What’s Next in the Mobile Browser War? Actual Revenue.
Phone image copyright Vepar5
Now, the meteoric rise in mobile Internet usage presents a new opportunity for technology companies to re-envision the browser not just as a free tool, but as a revenue generator. Apple, Google, Opera and other players are trying to figure out new browser monetization models uniquely suited to mobile devices. So far, in the U.S. at least, there is little consensus, and most mobile browsers are still just rudimentary Internet access tools. But if U.S. players want to figure out how to monetize the browser, they only have to look to China — the world’s largest and most advanced mobile market.
There were about 354 million smartphones in use in China in 2012, compared to 219 million in the U.S., according to research from Informa. And most Chinese consumers prefer smartphones over desktops to access the Web. At the end of 2012, 75 percent of Chinese Internet users accessed the Web from their mobile devices, up from just 28 percent five years earlier.
In China, my company, UCWeb, and other technology companies such as Tencent have come up with innovative ways to monetize the mobile browser. In particular, the mobile browser has become an entryway for e-commerce, gaming and video, with browser makers generating profits through revenue-sharing with e-commerce sites, games developers and publishers instead of through interruptive advertising. For Chinese consumers, the mobile browser isn’t just an entry point to the Internet, but is instead an “integrated service platform.”
U.S. companies could learn a lot from China when it comes to mobile monetization in general. Huge Internet players like Tencent and Baidu, as well as emerging mobile-first companies like YY and Meilishuo, are generating profits not primarily from advertising — which most consumers find disruptive and invasive on their mobile devices — but from revenue-sharing, freemium and tiered subscriber pricing. (These monetization models are common in the games industry in the U.S., but are rare when it comes to the mobile Internet.)
One of the reasons a browser-centric mobile experience works in China is that Chinese consumers have gravitated toward the mobile Internet, whereas U.S. consumers largely favor apps. But with millions of apps now available, it’s becoming more and more difficult for U.S. consumers to discover the apps they want and need. As mobile browser technology improves in the U.S., more consumers will ditch costly and cumbersome apps in favor of easy-to-use mobile websites.
In fact, it’s only a matter of time before American consumers catch up to their Chinese counterparts in terms of mobile Internet usage. In May 2013, 15 percent of Internet traffic came from mobile devices worldwide, but that number will rise to 40 percent by the end of 2014.
U.S. technology companies should anticipate the move away from apps toward the open mobile Web, finding ways to monetize the browser beyond ads. The largest and most sophisticated mobile Internet economy in the world, China, has already turned the mobile browser into an integrated mobile services platform. It won’t be long before U.S. consumers demand the same level of service from their mobile Web browsers that Chinese consumers already enjoy.
Yongfu Yu is the chairman and CEO of UCWeb, whose mission is to provide a better mobile Internet experience to billions of users around the world. Earlier in his career, he was a VP at Legend Capital. Yu graduated from Nankai University in 1999 with a bachelor’s degree in economics and minor in computer science.
