Internet & Tech

Happy anniversary

Tencent’s WeChat app just got more formidable

^

Pony Ma takes on Apple

“An iPod, a phone and an internet communicator… Are you getting it? These are not three separate devices. This is one device.”

So said Steve Jobs as he unveiled the first iPhone on January 9, 2007. Although it wasn’t the first gadget to combine an MP3 player with a phone, most view it as the pioneer in the smartphone field.

A decade after the iPhone launched, WeChat took advantage of that anniversary to make a potentially game-changing move of its own. On Monday, it launched a feature called “Mini Programs”, which allows users to access other apps without downloading them or leaving the WeChat ecosystem.

The Mini Program strategy has been designed to build on the spectacular success of WeChat, which is China’s most used app for iOS and Android. Tencent said in December the app has 768 million daily users.

According to the Financial Times, WeChat’s parent company Tencent has said that the date of the Mini Programs launch was chosen in tribute to Apple’s achievements and Tencent boss Pony Ma said that Apple was consulted during the software’s development, and that it had offered guidelines and advice.

But being so dominant in its home market makes WeChat a clear competitive threat to Apple, especially in pursuing the more affluent consumers more willing to spend on iOs apps. There is thus clear a rivalry between the two providers. Ma says the service is called Mini Programs because Apple won’t allow Tencent to use the term “app” and Apple also forbids iOS apps from hosting their own in-house “app stores”. This is partially why Mini Programs aren’t being downloaded but opened by scanning QR codes or by linking to a company’s official account.

That said, WeChat’s Mini Programs won’t offer mobile games, which account for the majority of the Shenzhen firm’s income. The latest offering Honor of Kings boosted third quarter revenues 87% year-on-year, Tech Crunch reports, and outstripped Pokemon Go as the year’s most-played game globally. But high performance games like these require the full functionality of an app to be effective. The real target of Mini Programs is to provide an alternative to apps that are only used for short periods, such as O2O food delivery services.

In this respect Mini Programs are more of a strategic move against Tencent’s main domestic rival Alibaba and they will add to Jack Ma’s concerns about WeChat’s dominance in social media. Some fans say they can get through an entire day using nothing but WeChat to communicate, as well as book taxis and cinema tickets, order food and so forth.

Alibaba’s fears are well-founded. When someone opens a Mini Program that provides a paid-for service, such as food delivery, they are directed to finalise payment with WeChat Wallet. If a customer uses the service’s standalone iOs or Android app there would be options to pay through AliPay as well. So Mini Programs looks like it has been designed to ringfence customers from Alipay’s payment services.

Outside China this strategy of trying to capture customers will have its limitations. While both Alibaba and Tencent are trying to expand in Asia, Tencent has come up against greater resistance. Its primary advantage in China is its messaging service and overseas rivals such as Facebook are often entrenched. Nor is Alibaba trying to establish total control of the digital experience in quite the same way as its rival. In Thailand, which Sohu describes as a springboard for Chinese tech companies in search of new markets, it has signed up with a Thai business consortium to expand the “cashless economy” and develop the e-commerce landscape in general.

Tencent’s Thai strategy has been less straightforward: it has created a new corporate identity. In 2010 it invested $10.5 million in Sanook, the largest web portal in terms of daily users, which has several other offerings, including music-streaming service Joox. Last month it took full control and changed the company’s name to Tencent (Thailand) and it has just signed up with Thai digital content server, Ookbee, to launch a joint venture which hosts user-generated content. Tech blogger Ge Jia told Caixin Weekly: “Tencent’s overseas advantage is not instant messaging. Its strength lies as an interactive entertainment company, and a portal that also has music and gaming. That will be a simple way to get into Thailand.”


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.