Mary Meeker of Morgan Stanley isn’t just any Internet analyst. Shewas covering the sector when the brokerage firm was the lead underwriterfor Netscape Communications’ initial public offering in 1995, wasdubbed the “Queen of the Net” by Barron’s magazine in 1998 and wascovering the space in 2004, when Morgan Stanley helped launch the GoogleIPO. Now a managing director at Morgan Stanley and head of the globaltechnology research team, she has released her latest massively detailed“State of the Internet” report, which she has been putting outperiodically since 1995. She presented the report during an event thisafternoon at Google, which was streamed live as part of theEvents@Google series.

And what does Meeker see in her crystal ball this year? Twooverwhelming trends that will affect consumers, thehardware/infrastructure industry and the commercial potential of theweb: mobile and social networking. Such a conclusion is hardlyearth-shattering news to GigaOM readers, for we have been followingthese trends over the past year or two, but Meeker puts some prettylarge numbers next to those trends, and looks at the shifts that will(or are likely to) take place in related industries such ascommunications hardware. She also compares where the rest of thedeveloped world is in terms of mobile communications and socialnetworking with Japan. Again, not a radically different approach to theone many tech forecasters take, but Meeker has the weight of someconsiderable research chops on her side.

The Morgan Stanley analyst says that the world is currently in themidst of the fifth major technology cycle of the past half a century.The previous four were the mainframe era of the 1950s and 60s, themini-computer era of the 1970s and the desktop Internet era of the 80s.The current cycle is the era of the mobile Internet, she says —predicting that within the next five years “more users will connect tothe Internet over mobile devices than desktop PCs.” As she puts it onone of the slides in the report: “Rapid Ramp of Mobile Internet UsageWill be a Boon to Consumers and Some Companies Will Likely Win Big(Potentially Very Big) While Many Will Wonder What Just Happened.”

Meeker says that mobile Internet usage is ramping up substantiallyfaster than desktop Internet usage did, a view she and her team arrivedat by comparing the adoption rates of iPhone/iPod touch to that of AOLand Netscape in the early 1990s. According to Meeker, adoption of theApple devices is taking place more than 11 times faster that of AOL, andseveral times as fast as that of Netscape. Helping to drive this is 3Gtechnology, which Morgan Stanley says recently hit an “inflection point”by being available to more than 20 percent of the world’s cellularusers (although penetration is only 7 percent in Central/South Americaand 13 percent in Asia/Pacific — excluding Japan, where it’s 96percent).

But that mobile boom will take its toll on carriers, Meeker says,because mobile Internet use is all about data. The average cell-phoneusage pattern is 70 percent voice, while the average iPhone is 45percent voice. At NTT DoCoMo, data usage accounts for 90 percent ofnetwork traffic. The analyst says her team expects mobile data trafficto increase by almost 4,000 percent by 2014, for a cumulative annualgrowth rate of more than 100 percent. Such numbers will likely strikefear into the hearts of carriers, but joy into the hearts of equipmentsuppliers and mobile service companies.

One of the implications of mobile access is a growth in ecommerce,says Meeker, featuring things such as location-based services,time-based offers, mobile coupons, push notifications, etc. In China,the success of social network Tencent proves that virtual goods can be abig business, she says — virtual goods sales accounted for $2.2 billionworth of the company’s revenue in 2009 and $24 in annual revenue peruser. Online commerce and paid services made up 32 percent of mobilerevenue in Japan in 2008, up from just 14 percent in 2000. Meeker’sreport suggests that the rest of the world — which is still below the 14percent-mark — could see much the same trajectory over the next 10years.

Meeker says that users are more willing to pay for content on mobiledevices than they are on desktops for a number of reasons, including:

* Easy-to-Use/Secure Payment Systems — embeddedsystems like carrier billing and iTunes allow real-time payment

* Small Price Tags -– most content and subscriptionscarry sub-$5 price tags

* Walled Gardens Reduce Piracy -– content exists inproprietary environments, difficult to get pirated content onto mobiledevices

* Established Store Fronts -– carrier decks andiTunes store allow easy discovery and purchase

* Personalization -– more important on mobiles thandesktops

On the social networking side, Meeker’s report notes that socialnetwork use is bigger than email in terms of both aggregate numbers ofusers and time spent, and is still growing rapidly. Social networkingpassed email in terms of time spent in 2007, hitting about 100 billionminutes/month globally — it’s now twice that — and passed email in termsof raw user numbers in July of 2009, with more than 800 million. Giventhe rate at which Facebook has been growing, that number is probably nowcloser to a billion. Meeker attributes social networking’s success tothe fact that it’s a “unified communications + multimedia creationtool/repository in your pocket.” And Japan’s experience makes howcrucial mobile is to that equation: Mixi, one of the country’s largestsocial networks, has seen its mobile page views grow to 72 percent ofthe total from just 17 percent three years ago.

Post and thumbnail photos courtesyFlickr user Shapeshift.