China's dot-com giants flooding market with own smartphones
By Zhu Shenshen |
June 5, 2012, Tuesday
|
Print Edition
Print Edition
THOUGH a Facebook phone is still in the rumor stage, China's dot-com giants aren't wasting any time as they flood into the telecommunications sector with their own brands of mobile devices.A dozen or more mobile phones are on the market now sporting the names of almost all of China's top Internet firms. Baidu, Qihoo 360, Tencent (QQ), Alibaba Shanda and NetEase are among those who either have unveiled mobile devices or plan to do so soon. "The mobile Internet is an integral part of the Internet," said Zhang Yanan, Zero2IPO's analyst. "It's natural for these dot-coms to enter the stage in 2012."
Compared with traditional mobile phones, the new Internet handsets have two unique characteristics: low prices and built-in services.
They may entice more users to the mobile Internet, significantly influencing China's Internet and telecom market, industry insiders said.
"The price of Internet smartphones will drop to about 100 yuan (US$16) by the end of this year," predicted Yue Guofeng, Baidu's mobile and cloud division vice general manager. "Free smartphones will finally be ready for consumers, as soon as next year."Familiar smartphones like the iPhone, HTC and Motorola models cost at least 3,000 yuan or more, while the new phones from Baidu and Alibaba have more affordable prices of about 1,000 yuan, only a quarter of the cheapest iPhone 4.
Most Chinese consumers buy mobile phones in retail stores, not in outlets owned by telecommunication carriers. Without subsidies from carriers, the cost of smartphones has been high, forcing many entry-level users to plod along with so-called feature phones that don't have smart functions.
Baidu, in tandem with manufacturer Changhong, has unveiled a 1,000-yuan smartphone running on the Android system, which will be sold through China Unicom channels.
By the end of this year, Baidu will unveil an additional two or three handset models, also with prices below 1,000 yuan and all with Baidu tools such as mobile search, according to the country's No. 1 online search service provider.Baidu is not alone in the dot-com-to-phone vendor trend.
More competitors
Two weeks ago, Qihoo 360, China's biggest online security services provider, launched a smartphone costing 1,499 yuan. The Android model is manufactured by Huawei Technologies.
Qihoo 360 said it wants to provide users a "low-cost, high-performance" product. In future, it will launch a smartphone for students costing only 1,000 yuan, according to Qihoo 360 Chairman Zhou Hongyi.
E-commerce giant Alibaba cooperated with Tianyu to unveil its Aliphone last year for only 699 yuan. An upgraded model at an even lower price recently came on the market.
Shanda Entertainment, which provides online entertainment services from gaming to videos, will debut its Bambook phone this month.
Ding Lei, NetEase founder and chief executive, also has said his company, the country's No. 2 online game firm, is "seriously considering" entering the market.
Last but not least, Tencent, China's No. 1 dot-com firm in instant messaging and game services, has cooperated with five handset makers, including Huawei and ZTE, to launch QQ phones, which cost about 1,000 yuan each and are targeted at students.
Risk warning
Industry analysts warn of risks.
"Most Internet firms will fail in the new wave because Internet firms and telecommunications firms have different DNAs," Kaifu Lee, Google China's former president and now chairman of Innovation Works, said in his online microblog, which has 13 million followers.
Compared with traditional phone makers, Internet firms lack operational and distribution channels in phone sales, according to other analysts.
Internet firms, however, prefer their own vision of the future.
The best example of them is a start-up called Xiaomi, which launched its first smartphone equipped with popular instant message tool MiTalk last year, for 1,999 yuan each, a relatively low price at the time.
The company, founded by angel investor Lei Jun, conducts sales and promotions mainly online and has attracted a sizable number of admirers among students and digital geeks.
In May, it also launched an upgraded Xiaomi phone, which costs 1,499 yuan.
Baidu's Yue said: ''We don't worry about short-term profit. We will wait and see what's going to happen in next 12 to 18 months."
Baidu's cloud server
Baidu has established a team of more than 1,000 people in the mobile and cloud sectors. It aims to provide services that allow users to access, edit and save personal data across various devices in an online cloud server.
Baidu will share mobile search advertising income with handset makers to help them reduce costs, though it's still a very limited income stream at the moment.
Qihoo 360's foray into phones will bring it users in the short term and money in the long term, according to Morgan Stanley.
"Qihoo's mobile strategies to preload its apps on Huawei smartphones may expand its mobile user reach," the US-based investment bank said in a recent note, with a "retain overweight" recommendation.
At present, China has more than 500 million netizens. Its mobile phone user base has surpassed 1 billion, according to the Ministry of Industry and Information Technology.
Smartphones provided by Internet firms will result in affordable prices, enlarged user bases and various built-in mobile Internet services, analysts said.
In the global market, Apple and Google, which are also relative newcomers to the mobile phone segment compared with Nokia and Motorola, are changing the digital landscape. And next? Amazon and probably Facebook.
Compared with traditional mobile phones, the new Internet handsets have two unique characteristics: low prices and built-in services.
They may entice more users to the mobile Internet, significantly influencing China's Internet and telecom market, industry insiders said.
"The price of Internet smartphones will drop to about 100 yuan (US$16) by the end of this year," predicted Yue Guofeng, Baidu's mobile and cloud division vice general manager. "Free smartphones will finally be ready for consumers, as soon as next year."Familiar smartphones like the iPhone, HTC and Motorola models cost at least 3,000 yuan or more, while the new phones from Baidu and Alibaba have more affordable prices of about 1,000 yuan, only a quarter of the cheapest iPhone 4.
Most Chinese consumers buy mobile phones in retail stores, not in outlets owned by telecommunication carriers. Without subsidies from carriers, the cost of smartphones has been high, forcing many entry-level users to plod along with so-called feature phones that don't have smart functions.
Baidu, in tandem with manufacturer Changhong, has unveiled a 1,000-yuan smartphone running on the Android system, which will be sold through China Unicom channels.
By the end of this year, Baidu will unveil an additional two or three handset models, also with prices below 1,000 yuan and all with Baidu tools such as mobile search, according to the country's No. 1 online search service provider.Baidu is not alone in the dot-com-to-phone vendor trend.
More competitors
Two weeks ago, Qihoo 360, China's biggest online security services provider, launched a smartphone costing 1,499 yuan. The Android model is manufactured by Huawei Technologies.
Qihoo 360 said it wants to provide users a "low-cost, high-performance" product. In future, it will launch a smartphone for students costing only 1,000 yuan, according to Qihoo 360 Chairman Zhou Hongyi.
E-commerce giant Alibaba cooperated with Tianyu to unveil its Aliphone last year for only 699 yuan. An upgraded model at an even lower price recently came on the market.
Shanda Entertainment, which provides online entertainment services from gaming to videos, will debut its Bambook phone this month.
Ding Lei, NetEase founder and chief executive, also has said his company, the country's No. 2 online game firm, is "seriously considering" entering the market.
Last but not least, Tencent, China's No. 1 dot-com firm in instant messaging and game services, has cooperated with five handset makers, including Huawei and ZTE, to launch QQ phones, which cost about 1,000 yuan each and are targeted at students.
Risk warning
Industry analysts warn of risks.
"Most Internet firms will fail in the new wave because Internet firms and telecommunications firms have different DNAs," Kaifu Lee, Google China's former president and now chairman of Innovation Works, said in his online microblog, which has 13 million followers.
Compared with traditional phone makers, Internet firms lack operational and distribution channels in phone sales, according to other analysts.
Internet firms, however, prefer their own vision of the future.
The best example of them is a start-up called Xiaomi, which launched its first smartphone equipped with popular instant message tool MiTalk last year, for 1,999 yuan each, a relatively low price at the time.
The company, founded by angel investor Lei Jun, conducts sales and promotions mainly online and has attracted a sizable number of admirers among students and digital geeks.
In May, it also launched an upgraded Xiaomi phone, which costs 1,499 yuan.
Baidu's Yue said: ''We don't worry about short-term profit. We will wait and see what's going to happen in next 12 to 18 months."
Baidu's cloud server
Baidu has established a team of more than 1,000 people in the mobile and cloud sectors. It aims to provide services that allow users to access, edit and save personal data across various devices in an online cloud server.
Baidu will share mobile search advertising income with handset makers to help them reduce costs, though it's still a very limited income stream at the moment.
Qihoo 360's foray into phones will bring it users in the short term and money in the long term, according to Morgan Stanley.
"Qihoo's mobile strategies to preload its apps on Huawei smartphones may expand its mobile user reach," the US-based investment bank said in a recent note, with a "retain overweight" recommendation.
At present, China has more than 500 million netizens. Its mobile phone user base has surpassed 1 billion, according to the Ministry of Industry and Information Technology.
Smartphones provided by Internet firms will result in affordable prices, enlarged user bases and various built-in mobile Internet services, analysts said.
In the global market, Apple and Google, which are also relative newcomers to the mobile phone segment compared with Nokia and Motorola, are changing the digital landscape. And next? Amazon and probably Facebook.
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