Mobilemonday Global Summit KL Bruno Bensaid 20080519

Innovation in the China Mobile Industry MobileMonday Global Summit 2008 – Kuala Lumpur May 19, 2008 Bruno Bensaid MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 1 Bruno Bensaid 1

My profile • Established in China since 1997. • VP Business Development for Ventech (China), VC fund focusing on China TMT companies. 100% sub of Paris-based Ventech, French venture fund focusing on TMT and biotech. Ventech was elected best VC of the year (2007) • Founder of Mobilemonday in shanghai (2006). Running 150-people events monthly covering all angles of the industry. • Launched and managed Wireless businesses in Shanghai from 2002-2006 (In- Fusio, Faith Inc, Freever, Open-Plug), consulted to European Telecom operators • Worked with Cisco Systems @ APAC HQ in Singapore (1999-2002) • Reachable on linkedin, msn, skype, twitter, facebook and….phone! MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 2 Bruno Bensaid

What’s New? Telco reorganization, 3G, Mobile TV… MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 3 Bruno Bensaid 3

China Telecom Industry to Restructure • Emergence of 3 national champions, with fixed and mobile capabilities (Government-led reorganization). To be confirmed: • China Railcom to be merged into China Mobile • China Netcom (fixed line operator) to be merged with China Unicom (GSM network) • Unicom's CDMA business to be merged with China Telecom (largest fixed operator) • TD-SCDMA (China 3G home grown standard) launched with at least one operator (China Mobile). Other standards (WCDMA and/or CDMA2000) will likely co-exist too. MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 4 Bruno Bensaid

3G finally coming, but the ecosystem is weak • Large scale commercial trial of home-grown technology TD- SCDMA is currently conducted by China Mobile in eight major cities, including Beijing, Shanghai and Guangzhou. • China Mobile to provide 20,000 trial users with handsets and data cards free of charge. 40,000 handsets to be rolled out to paid customers soon. • Yet, the ecosystem is not healthy. Commit, a TD-SCDMA design house invested by Nokia, TI, LG (etc) went bankrupt (May 2008). Government backing to TD-SCDMA is weak. • Meanwhile, Edge deployed by China Mobile in tier-1 cities, CDMA1X (Unicom) deployed in key provinces. LTE trialed. MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 5 Bruno Bensaid

Mobile TV standard Also given a Thumbs Up • DMB-T and CMMB main standards adopted by SARFT (State Administration of Radio, Film and Television) for mobile TV. • 6 mobile TV licenses - SMG, CCTV, Beijing TV, Guangdong media group, Renmin Guangbo Diantai, China Radio Int’l. • CMMB used for mobile phones and data connected devices, with interaction and billing. DMB-T to be used on mobile display terminals (transportation) without need for interaction. • CMMB trialed in Beijing, Shanghai & Shenzhen. 90% of Beijing covered, 20 channels offered. Devices from Lenovo, ZTE, Innofidei etc shipping. SMG launching dongles in Shanghai. MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 6 Bruno Bensaid

Market Update China MVAS growth fueled by commoditized services MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 7 Bruno Bensaid 7

Mobile Subscribers growth only getting stronger • 575 Mil Mobile Subscribers (March 2008). +9.4 Mil new mobile subscribers in March. • Net loss of 1.4 Mil subscribers of fixed operators (326 Mil). • Mobile penetration ~ 45% • ~ 60 Bil SMS sent per month (+29% YoY) • 210 Mil Internet subscribers (end 2007), ~ +6 Mil new suscribers / month MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 8 Bruno Bensaid

And so is MVAS growth Wireless value-added services accounted for 25.7% of China Mobile's total income in 2007, with ringback tones, WAP and MMS services all continuing to grow. * Source China Mobile MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 9 Bruno Bensaid

But Innovation does not drive Growth, Mature Services Do • Mature, commoditized services are driving growth, fueled by operators’ walled garden strategies. • The Most Acclaimed applications and services are not the most innovative: IM, Digital Newspaper, short novels/ebooks and Entertainment MVAS dominate (music, logos/pictures, small videos) • Operator walled garden strategy successful. End 2007, China Mobile had 12.81 mln active Fetion (IM) users, 23.55 mln paid mobile newspaper subscribers, and 34.56 mln Wireless Music Club VIP members. MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 10 Bruno Bensaid

2007 Most acclaimed Mobile Applications • 由《通信产业报》主办的“2007中国手机客户端软件TOP50评选”。Out of 50, the top 20 cover: • 1.手机QQ IM Entertainment • 2.掌上书院 Mobile ebooks • 3.PICA IM • 4.PingCo IM Micro-Blogging • 5.ucweb优视浏览 Mail / browsing • 6.百阅 Mobile ebooks • 7.飞信 IM • 8.空中-Opera2.0 Browsing • 9.手机MSN IM • 10.百灵鸟音乐客户端 wap platform • 11.手机大头 IM Entertainment Browsing • 12.掌讯通 Mobile ebooks Entertainment • 13.掌媒 Mobile ebooks • 14.维信 Mobile Widgets • 15.胖葫芦 Mobile Widgets • 16.网秦手机杀毒 Anti-virus • 17.凤凰移动台 Entertainment • 18.MM狂下载 Entertainment • 19.V8书客 Mobile ebooks • 20.贝多 IM MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 11 Bruno Bensaid

Yet, too little innovation could lead to failure • By end 2007, Fetion (China Mobile IM service) had over 73 million registered users with about 67 million addition in 2007, but only 12.8 million are active users. • Despite solid growth, real usage is actually down (10% only of H2’2007 additions are really active, compared with 30% in H1’2007). • Reflects the limited growth potential of Fetion, which most of users use for free SMS communication between PC and mobile phone (compared with Tencent’s QQ complete suite of services using IM as a pillar). MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 12 Bruno Bensaid

Mobile Innovators in China Making the Most of 2.5G networks MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 13 Bruno Bensaid 13

Mobile 2.0 in China is Late but Youth are driving usage • Widsets (Mobile Widgets) reached “only” 3 mil users by end 2007, in a ~ 50-60 Mil Active Mobile Internet users population (the real mobile internet potential population is 3x higher). Hard to call it a success! • But outlook is positive. Recent research indicate Youth will drive mobile 2.0 usage: • 31% Youth used mobile phones to access the Internet in the past six months (40.2% with College students, the highest usage among all populations surveyed) Source: CNNIC April 2008 MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 14 Bruno Bensaid

Barriers to Innovation - I Political Reasons • Payment mechanisms with operators are mature and varied (SMS, WAP etc), but made difficult to implement if Service Providers / Content Providers have not reached a “critical mass”. • Walled gardens is a real threat. Once popular, a service can virtually be monopolized and run by China Mobile and kick early entrant out. • Late entrants Innovators clearly discouraged to operate independently or face heavy losses in the first years (leveraging too much on ad rather than paid services) MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 15 Bruno Bensaid

Barriers to Innovation - II Technical and Marketing Reasons • slow speeds are slowing down innovation and adoption (though the infrastructure is massively upgraded to Edge or CDMA 1x, and TD-SCDMA now trialed on large scale) • Flat rates or quasi-flat rates are back, but not communicated well enough. Data packages are confusing • No or little service is bundled with data packages (except overly expensive Blackberry data package and service, a possible failure) MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 16 Bruno Bensaid

Barriers to Innovation - III Cultural Reasons • Competitors don’t cooperate in China! - Most popular web and mobile platforms are still proprietary (“silo mentality”). When API is open, it is limited in scope. • Few platforms enable mashups and interoperability. • Older netizens generation is a BBS generation (anonymous). Moving towards SNS (public) is slow, but Younger generation, self-conscious and open, will drive adoption of new services and social networks. MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 17 Bruno Bensaid

Established Innovators • Tencent still leading the train of innovation, leveraging on their integrated suit of free and paid services, across mobile and online platforms (and in process of opening their QQ SDK). • Baidu, online search leader (80% market share) successfully launched its wap suit of services and is following with tons online/mobile (just launched an IM client, Baidu Hi). Expect strong content innovation in 2008-2009, as search is the entry point to other services MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 18 Bruno Bensaid

2007 Adopted Innovations • Mobile Advertising established in the landscape (but no real expectation on revenue until 2010). • IM feature a must, in proprietary format or open source. • VoIP calls, call-back and push-to-talk (Vivame, Bedo) • Click-to-call very popular (after search results or banner based, like with MadHouse) • Photo/video sharing and geo-tagging (more recent) • Content compression widely adopted • Mobile Clients, like GGlive (3G.cn) enable rich content streaming and TV-like experience. • Free content with advertising (Datuu, 5MM etc). MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 19 Bruno Bensaid

2008 Innovation Trends • For SNS, location-aware features will be key (POI, discovery of friends in the vicinity etc), using GPS or cell ID (Bedo, Gypsii, Mimo etc). • Information organized into CHANNELS: o Customized Search, pre-arranged or pre-fetched search content (Datuu, Roboo, Cgogo etc). o 3rd generation mobile browsers (client-server) enabling content categorization and behavioral features, helping prioritize content downloaded (Dratek, Datuu etc). • M-commerce should emerge (NFC payment trial in Shanghai, or wap-based m-payment, like with 3G.cn), But mobile widgets and RSS still niche (Panghulu…) MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 20 Bruno Bensaid

Tencent Undisputed MVAS leader MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 21 Bruno Bensaid 21

Tencent’s IM “QQ” is China’s youth “email” and much more • Integrated offer of service leveraging on a rich IM client deployed over 300 mil accounts (84% market share). Courtesy MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 22 Bruno Bensaid

Tencent’s QQ Labs at the cornerstone of innovation • In-house R&D (QQ labs) enabling diversification into casual games, CtoC , In large cities, such as Shanghai, Beijing, Guangzhou, Shenzhen, Entreprise IM, Blogs, wap portal, bookmarks, video download, online and penetration has reached over 100%. Subscribers growth is now mobile ad serving etc. occurring in 2-tier and 3-tier cities as well as rural townships. Courtesy MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 23 Courtesy of Bruno Bensaid

Bedo.cn Pure-IP based location aware SNS MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 24 Bruno Bensaid 24

The Essence of Mobile 2.0 Chinese Innovation bedo.cn is a location based mobile SNS providing the following IP-based services: • Communication o Mobile instant messaging o Push to talk Location • Content o Mobile blog/spaces o Music/software sharing • Location o Local friend finder/matcher o Geo-tagged contents o Local events Communication Content o Using GPS or free cell-ID MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 25 Bruno Bensaid

Local blogs are Bedo.cn - Mobile Interface displayed as a star Click star to view the blog, which could be in Click buddy’s icon to “Radar” – Find who is nearby. text, photo, voice chat/voice talk instantly format View her latest blog Support both GPS phones and non-GPS updates, sharing phones (via Cell-ID) newest findings Find what happened around (blogs, pictures, events etc) Click to chat, or push-to-talk; One to one, or one to many; Phone to phone, or phone to PC Chat with MSN/Yahoo friends Picture sharing and geo-tagging & mobile blogs Local weather & nearby POI advertisement can be displayed automatically in the bottom area Can view the internet comments/ratings of the POI service provider MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 26 26 Bruno Bensaid

Bedo.cn - Website Interface • Find who is nearby • Roaming to any place through a nation wide map • Read local blogs, events • Post, reply & comment • Update location through the map MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 27 27 Bruno Bensaid

Bedo.cn - PC Client Interface • Desktop users can also use a PC client for multimedia instant communications with mobile users • Talk/chat/share with their mobile friends • Users can learn: o presence & distance of their buddies o coming up local events o local UGC blogs etc MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 28 28 Bruno Bensaid

Text chat, and Voice Talk! With advanced voice compression algorithm, smartphone users can chat, push-to-talk, and share pictures/videos... • Chat between Pep, MSN, and Yahoo users • Push to talk between GPRS/wifi phones, between mobile and PC (only 0.6KB/second) • One to one, or one to many MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 29 29 Bruno Bensaid

Free mobile blogs & spaces Users can enjoy free mobile blogs & spaces, content sharing etc • Picture and video sharing • Personal spaces & virtual homes in the map • RSS subscription • Music/software sharing MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 30 30 Bruno Bensaid

5th Media Mobile Idle Screen mobile content channels MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 31 Bruno Bensaid 31

A new media, sliding on idle screen Basic Slide Through Content Channel Rolling bar for 人姓名 TrackID 可帮助 News, Product Tips Click Through MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 32 Bruno Bensaid

Well-defined Media Rich channels, updated automat. or manually Sports Sports Consumers Consumers Life Style Life Style Fashions Fashions Music Music Travel Travel Home Home Food Food MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 33 Bruno Bensaid

User Defined Channels, fed with partners content Arts Arts Games Games Cars Cars Night Life Night Life Movies Movies Men Men Women Women Finance Finance MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 34 Bruno Bensaid

Free Content Download, Ticket Selling, Promotional activities Reservation Content/ad to be shown Ticketing “ 爱的契机 ” 席琳狄翁 2008世界巡回演唱会 1-click to call... 日期:2008.4 场馆:上海体育场、北 1-click 1-click to call... 京工人体育场票价(RMB): 300, 500, to call 800, 1000, 2000, 3000 立即预定 Music Games NO1 胡彦斌 - 男人KTV 哆啦A梦大雄的恐龙官铃音下载整曲下载方授权手游小恐龙回 NO2 韩雪 - 你不会知道到白垩纪的日本,途中铃音下载整曲下载经历的一系列精彩故 NO3尚雯婕 -在梵高的星空事!画面精美且易上手、下多种道具完美结合，铃音下载整曲下载经典再现电影故事情 NO4王力宏 - 改变自己节。铃音下载整曲下载马上体验哆啦A梦神奇 NO5金莎 - 不可思议的百宝袋铃音下载整曲下载 MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 35 Bruno Bensaid

Roboo New Generation Mobile Search Service MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 36 Bruno Bensaid 36

“UGC”-based and Channel-based Search 12 Mobile Search Channels ringtones; songs/music; wallpapers/screensavers; pictures; video; games; software; hardware; pages; eBooks; news; stocks; weather/local life • Personalized Ad: display proper ads by matching query with contents, plus phone characteristics, city, popularity, user profiles (gender, interests…). • Innovative: user participation (input comments on search results, upload contents onto search engine!!!) “human-centered” PopRank algorithm: • user modeling, user comments / scoring • matching of user queries with user profiles / phone characteristics • content popularity MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 37 Bruno Bensaid

Roboo Search Channels Overview MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 38 Bruno Bensaid

Datuu Fully Automated Suite of Services MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 39 Bruno Bensaid 39

New Generation Browsing and Search • Choice of 200 most popular and up-to-date websites (appearing in browser and search results) • Content Filtration - browser and search engine remove unwanted material and separates text from pictures into two individual pages MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 40 Bruno Bensaid

Search-to-listen mobile music download • Integrated search, stream/download and play-the-track user experience. Datuu acting as a proxy, not storing songs • Songs ranked by popularity. • High compression (from 3Mb to ~500Kb) • Creation of playlists on the fly MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 41 Bruno Bensaid

MTI Location-based hardware solutions MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 42 Bruno Bensaid 42

Healtcare and safety location-based Services • MTI has developed an LBS platform and a cell Capture® technology and algorithm to catch roaming position without GPS and Carriers support. It has been used in the Stand- alone device, Kare® and Smartcard®, to support a LBS service in positions of vehicle, kid, senior, field-workers, valuable assets, even pets…All devices are voice enabled • MTI cooperates with local carriers for co-marketing Kare® and Smartman®, billing monthly fees Smartman ® device MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 43 Bruno Bensaid

Kare®: Kid Tracking device Dad home Localization of the child Regular alerts to at any time based on Cell parents’ phone ID Hands free speaker Mic. Localization Assistance Emergency Key (calls pre- 24x7 Customer service Localization reports sent emergency number) sent by the child MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 44 Bruno Bensaid

Kare II®: Device for the elderly 免提喇叭多功能滚轮收音机服务菜单 WAP/Internet 一按无忧键子女家庭电源开关紧急求助拔销 MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 45 Bruno Bensaid

3G.cn Rich Media Mobile Portal MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 46 Bruno Bensaid 46

Mobile Portal with Rich Media Client • No.1 wireless portal in China, +50 million registered users, and 8 mil daily users. 全方位的图文资 • Information in text and picture, 讯，超过50个频道 from +50 channels 分类专业提供广泛深度的互动娱 • GGLive: Live TV client (8 mil 乐，包括社区、交友、游戏、3G秀等 downloads, 800k daily users) 高品质的影音享 • GGMusic: Music streaming rich 受，包括电视、音乐、电影、体育直 client, with search and playlist 播的流媒体提供 management. MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 47 Bruno Bensaid

Most Innovative Rich Clients: GGLive and GGMusic • Services include: live broadcasting, Movie, Video-on- demand and interactive entertainment • GGLive also offers GG radio, live radio streaming • GGMusic: Online music Streaming, with automatic search and download of lyrics of played song MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 48 Bruno Bensaid

Tokiva MVNO for Global Travellers MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 49 Bruno Bensaid 49

An inexpensive suite of communication services Inexpensive phone calls around the world, using call back. Also integrated with IM, phone book, SMS. The service was launched in September 2007, with over 700k registered users as of 01/2008. MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 50 Bruno Bensaid

Patent Pending Technology Data Channel USPTO Provisional Patent USPTO Provisional Patent Voice Channel #60/808560, 60/990996 #60/808560, 60/990996 Internet VoIP Gateway GPRS Network GPRS Network Tokiva Toronto Mobile Platform Shanghai Web / SNS Voice Messaging Sharing Billing Service Service Service Service Service MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 51 Bruno Bensaid

Pang Hu Lu Mobile RSS and Widgets MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 52 Bruno Bensaid 52

A simple syndication tool, competing with Widsets Panghulu enables users to subscribe for any digital content and play it on the mobile phone. Free Internet Resources RSS Feeds Other Information Sites Online Services Automatic Conversion Gateway BBS SNS Multimedia Compression Search Technology Ticket Booking Handset Adaptation … Technology Traditional Media Publishing CMS Broadcast MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 53 Bruno Bensaid

Business model: ad + revenue sharing Placing advertisements amidst free contents Sharing premium content subscription fee with CPs Sharing advertising revenue with online service providers and CPs MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 54 Bruno Bensaid

Thank You! Bruno Bensaid - 布鲁诺 - email/msn: bensaid@fastmail.fm MobileMonday Global Summit 2008 – Kuala Lumpur – May 19, 2008 55 Bruno Bensaid 55

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Mobilemonday Global Summit KL Bruno Bensaid 20080519

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Mobilemonday Global Summit KL Bruno Bensaid 20080519 — Presentation Transcript