BEIJING, April 16 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong, recently made a comparative analyses on China's IM market, and concluded that Tencent no longer has notable competitive advantages among its competitors: China Mobile, China Unicom, MSN and PICA.
Tencent's domination in China's IM market is a fact known to all. Its market share, user size and revenue are unrivalled by other competitors. However, Tencent's achievement stems mostly from Internet-based applications. In the three IM market segments, Tencent's leading position in Internet IM is beyond doubt. In the enterprise IM field, Tencent also takes the lead. But in the more promising mobile IM market, Tencent no longer had notable competitive advantages.
Tencent started mobile applications earlier. Currently, it has attracted a large number of users. Its cooperation with operators has also deepened. As early as in August 2000, Tencent opened wireless value-added services. Currently, Mobile QQ has over 6 million users. Cooperation with China Mobile has led to a fast growth in Tencent's wireless value-added services, with great achievements scored. In reality, with rich and detailed market description data, CCID Consulting indicates that Tencent's development in the mobile IM field is far behind its growth in the Internet IM field. In the mobile IM market, China Mobile and China Unicom have successively introduced "Fetion" and "Chao Xin" in the hope of making use of their resource advantages as operators to take up the market. MSN has started to step up its efforts in the field, while PICA has also attracted a considerable number of users through many years of efforts. By comparison, Tencent reacted slower than its competitors.
The entry thresholds to the mobile IM market is rather high. Only 5 services providers now have competitive abilities: China Mobile, China Unicom, Tencent, MSN and PICA. Tencent's current mobile IM services include 2 products. One is Mobile QQ, which has long taken ship and brought rich returns to Tencent. But in terms of its technology, Mobile QQ uses SMS channels to operate. It does not belong to mobile Internet services offered through G Network or C Netwirk. Because the fee rate of SMS channels is rather high, they have gradually lost price competitiveness. In 2007, Tencent introduced truly mobile Internet-based mobile phone QQ products.
As for user positioning, Tencent's products project a strong entertainment image, developed over the years. Both mobile phone QQ and Mobile QQ have less appeal to business user groups. Mobile phone QQ has yet to have a unique user positioning. It is only committed to transferring all Mobile QQ users to their own hand. "Fetion" positions its target customers at fashion-seekers and business user groups, while "Chao Xin" is more oriented towards young users but still gives concurrent attention to fashion-seekers. Mobile MSN has inherited MSN's previous features and pays more attention to business user groups. Consequently, there is a greater degree of overlapping in user positioning between Mobile MSN and "Fetion". Competition between the two will gradually emerge. PICA has a rather balanced user positioning but is more leaned towards student and fashion-seekers. Fashion-seekers will be the main target user groups in the future mobile IM market. Meanwhile, most service providers also take business users as their long-term target, because their demand and consumption power is more stable.
As for user numbers, PICA has saw its users grow to 7 million strong through several years of quiet work. This makes it a rising star in the mobile IM market in the current stage. Fetion, Chao Xin and Mobile Phone QQ have yet to accumulate a big number of users due to their short history. Though Mobile MSN has been introduced for some time, it nevertheless has yet to make a real impact. The above 4 service providers have a total number of some 1 million users.
As for pricing, PICA is more competitive compared with Tencent. Tencent has priced its Mobile QQ for 5-10 Yuan/month. Mobile Phone QQ is still in a period of free trial, while Mobile MSN has a monthly all-inclusive fee of 10 Yuan. Fetion and Chao Xin are expected to price for 5/month Yuan. Only PICA has long offered free services.
In terms of supporting networks, Tencent renewed its contract with China Mobile for 6 months at the end of the 2006. If it is still very difficult to judge the result of Mobile QQ in June 2007, but there can only be two possibilities. One is that Tencent will continue to operate the services but gets a smaller share of its profits; the other is that China Mobile will terminate its cooperation with Tencent. In either case, Tencent will suffer heavy losses.
As for advantages, Tencent has comprehensive technological, funds and user advantages, but not outstanding in terms of each of them. Technically, PICA has taken the lead, while MSN has a more rational user structure. As for financial strength, Tencent is bound to fall behind operators. Moreover, the right of discourse in the mobile IM market is fully controlled in the hands of the 2 major operators China Mobile and China Unicom. In all its moves, Tencent will have to see what these two operators allow it to do. This practically restricts Tencent'e free development in the market.
Fetion Chao Xin Mobile Mobile Mobile PICA
MSN Phone QQ QQ
Student,
User Fashion- Young & Student Fashion-
Position- Seeking & Fashion- Business Mobile & Young Seeking
ing Business Seeking Users QQ Users Users and
Users Users Business
Users
User
Numbers 1 million 1 million 1 million 1 million 6 million 7 million
Price 5 Yuan/ 5 Yuan/ 10 Yuan/ 5 Yuan/ 5-10 Yuan free
month month month month /month
Supporting G Network C Network G Network G Network SMS G Network
Network channel
Policy Policy Tencent's Experien-
Advantages orientat- orientat- High-end overall ces and
ion and ion and user resources techno-
resources resources groups logy
To sum up, insufficient inputs over the years have resulted in Tencent's slow development in its mobile IM businesses. The company has kept its user positioning, services model and price strategy unchanged. This has directly resulted in a drop in its competitiveness in the mobile IM market.
To change its current situation in the market, Tencent should firstly solve the following 3 problems:
-- Fully understand mobile users' demand and fast position target users;
-- Improve current user structure and develop high-end users;
-- Strengthen technology R&D, fully cooperate with mobile phone makers
and provide client products that support all kinds of mobile phone.
In the next year, the development trend of the mobile IM market will be one of more cooperation than competitions. CCID expects interesting developments in the market as more new technology and products appear. As for the current market pattern, the existing 5 services providers have different product positioning. Their advantages also keep one another at bay. This shows that services providers will have sufficient opportunities to expand their market shares, which is more helpful for deepening their cooperation. For Tencent, this is a critical period to put together its strength and catch up with the others vigorously, or choose to fall behind the mobile IM market.
About CCID Consulting
CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.
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