BCG: EU5 mobile internet economy grows to 230 billion

15 December 2014 Consultancy.uk

The mobile internet system of Europe’s five largest economies is worth €92 billion, which equates to an average spending per adult of €555 a year on phones, tablets, data plans, digital content and m-commerce. According to the research from The Boston Consulting Group the mobile internet market will in the coming years boom, growing to about €230 billion by 2017.

In a research report, ‘The Mobile Internet Economy in Europe’, The Boston Consulting Group, commissioned by Google, explores the various ways the mobile ecosystem is transforming the economics of people’s lives. The aim of the report is to discover the state of affairs of the mobile ecosystem, specifically for the big 5 EU (Germany, France, the UK, Italy, and Spain) countries. Key findings are that mobile internet penetration is climbing, mobile market revenue will increase substantially and consumers are benefitting

Market penetration
As it stands, there are 7 billion mobile phone subscriptions worldwide. With mobile phone penetration especially high in Western Europe, where there are 530 million subscriptions. For Western Europe this represents 1.33 subscriptions per head of population, with 50% of those subscriptions being for smartphones. Smart phone penetration is only expected to rise, and by 2017, seven of the top ten countries with per individual smart phone usage will be in Europe; with smart phone penetration expected to be especially high in Norway, Denmark and Finland, there reaching 90%. Leading the trend are young Europeans, for instance, 88% of 18-24 year olds in the UK have a smart phone, compared to 65% of the UK’s wider population; with younger users spending up to 2.5 times their older counterparts’ time on smart devices. 

Mobile Internet Ecosystem Revenue

Market revenue
For the 13 countries surveyed, which contribute 70% of global GDP, the total revenue of the mobile internet ecosystem in 2014 is €512 billion. The big 5 EU countries produce €90 billion of that revenue, or €555 per adult a year on phones, tablets, data plans, apps, digital commerce, and m-commerce. By 2017 that revenue is expected to double to €226 billion, an annual growth rate of 25%. For the 13 countries surveyed, the growth in revenue is expected to grow to €1,159 trillion by 2017 at an annual rate of 23%.

The mobile ecosystem is also an important employment engine, with a total impact for the EU5 of around half a million jobs in 2013, 50% of which are physically in the countries themselves. Within the 13 countries surveyed the report estimates that 3 million people are employed within the ecosystem, with many entrepreneurial start-ups looking for the next big thing within the new and developing environment.

Economic Surplus of Mobile Internet

The consumer surplus
The mobile internet boom creates, the report finds, considerable consumer surplus. The surplus, where the value a good or service has to a consumer is more than the cost of the good or service, created for consumers by the mobile ecosystem is estimated to be around €2.8 trillion per annum. For the EU5, the surplus comes out at €770 billion per annum. On the per capita basis however, the EU5 are well ahead of their international counterparts, with the average value added through smart devices being €4,700 per annum, with the 13 country average being €3,200.

Consumer Value Surplus per Capita EU

Different mobile operating system create different levels of value, related to the apps, content and services provided by that particular environment. The largest market share for the EU5 goes to the Android environment, which generates ~49% of revenue at €378 billion, with the Apple environment generating €234 billion and smaller players contributing ~21% of the total makeup.

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