chinese ecosystems - relayto/ · ecosystems appear almost completely dominant (slide 28 in deck,...
Post on 28-Jul-2020
3 Views
Preview:
TRANSCRIPT
Dr. Richard Windsor PhD CFARadio Free Mobile
Fixed: +1 415 830 6032Fixed: +44 203 239 9904Mobile: +971 56 1142 482Skype: rhswindsorTwitter: @RadioFreeMobile
richard@radiofreemobile.comwww.radiofreemobile.comTo entertain as well as inform
Chinese Ecosystems
September 12th , 2016BATmen
To entertain as well as inform
Digital Life
Source: www.radiofreemobile.com
Radio Free Mobile China Digital Life Pies - 1
Usage between smartphones and tablets is very different.
2015A, % time spent
3
Smartphone Q1 2016A Tablet Q1 2016A
An ecosystem needs more services in China than in developed markets to establish a credible position as an ecosystem provider
Radio Free Mobile, e-marketer, QuestMobile, WBR Research. DataEye, China Internet Watch, Flurry, iResearch
Browsing10%Search
8%Banking and Payments
5%
social networking
20%
Gaming10%
Media consumption
14%
Instant messaging
16%
shopping14%
Microblogging1%Mapping
2%
Browsing12%
Search4%social
networking4%
Gaming20%
Media consumption
35%
e-book reading
15%Instant
messaging10%
Source: www.radiofreemobile.com
Radio Free Mobile China Digital Life Pie - 2Q1 16A, %
4
Smartphone vs. tablets % total time used Weighted average Digital Life Pie
Usage in China is more balanced with the top 2 services making up 35% of usage compared to 51% in
developed markets
Browsing10%Search
8%
Banking and Payments
4%
social networking
18%
Gaming11%
Media consumption
17%
e-book reading
2%
Instant messaging
15%
shopping12%
Microblogging1%
Mapping2%
87%
13%
Smartphone Usage Tablet Usage
Smartphone Usage
Tablet Usage
Tablets are used less as most connect over Wi-Fi with
fixed backhaul resulting in a worse experience than
cellular
Top two services in developed markets
are Social Networking and
Gaming
Radio Free Mobile, e-marketer, QuestMobile, WBR Research. DataEye, China Internet Watch, Flurry, iResearch
Source: www.radiofreemobile.com
77%
45%
53%
44%
30%
Tencent Alibaba Baidu Xiaomi China Mobile
Coverage of Digital Life by each Chinese ecosystem2015A, % Digital Life pie covered.
5
RFM sees Alibaba, and Baidu investing heavily to catch up
with Tencent
When usage is taken into account
the three big ecosystems appear almost completely
dominant (Slide 28 in deck, fig. 14 in
note)
Tencent has a clear lead but has been less effective at
monetisation than Baidu.
Xiaomi has real problems as it lacks the
ability to invest to increase its coverage
Radio Free Mobile, e-marketer, QuestMobile, WBR Research. DataEye, China Internet Watch, Flurry, iResearch, Company data
To entertain as well as inform
7 Laws of Robotics
To entertain as well as inform
Laws 1 - 4
How good is it today?
Source: www.radiofreemobile.com
Laws of Robotics 1-4 for the Chinese ecosystems
8
= 5
= 1
= 4
= 3
= 2
Source: Radio Free Mobile
An Ecosystem must provide easy and fun access to
digital life
1 An ecosystem must capture
traffic on its own servers
3An Ecosystem must be simple
and easy to set up and use
2 An ecosystem must offer access
to a good range of third party apps
4
Only Xiaomi
has really developed a unique UX across services….
…that is ready to go out of the box
Still experimenting
it seems
1
3
4
Source: www.radiofreemobile.com
Laws of Robotics 5-7 for the top 6 ecosystems
9
An Ecosystem must allow Digital
Life services to share data
5An Ecosystem’s
user data must be integrated
6 An ecosystem must have
consistent device software
7
Source: Radio Free Mobile
= 5
= 1
= 4
= 3
= 2
Only Baidu shows any
understanding of the
importance of sharing and integration
Tencent achieves some data sharing
using Weixin / Wechat as its
platform… but shows no sign of integrating QQ
or anything else.
Source: www.radiofreemobile.com
Conclusions from 7 Laws of Robotics Analysis
10
Xiaomi Xiaomi is the most advanced despite being the weakest player. Could be acquired by one of the BATmen.
Baidu The only one that really understands the ecosystem beyond Digital Life coverage.
China Mobile Least developed despite being the biggest and having a billing relationship with 68% of users.
Software Consistency This is huge problem for everyone based on Android
Source: Radio Free Mobile
To entertain as well as inform
The market in China
China plays to its own rules
Source: www.radiofreemobile.com
How the Chinese market differs
12
Monetisation The same three methods apply but monetization from O2O is much greater.
Privacy No one seems to care about privacy
Default The power of default has yet to emerge in China
Usage Everybody uses everything
Access & Control The quality of fixed and mobile access is the inverse of developed markets. Internet is controlled
Source: Radio Free Mobile
Source: www.radiofreemobile.com
Fixed Internet vs Mobile Internet in China & USA
Access : Mobile is the primary choice for users in China, in contrast to USA
Q1 2016A, Users (m), MBPS, %, Milliseconds (ms)
% connections over 4MBPS
Mobile broadband in China has greater penetration, is faster on average with lower latency than fixed. Opposite to USA.
Average speed MBPS Average page load time ms
Akamai, Radio Free Mobile
41%
63%
Fixed Internet Mobile Internet
83%
35%
Fixed Internet Mobile Internet
4.1
4.7
Fixed Internet Mobile Internet
14.2
4.8
Fixed Internet Mobile Internet
2661
2426
Fixed Internet Mobile Internet
2564
3559
Fixed Internet Mobile Internet
Source: www.radiofreemobile.com
109
263
508
659739
812864
8%
19%
37%
48%54%
60%63%
2011A 2012A 2013A 2014A 2015A 2016E 2017E
Ecosystem users (m) Penetration
Number and penetration of ecosystem users in China
Control: The Golden Shield Project has allowed the Chinese ecosystems to emerge with no foreign competition
2011A – 2017E, Users (m), Penetration population (%)
14
The market for the mobile ecosystem has grown up with Chinese Digital Life offerings only.
There is no sign of the Golden Shield Project
coming to an end.
This is very likely to ensure that China
remains a huge market for Chinese Digital Life
services provided to Chinese users by
Chinese companies
Source: CNNIC, Radio Free Mobile
Source: www.radiofreemobile.com
Percentage China ecosystem users with each player
Everyone uses everything
2012A-2018E, % of total ecosystem users in China
15
22%27%
40%
53%57%
61%65%
60%
69% 71%
85% 86% 88% 90%91%
81% 82%89% 89% 90% 91%
2012A 2013A 2014A 2015A 2016E 2017E 2018E
Alibaba Users Tencent Users (China only) Baidu Users
Almost all users in China are members of Tencent and Baidu’s ecosystems and over half are also members of Alibaba’s.
Source: Company Data, Radio Free Mobile
Source: www.radiofreemobile.com
Browsing10%Search
8%
Banking and Payments
4%
social networking
18%
Gaming11%
Media consumption
17%
e-book reading2%
Instant messaging
15%
shopping12%
Microblogging1%Mapping
2%
The Digital Life of most Chinese users
One of the big three ecosystems dominate almost every single segment of Digital Life.
Q1 2016A
16
Baidu, Tencent and Alibaba are already
in a dominant position.
MusicVideo Video
Radio Free Mobile, e-marketer, QuestMobile, WBR Research. DataEye, China Internet Watch, Flurry, iResearch, Company data
Source: www.radiofreemobile.com
70%
48%
39%
27%
UC browser (Alibaba) QQ browser (Tencent) Baidu browser Qihoo 360 browser
Penetration of mobile browsers in China
Default lacks power.
Q3 15A, % total smartphone users
17
Despite being included with the device, the stock Android browser
has very low, if any share in the
Chinese market
Users have learned to pick and choose the services that
they want instead of being spoon-fed them by default.
Chinese smartphone users routinely use more than one browser
Source: China Internet Watch,
A good example of how default is
currently irrelevant in China
Source: www.radiofreemobile.com
20%
16%
15%
13%
8% 5%
6%
3%
4%
10%
Market share of App Stores in China Q1 2016A
18
The landscape is very fragmented
creating a frustrating
experience for developers.
The top 4 reach 64% of users
owned by Tencent, Qihoo, Xiaomi and
Baidu.
This is a weak spot for Alibaba
Talking Data, newzoo.com, Radio Free Mobile
Present but questionable
whether it functions
To entertain as well as inform
Market forecasts
A greatly slowing outlook
Source: www.radiofreemobile.com
353
430 439 454 46274%
22%
2% 3% 2%
2013A 2014A 2015A 2016E 2017E
Smartphone shipments (m) Growth
17.2
21.519.1 18.1 17.7
67%
25%
-11%-5% -2%
2013A 2014A 2015A 2016E 2017E
Tablet shipments (m) Growth
508
659739
812864
93%
30%
12% 10% 6%2013A 2014A 2015A 2016E 2017E
Ecosystem users (m) Growth
China Smartphone, Tablet and Ecosystem forecasts
Smartphone growth is rapidly slowing meaning that one should look to the ecosystems for growth
2013A-2017E, Units (m), % growth YoY
20
LOW / NO GROWTH
MID LEVELGROWTH
Baidu, Tencent, Alibaba exposed to
users will fare better than Apple, Xiaomi and other handset
makers
Radio Free Mobile, Counterpoint Research
To entertain as well as inform
Ecosystem Status Quo.
21
Source: www.radiofreemobile.com
Gated Community concept in Chinese ecosystems
Users can no mix and match Digital Life services from different ecosystems…
China Digital Life Pie, 2015A, %
22
Ecosystem A
Ecosystem B
In China, users have always mixed and matched Digital Life services
The degree to which the user mixes and matches ecosystems
will have an impact on the overall brand strength and monetisation opportunity.
1) The more services of an ecosystem that the user
chooses to use, the greater the potential revenue
opportunity from that the user for the ecosystem.
2) The more of the services that are used, the greater the stickiness and brand
strength of that ecosystem
Source: Radio Free Mobile
Source: www.radiofreemobile.com
Browsing10%Search
8%
Banking and Payments
4%
social networking
18%
Gaming11%
Media consumption
17%
e-book reading2%
Instant messaging
15%
shopping12%
Microblogging1%
Mapping2%
The Digital Life of most Chinese users
One of the big three ecosystems dominate almost every single segment of Digital Life.
Q1 2016A
23
Baidu, Tencent and Alibaba are already
in a dominant position.
MusicVideo Video
Radio Free Mobile, e-marketer, QuestMobile, WBR Research. DataEye, China Internet Watch, Flurry, iResearch, Company data
Source: www.radiofreemobile.com
The direction the BATmen must take to grow
The degree that the user takes services from only one provider will have a non-linear impact on monetisation
24
An Ecosystem must allow Digital
Life services to share data
5
An Ecosystem’s user data must be
integrated
6
An ecosystem must offer access
to a good range of third party apps
4The better each
ecosystem meets the
criteria of Laws 4,5,&6, the less a
user will want to mix and
match Digital Life services and
the more valuable users will be to that
ecosystem
Value creation is not linear as the having the whole of the pie generates
much more value than the
sum of the parts
654
654
Source: Radio Free Mobile
RFM Laws of Robotics.
Potential for value creation / monetisation
Source: www.radiofreemobile.com
Proprietary software development options in China
Software consistency is a huge problem for everyone in China leading to proprietary solutions.
GMS
AOSP
Hardware
MIUI
AOSP
Hardware
YunOS
AOSP
Hardware
AOSP
Hardware
RFM fully expects Google to take GMS fully proprietary in 2017. Alibaba, Xiaomi and Tencent have their own software development but Baidu, and China Mobile effectively have no OS of their own. Cyanogen, Acadine, Sailfish, Tizen and others as well as acquiring Xiaomi are all options.
Source: Radio Free Mobile, Xiaomi, Cyanogen, Amazon, Google
25
Hardware
AOSP
Obscure since 2012
?
?
Source: www.radiofreemobile.com
% China Digital Life Pie dominated by each ecosystemQ1 2016, Sum of Digital Life segments where dominant, %
26
45.0%
34.5%
18.5%
0.0% 1.0%
Tencent Alibaba Baidu Xiaomi China Mobile
Tencent is by far the most advanced
in creating a thriving ecosystem
when its service offering is
considered.
Removing Ant Financial puts Tencent 14.5%
points clear of its next rival.
The battle for China Mobile and Xiaomi
seems already to be lost
The reasons for Xiaomi’s problems start become
very clear
is the missing 1%
Incudes Ant Financial which Alibaba does not own but receives 37.5% of profits. 30.5% if this is removed
Radio Free Mobile, e-marketer, QuestMobile, WBR Research. DataEye, China Internet Watch, Flurry, iResearch, Company data
Source: www.radiofreemobile.com
China Ecosystem users by provider
The big ecosystems already have the majority of all users on board. Now they must fight for engagement.
2015A,
The main contenders already have the users on board. Now they have to fight it out between them.
The mid-tier100m+ active users
- sustainable
The Top tier300m+ active users - success
Less than 100m- losers
Ecos
yste
m s
ize
27Radio Free Mobile
Very undeveloped
?
Source: www.radiofreemobile.com 28
To entertain as well as inform
Disclaimer
The views and opinions expressed in this report represent the views and opinions of Radio Free Mobile. They are not the views and opinions of any third party past or present with whom the author of Radio
Free Mobile has been or is associated. Radio Free Mobile is objective and independent. Radio Free Mobile aims to entertain as well as inform and in this vein can be irreverent at times. This is the
expressive style of the author of Radio Free Mobile and should not be construed in any other manner
top related