Who Steers Mobile Future in China?
BEIJING, Nov 15, 2012 (Menafn - SinoCast Daily Business Beat via COMTEX) --Who steers the future of mobile Internet is a coming question in the Chinese Internet industry as Apple Inc. AAPL has grown into a global tech dominator relying on the excellent combination of its innovations, mobile devices (or terminals), and entertainment ambitions.
Such a success has not yet been found out in China, but sprouting part of it can be seen, like some mobile actions from Baidu Inc. BIDU, Huawei Technologies Co., Ltd., and a very small one - Beijing Xiaomi Technology Co., Ltd.
As we know, Baidu has built up its leadership over the Chinese Internet search market, with extending to online marketing and other Internet segments; Huawei has developed into an important force in the world telecommunications equipment industry. And Xiaomi is a smartphone start-up based in Beijing, with a team of robust Chinese tech elite led by Lei Jun, a well-know software veteran and angel investor in the tech market.
In recent few years, the list of mobile Internet participators has been prolonged constantly in China, including Taobao.com, Baidu, Tencent Holdings Ltd. (sehk:0700), Taobao.com, Qihoo 360 Technology Co., Ltd. QIHU and so on.
Looking at Apple, it is a consumer electronics power labeled with fresh and popular creative products, which are loved worldwide. Its huge-potential profit-making mobile Internet business capitalizes on its mobile devices and an open-to-designer applications platform, already building a new world in the global tech industry. Now it also discloses another ambition to traditional media in the United States, which annoys the Big Three TV dominators in the US, triggering counterattacks.
Could the Apple success be copied in China? Could a Chinese tech company perform a creative dance on terminal products, too? It is not time to answer it now, because an earlier attempt in the tech industry does not mean an essential and sustainable success in profit making or called simply as a final success, an insider pointed out. In the industry worldwide, many start-ups die of their early-anticipated dreams, then stronger competitors or other giants succeed in their death and bodies, becoming the final winners.
Another question comes here-if a small player should choose to exploit a new and alluring bonanza in the mobile industry? It is hard to answer, either, because hungry lions are able to easily grab an antelope from the mouth of an agile but single cheetah, which is often watched in a wild animal television program.
Indeed, the Chinese mobile market needs such a service - providing PC-to-smartphone applications, which proves to be a feasible business in China. When most of smartphone users have come to habituate to application provisions from a certain app platform, it may grow increasingly harder to persuade them to switch to another platform, which is helping for the former to accumulate users.
In fact, so small a player in the Chinese mobile Internet segment is destined to face challenges delivered by those big rivals with rich capital and distinctive services in the Internet industry, because it is weak in the Apple model, the innovation-to-terminal-to-revenue plus terminal-to-application-to-revenue one.
Rivals in Mobile Internet
Taobao.com, the biggest online shopping bazaar in China, made a foray into the mobile payment segment in 2008. It reaped a mobile payment turnover of CNY 11.8 billion in 2011, and the number is estimated to tumble to CNY 50 billion at the end of 2012, according to its wireless division. Without doubt, that will be a strong push to solidify its leadership over the huge-potential online shopping market in the country.
Baidu, China's Internet search dominator, on September 3 announced the release of yun.baidu.com, an aggressive move to the country's not-yet-profitable but promising could-computing segment. On the same day, its chief financial officer Jennifer Li disclosed that Baidu would invest over CNY 10 billion (or USD 1.6 billion) in a cloud computing center, with a yearly infusion of around CNY 2 billion. The far-reach move, targeting the infrastructure of mobile Internet, will test the confidence and patience of the company's shareholders and investors for a long time.
Tencent, China's Internet entertainment service giant with 783.6 million active accounts of QQ, the most popular instant messaging tool in the country, recently unveiled a first-phase investment of CNY 1 billion to build its wireless Internet technology R&D headquarters in Wuhan, a city with many tech universities in central China. In addition, Tencent already acquired 100% of Shuame.com, a Shenzhen-based start-up with providing ROM service specially directed for Android smartphone users, who want to jail break and root on their handsets with the aim of slimming operating systems and selecting good-for-use applications. The start-up was owned by Qihoo 360, a computer security company with creative destruction in the Chinese Internet industry.
Qihoo 360, it said in its second-quarter financial results, had a monthly active user base of 425 million in its computer security products in June 2012, with a market penetration of 94% in China. It captured about 120 million users for its 360 smarphone products and services. In the month, it saw 272 million monthly active users for its 360 browser, with a penetration of 61%.
Competitors in Mobile Gaming
Of course, mobile Internet consists of not only applications, but also mobile games, music, videos, ads, etc. When small players smell of such a lucrative applications platform, other powerful and ambitious "predators" must follow suit, even some mobile game start-ups want to bite a slice of this bigger and bigger pie, too.
China Mobile Games and Entertainment Group Limited (CMGE), or called China Mobile Games and Entertainment Group (CMGE), is scheduled to debut on the Nasdaq on September 25, 2012, with a mobile gaming image in front of Wall Street investors, said a media report by Techweb.com. Forbes recently listed CMGE as one of the top 30 mobile businesses in China, with a revenue of USD 31 million in 2011.
More importantly, the report noted, CMGE is a spin-off subsidiary of VODone Ltd. (sehk:0082), an online media company, which is a semi-state-owned group in China, engaging in the operation of online media, lottery, and mobile games. The parent's shareholding background can be traced to the Ministry of Civil Affairs of China.
Taomee Holdings Limited TAOM is a Shanghai-based Internet start-up with focus on child entertainment and media and its 61 applications platform. For the second quarter of 2012, Taomee had a net revenue of USD 10.5 million, up 0.4% quarter-on-quarter; a net income of USD 3.2 million; and USD 0.09 and USD 0.08 in basic and diluted earnings per ADS, according to its unaudited fiscal report unveiled on August 16. Its active accounts increased 3.1% to approximately 43.6 million from 42.3 million a quarter ago, surging 81.6% from 24.0 million a year earlier. Active paying accounts slipped to 1.8 million from 1.9 million a quarter ago, down from 2.2 million a year ago. ARPU was CNY 30, versus CNY 31 a quarter ago and CNY 33 a year ago.
Started in July 2003, Pearl-in-Palm Group already stepped into the development and publishing of mobile games in China. Later, it set up Beijing Pearl-in-Palm Group Information Technology Co., Ltd. in 2006, with the aim of serving smartphone users.
In addition, other influential Internet companies in China show an interest in emerging mobile Internet, beginning some attempts. Some of them are Shanda Interactive Entertainment Ltd. , Sohu.com Inc. SOHU, NetEase.com Inc. NTES.
By far, China Mobile Ltd. (sehk:0941)CHL, the nation's largest telecommunications carrier with a cellphone user base of 687.955 million as of July 31, 2012 and a daily profit of over CNY 300 million, has not yet made any big action in the industry. If it will, that will reshuffle the industry absolutely.
There is a Swahili saying: "When two elephants fight, the grass suffers; and, when the same two elephants make love, the grass also suffers." The tech industry is filled with not only enthusiasm but also life-or-death battles. A single is easy to be eaten by a group, and a weak one is beaten by a strong one in the long run, because the world has been always running on the jungle law.
(USD 1 = CNY 6.22)
Source: www.sinocast.com (November 15, 2012)
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