According to International Telecommunication Union (ITU), a UN
agency, the total number of Internet users globally crossed 2
billion by the end 2010, an increase from 1.86 billion in 2009 and
double the number of netizens in 2005. However, the additional
growth doesn't move the needle on Microsoft (
) stock much given Bing's low penetration in search and since the
much of this rapid growth is due to cellular subscriptions and
migration to 3G. While Microsoft is the reigning desktop OS
champion, it's penetration of mobile OS is still low vs. Google's (
) Android and Apple's (
) iOS, which typically default to search engines other than
Bing contributes less than 1% to Microsoft's stock value by our
analysis. Hence a higher number of Internet users than we expect
will have a marginal impact on the stock price. While we estimate
global Internet users will reach 4.2 billion by the end of our
forecast period, Trefis members predict the figure will reach
closer to 5 billion.
We currently have a
Trefis price estimate of $31.64 for Microsoft's
, about 25% above the current market price.
Rising Number of Global Internet Users
ITU estimates that out of 2.08 billion global Internet users (by
end 2010), 57% are from developing countries like India and China.
But, in terms of density in online usage, the difference between
developed and developing is stark.
Only 21% of the population in developing countries are online
compared to 71% for developed countries. The Internet penetration
in Africa is at 9.6%, far below the world average of 30%. However,
the overall number of Internet users is rising globally due to
rapid growth in mobile subscriptions and adoption of 3G
Increasing Broadband Penetration, Mobile Subscriptions
Growing adoption of Internet-capable mobile phones by non-PC
Internet users will increase the total number of Internet users.
ITU estimates mobile cellular subscriptions worldwide has reached
5.3 billion by 2010, and this includes 940 million subscriptions of
3G services. While cellular penetration in developed countries has
reached saturation, the same for the developing world is close to
68%, backed by growth from Asia-Pacific.
The increasing availability of reasonably-priced residential
broadband services is making it more attractive for residences
currently without Internet access to sign up. The number of people
having Internet access has increased from 1.4 billion in 2009 to
1.6 billion in 2010. But the disparity in broadband penetration
rates between developed and developing countries still
exists. The penetration level in developing countries is 4.4
subscriptions per 100 people compared to 24.6 in developed
complete analysis for Microsoft's stock is here