a very animated and well-received lecture by Hans Rosling, a Swedish medical doctor, academic and statistician, with the title “Asia Rising: How and When?” Rosling focused on the alternative measures by which the progress of countries around the world can be measured, and when Asia will once again dominate the world. And though the two talks could not have been further apart in every sense, Rosling’s talk neatly segued into Alegre’s at one point when the Swedish doctor mentioned that he was a co-founder of Gapminder, which was acquired by Google in 2007. Gapminder bills itself as a “fact tank that promotes a fact-based world view” using statistics and data.
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