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  1. 1. Voice of GMIC2011
  2. 2. INTRODUCTION About this report This report will provide a comprehensive overview of the various topics discussed at this year’s Global Mobile Internet Conference (GMIC) in Beijing. It combines material from speeches, presentations, panel discussions and also direct interviews, refined with latest market statistics and news. Summary The dramatic increase in mobile application usage in the market and the growing penetration of smartphones with GPS and augmented reality capabilities have caused a great increase in mobile services, especially location-based services for mobile marketing, search and commerce. China’s development is much harder to predict than the western ecosystems as it comes with unique demographics, user needs and handsets: feature phones will still play an important role the next years. But similar to emerging markets, China’s complex environment has a strong potential for a growth in user base and value-added services as a result. Western players have to adapt their services to fit to this ecosystem.  Social, Local and Mobile - these services drive the industry, but require relatively higher investment, with monetization coming after building a strong user base.  Mobile Marketing - will see strong growth in Asia, driven by new device types, HTML5 and the app environment.  Mobile Gaming - a main segment; 460 million users bring many opportunities, and global mobile gaming companies come to China to try their luck, which strengthens the market.  Mobile Commerce - insufficient mobile payment options and the necessity for developers to create a good mobile user experience make this a challenging market with only a few key players.
  3. 3. “ I feel blessed and excited to witness this new age of the internet. There are so many revolutionary advances in our world. Our industry is blessed for this new age. Charles Zhang CEO, SOHU“ I’m blown away that the ecosystem that America and Europe are used to is totally different here [in China]. Rolf Assev CSO, Opera“ All these kinds of conference are led by foreign, European or US companies. This conference is organized by Chinese in China, bringing Information about the local market into the world. Takeshi Natsuno i-mode inventor
  4. 4. ABOUT With over 40% attendees in C- level, the conference specializes on Intl. high-quality executive-level content local and insights from the leaders of participants mobile Internet players worldwide. appSpace GMIC GMIC was one of those Manager & others conferences where I wish I C-Level could have cloned myself Director WGA Advisory VP GMIC focuses especially on the Industry Association service & content layer of mobile Government Agency Consulting 3% 2% Telecom Operator 4% Internet ecosystems. University/Research Institute 4% Over 40% of the attendees 2011 Mobile Handset work in companies agitating in Manufacturer 5% this area. 6% of the attendees Other 7% work in investment and seek for Service / Content Provider insights on start-ups and further investment opportunities. Media 6% Investing 6% Technical / System Solution Provider GMIC2011 built on the success of Fully satisfied or the previous two events, taking satisfied with the event best practices in Asia and bringing them forth to the global stage. Recommend GMIC 2012 to others The Le Web of China’s Plan to attend GMIC next year mobile Internet CNN
  6. 6. MarketsWhat are the trends in the industry?China - the perfect mobile Internet market?What are the user’s needs?Who leads the industry?SegmentsEverything will be Social - Local – Mobile?Will mobile marketing surpass traditional marketing?Mobile gaming pushing the industry?M-Commerce & M-Payment to become mainstream?Which platform will win?OpportunitiesChina Mobile Internet - a bubble?How to start you own biz. New
  7. 7. MarketsWhat are the trends in the industry?China - the perfect mobile Internet market?What are the user’s needs?Who leads the industry?
  8. 8. MOBILE INTERNET CHINAInternet services are not necessarily mobile services Do mobile Internet Internet giants. But, the companies. Others don’t services complement the real game terminator has even have the traditional Internet or not yet been found. opportunity to consider. can it be viewed as one? There will be someone Internet is driven by Mobile handsets in who overturns the technology and western economies e.g. business models created products. Mobile are used in addition to by traditional internet. internet is driven by the PCs, while mobile But the Mobile internet value chain and business. phones in emerging value chain is much more markets are the only complex than the one of access point to the traditional Internet. Internet. Most of people think structure because the is of market clear the Regarding about traditional Internet, no one talks network terminal, as both are or “ Mobile is the extension of our services onto different devices. successful current monopolized by a few - Charles Zhang, SOHU CEOMobile trends emerge with technologies: location, cloud computing. Trends in the Chinese mobile Internet for 2011 Two industry trends within 5 years by Google Global VP, John Liu by Motorola Mobility VP Smartphones and tablets PCs will continue 1. Mobile marketing ad rev. will to blur the border between mobile and PC surpass traditional internet ad. 2. In big markets such as Search & information collection will stay China, US, Japan, and Europe, there the most important task in mobile will appear pure mobile internet Complimentary PC based internet. players as big as Enabling the always on‘ Tencent, Amazon, Yahoo Location based services Mobile-based new user behavior drives new types of information collection, ad and commerce New opportunities in terms of personality and mobility with cloud computing and mobile devices Mobile internet as open world. Open, fair and free. The mobile market is complex but brings opportunities for new players with location-based services for mobile marketing, search and commerce.
  9. 9. MARKETS: CHINA A strong market with tremendous growth. China’s ‘high’ mobile internet market > 20 million smartphones sold in 2010, 60 million estimated in 2012 High Numerous investment > Over 354 mln. users in 2011. Mobile Internet will capital opportunities. surpass fixed line internet usage in 2013 High Proven by continuous ► Huge user base talent growth for 10 years ► Simple usage behavior (which usually happens in High Quick copy-cats in China. narrow bandwidth) competition Example: Groupon ► WiFi and 3g growth bring high potential for richer applicationsInternet users (million) in China (source: MIIT) Internet users vs. mobile users (million) in China (source: MIIT) Fixed: first 100 mln users in Mobile: 467100% 500 6 years 2 years 400 35180% 303 302.73 300 233.4460% 182 200 111 137 117.640% 94 59.1 79.5 50.4 100 8.9 22.5 33.7 1720% 0 0% 2010 Q1 2011 Q1 China Mobile WAP China Mobile China Unicom China Telecom WiFi Fixed Internet Mobile Internet But also a very diverse and complicated ecosystem. "We want to be more Chinese past development in the USA than most Chinese or Europe, the Chinese mobile companies“, the CEO of Internet market shows Angrybird developer Rovio several unique distinctions announced. While there are and requires both an adapted definitely similarities to the strategy and market behavior. provincial mobile mobile mobile phone phone carriers carriers models users 460+ 3 340+ mln 900+ 3 3G 93 7400+ mln mobile mobile standards phone internet brands users The development of the Chinese mobile Internet is much harder to predict than the western ecosystems. Western players have to adapt.
  10. 10. MARKETS: CHINAMarket needs derive from its demographics. China’s unique demographics shape the future of the industry, as the duality of the Chinese society results in a duality of China’s mobile Internet market. The current market divides itself into two sides: high end in urban areas and low-end for rural areas. High end users have iPhone or modern Android phones, they will access m- commerce services. Low-end users didn’t consume until recently, but only saved money and transferred it to their hometown. Their consumption was restricted to food and clothes. However, things change fast. Traffic flow 75% of the Chinese mobile users only generate around 50MB/month traffic on average, whereas US users’ average traffic flow is 325MB/month; showing a clear difference in preferred mobile services.Rising market share of low-income users defines future services. Example for adapted services OVI life tools: Informational services developed by Nokia for rural markets in developing countries. Information can be found on a variety of simple topics including the weather, market prices and pregnancy care. 47% urban 53% rural These tools have become the companys fastest- growing service in the country.“ We needed to understand who needs mobile Internet most, and found out that it’s people in the rural areas. After that, we tried to understand what our audience wants and again, we found out that price is a very sensitive issue. - Michael Song, SkyMOBI The demographics of China are unique in Asia and will cause different development and needs than e.g. Japan or Korea experienced.
  11. 11. MARKETSChina and western markets both have to learn from each other. China: unclear regulations, failure as a no-go. Free Enterprise vs. not-free America can endorse enterprise in China failure, which can help innovation Transparency (e.g. regulators like FCC, or open source) is very important and goes a long way from the top down in western ecosystems. Western companies should learn from China’s flexibility. In addition to the common Chinese government regulations, western companies block their success to the market themselves by insisting on their own restrictions and company policies. Example: while iOS developers easily could enter the market through one of Chinese many local appStores with access to the country’s payment services, Apple restricts this step but does itself not offer any working solution to sell apps in the country easily. Another example are strict English language policies in western companies, requiring local engineers to be fluent in English, which prevents most of the graduates from applying as English skills are still not as common.Japan and Korea are still leading in mobile service innovations. Japanese mobile phones were already very advanced with functions which global smartphones did not have at that time. Japan is all about uniqueness, and manufacturers frequently add innovative services to the handsets. (Sample: earthquake warning systems in phones) Biggest Japanese mobile Internet players 25 mln users US$ 1.3 bln revenue 49% operating profit coop. with ARPU of US$ 52 Launched global mobile social game platform based on ngCore, covering Japan, Europe, USA, and China; also started Mobage China, a social game-focused mobile SNS. 25 mln users In Korea, Supermarket TESCO recently US$ 414 mln revenue 56% operating profit installed out-of-home storefronts in coop. subways with QR codes. Waiting passengers with ARPU of US$ 17 with compatible camera phones are able to Acquired mobile gaming platform OpenFeint shop for groceries. Tesco employees deliver in April 2011, reaching a user base of 100 the goods directly to the home. million users. Japan and Korea continue to be the role model as the adoption of mobile services is stronger and the networks further developed.
  12. 12. MARKETSIn emerging markets, every ecosystem is different. In emerging markets, strategies for feature phones work as well or even better than for smartphones, as they are more affordable and fit the user’s needs. In 2010, MediaTek alone sold 500 million units of their fully-integrated mobile phone chipsets. Challenges arise from complex cultural environments like scattered languages and religious restrictions, but also from complex telco environments: Indian operators e.g. take 60-7-% of the VAS revenue (vs. ~30% in China and ~10% in Japan). Important strategies for B2B in emerging markets Awareness, Preference Short time-to- Fulfill local needs and Commitment market Companies need to explore and Sth. Asia: affordable entertainment Handsets need to be rolled out partner with local key SEA: SNS, entry 3G & Android very quickly, not being important players, provide one-stop shopping MEA: ultra low cost, cheap VAS whether smart- or feature phone. for these companies, and provide LATAM: local special IM support But internet access is important. direct technical support E-Europe: low cost, charming UILeading positions depend strongly on speed and adaption to the market. Like the U.S. market is defined by iPhone, so are the emerging markets by Nokia handsets. Over 50% of the mobile handsets in China and India are Nokia phones, and the company is still market leader in Vietnam, Indonesia and Russia. But with the development speed and market prices of Android phones and the recent commitment to Windows Phone OS, the company will struggle to keep it’s position. “ The mobile phone is the only possible way for me to access the internet. “ Most of the emerging markets have lots of problems, and where there are problems there are opportunities. Emerging markets are a complex environment but have a strong potential for user & VAS growth.
  13. 13. SegmentsEverything will be Social - Local – Mobile?Will mobile marketing surpass traditional marketing?Mobile gaming pushing the industry?M-Commerce & M-Payment to become mainstream?Which platform will win?
  14. 14. SEGMENTSSolomo requires a lot of resources and a good knowledge base. Social, Local, Mobile. Especially the social feature phones, which represent part is an important factor in China. thousands of different models. Building a China’s unique demographics split this cross platform R&D team is costly. And segment into two user bases: in cross platform services are necessary for urban, white-collars and low end users developing a strong user base. such as students, migrant workers, or This business is about both consumers and people in rural areas. For a full local merchants. HR cost are very high. coverage, service provider also need to This also means that LBS might not be consider the need of low-end users. good for people who are doing their own A second big barrier is the diverse mobile venture for the 1st time, as both business handset environment in China. Potential development and fundraising are equally users divide into 15% smartphone and 85% important. Mobile service comparison: western and Asian SNS networks Network SNS Platform Gaming Mobile strength        General General Strong “ The key component of every ecosystem is the developer. - Microsoft, Benjamin Tan    StrongMonetization will be an important topic in the future. One barrier of LBS in China is the missing mobile payment options. Ideally, location based services can sell goods directly like in a ‘groupon’ model, but current mobile payment services are not convenient enough. Mobile ads are still the only way to go. One next step is to find better, context- Monetizing the site isn‘t at the top of the aware ad solutions, based on the user’s company‘s agenda. Its highest priority, Sina’s CEO location or check-in. Chao said, is to build its platform and user base. Social, local and mobile services require relatively higher investment, while monetization should come after building a strong user base.
  15. 15. SEGMENTSAsia leads the mobile advertising statistics. Region 2010 2011 2015 “ Advertising worked for PC internet as a business model. But it remains to be seen if it will work for mobile. - Tetsuzo Matsumoto, Softbank North America 304.3 701.7 5,791.4 Western Europe 257.1 569.3 5,131.9 Asia-Pacific & Japan 868.8 1,628.5 6,925.0 Print Rest of the World 196.9 410.4 2,761.7 Total 1,627.1 3,309.9 20,610.0 TV Mobile Advertising Revenue, 2010-2015, in Million USD Source: Gartner, June 2011 Internet $2.5 十亿 $2.0 Mobile $1.5 $1.0 0% 50% 100% $0.5 $- Transaction Viral 2009 2010 2011 2012 2013 2014 2015 Engagement Targeting Reach China Japan India Mobile marketing compared to traditional media Mobile Ad Spending in China, India, JapanNew device types and LBS accelerate mobile marketing growth Gossip news, social networking and messaging are the most common PC Internet activities in China. Mobile internet usage behavior is more or less the same, but content aggregation, personalization, user experience and stability would be some improvements coming with the next step. Smartphone & OS-driven trends Location services as a driver Mobile App Over 30 app stores and thousands of mobile Research estimates that 50% of total Consumption app developers in China developing apps for LBS revenue will come from Explodes the fast growing smart phone segment location based search advertising. Renren e.g. just launched a mobile In-App Ads In-app ads, especially HTML5-enabled check-in feature, planning to enable ones, bring engaging brand and interaction monetize its mobile traffic through Interaction experience. mobile advertising and location- Tablet Adv. Effective media channel to reach tech savvy based services (LBS), such as brings new consumers, using theirs tablets for discount information from nearby Audience casual, leisurely exploration. merchants. Mobile Marketing will see strong growth in Asia, driven by new device types, HTML5 and the app environment.
  16. 16. SEGMENTSChina is becoming a very popular mobile gaming market. The Ambitious China strategy of Rovio Online Gaming Market Size “ We are very serious about China. We want to be the leading entertainment brand. $5 bln $4.7 bln $1.5 bln “ Consumers are more quality focused nowadays, not like 10 years ago where ‘everything While looking for partnerships with Chinese sold’. companies and distributors, Rovio currently - James Gwertzman, Popcap Games sets up its first office outside of Finland for game development in China. The ambitious goal of the Angry Birds developers are 100 million downloads for 2011 in China. As a next step, Rovio plans to become one of the leading entertainment brands in China, naming Disney as one of it’s main competitors.Game development requires creativity and localization. Game development strategy Localization  Be inspired by other games, but innovate too. Social games can be  Prototype your ideas. accepted by users all  Add fun, remove frustration. over the world. The key is  Don’t be afraid to be creative. the localization of the product.  Don’t worry about the name. Rekoo CEO, Liu Yong  Share creative ownership with the team.  Test early, test often. Encourage feedback. In mobile internet market, we  Prevent players from making bad choices. need to consider  Measure. handset, operator, billing  Take time to polish. system, users behavior, more  Have fun!! complicated than traditional  Adapt carefully to other devices internet. Localization of product is a key. In addition, finding good local partners is also important. Zynga China GM, Andy Tian The strong user base brings many global mobile gaming companies to China to try their luck, which strengthens the market.
  17. 17. SEGMENTSStrong growth and technology trends show the industry’s interest. With more mobile commerce services that provide value such as location based offers or discounts combined with the rise of smartphone, a boom in m-commerce might be near. China had a 2.6 billion RMB mobile commerce transaction value in 2010 and a YoY growth of 370%. Mobile payment and m-commerce companies may become the biggest retail operators in the world. Until then it is inevitable that key players have to open up their platform for aggregators to help Mobile payment growth will be driven in bring in the necessary deals. the short term by services launched by mobile network operators. China is  20.2% mobile internet users indicate they have expected to be the leading country, with placed an order through mobile. a mobile payment growth of 48% YoY to  10.6% use mobile banking services 410 mln users by 2013. Another driver  7.2% users tried mobile payment. are integrated NFC chips in handsets, like Google’s Nexus S. Recent market forecasts suggests a rapid adoption of NFC services over the next 3 years, with almost 300 million NFC capable smartphones (20% adoption rate) by 2014. Biggest obstacle: user acceptance. Mobile commerce depends traditional internet VANCL started trying mobile on how creative the services. commerce in January 2011, and industry players and The company Innovation was surprised to see the high entrepreneurs are. In this Works has a fluctuation of potential. They did not have respect, user experience 40 people in 6 months in problem of payment as people and design have its user experience paid on delivery. increasingly become an department. A detail may important factor: Mobile decide if users’ stay or  In April, 6000 order forms internet companies need leave. per day, 500,000 RMB sales to pay more attention on per day, or 3% total daily user experience than sales internet companies, as the  Most users are coming from mobile phone is so small Symbian. iOS is that a tiny inconvenience second, followed by for the user can be much Android. more serious than similar M-Commerce depends on a not yet standardized mobile payment infrastructure and a well thought-through user experience.
  18. 18. SEGMENTS Open source leverages services. “ Android is one of the most successful acquisitions Google has made so far Mobile devices are becoming smaller and also increasing in mobility. For Tencent Senior Director of Wireless R&D, software and hardware integration between companies is an important - Ming Guang Yong, Google factor to make ‘2.0 users needs’ a reality. It requires an open source mobile platform to allow leverage on public, open technology. (Tencent e.g. provides an open source mobile platformFeature phones dominate China until 2013 supporting flash and LBS.) Smartphone Feature Phone百万 350 300 Chinese search interest in mobile platforms 250 (Baidu) 200 150 21.6% Symbian 100 Android 50 0 iOS 8.7% WinMo 56.8% 6.7% BlackBerryAndroid takes market share from MTK chip phones Other (Proprietary) 2010 2011 (est)百万 1.8% 12 4.4% 10 8 Feature phones will slowly become less 6 important in China, with smartphone sales 4 surpassing feature phones in 2013. (source: 2 DDCI). Despite Nokia being a clear leader in the 0 handset market, Android is gaining market share and is one of the favorites of Chinese users.Partnerships with local mobile service providers will have influence. How to choose the right platform and partner  Create a win-win situation for both parties. Winning together would keep partnership strong.  Speed is essential to be always ahead in the mobile industry.  Open source platform to ensure users have the best user experience based on collective wisdom from the developers. (Shaodong Zhen, of Nokia emphasized that their focus on user experience is the very core of Tencent-Nokia’s success.) Reasons for the partnership of Tencent with Symbian  High market penetration in China (Nokia’s feature phones are widely used in China)  Strong communication and synergy in expertise and resources between both companies. The Chinese market is still characterized by feature phones but will Feature phones continue to become less important to the world
  19. 19. OpportunitiesChina Mobile Internet - a bubble?How to start you own biz. New
  20. 20. OPPORTUNITIESThere are heavy investments in the Chinese market. Very high growth rates are fundamentally driving a lot of the businesses, with an enormous hunger for investments in mobile internet business from leading institutional investors in the U.S. and “ China now feels like Silicon Valley 1999. It has a great naivety but also a lot of energy. elsewhere. Comparison: Investment in Chinese Mobile Internet Industry (Source: zdbchina.com)Fund growth and foreign investment in China Biggest funds focused on mobile internet  The9 - Fund9, 100 million USD, Dec. 2010  NetDragon - mFund, 50 million USD, Nov. 2010  Shanda Wireless - JoyFund, Jan. 2011, only android  Gree, Tencent, KDDI, DCM - A-Fund, 100 million USD, Apr 2011, only Android  Lenovo - LeFund, 100 million RMB, Nov. 2010 Many of the issues seen in US in 2000 currently appear in China: a wave of IPOs, uncertain business models and a hard fight over the user-base. Western companies search for their part and try to establish themselves in China. Rovio sets up an office this year in China, the 1st office outside Finland. Gree is to set up an office this year in Beijing as well. At the same time, big Chinese companies like SOHU or Baidu could afford high salaries but have problems finding good staff. Many people at the moment prefer to create their own ventures, as this the best moment for raising money from VCs, although investments in key leaders in the sector – like Baidu or Netease – could be safer. “ If you want to go for an IPO, you have to brush up your English. - Michael Song, SkyMOBI A rising number of mobile Internet funds and foreign companies drive the market.
  21. 21. OPPORTUNITIESPlayers vs. newcomers. People realize the high potential of mobile Internet business. But taking the opportunity is hard for newcomers due the existent, big players. The result may be that entrepreneurs start, but are soon substituted by services of established companies, or might just be bought to become an advanced research for the big Where are the opportunities for the newcomers? ones. We can consider this question from what users do with their mobile:  Information services  Entertainment : game, music, video, etc.  Practical usage in life and business: the combination of mobile and daily life, the combination of mobile and business/commerce How to find VCs Founders should network more often – meeting people, building the network. To get the investors’ attention by knowing their friends and to have someone they know to recommend. How to pitch your business: practice and refine your ideas Experience: the experience of the start-up team is what investors value a lot. People, people, people. The team needs to know how to execute at the right timing. Communication: Communicating the vision of a start-up is important because investors have to be able to “see” your vision to be able to invest. Goal: don’t think about exit or valuation, but about building the company. Scrap the market analysis slides and go straight to the main points: do the foundation work first
  22. 22. GMIC 2012 The annual Global Mobile Internet Conference is the leading mobile internet conference in Asia. Organized and hosted by the Great Wall Club, attracts the newly emerging forces and industry elites from around the globe. The Great Wall Club, the leading CEO club of the global mobile Internet industry. GMIC started in 2009 with only 300 attendees, but the last edition in 2011 was attended by a total of over 3200 people, and featured 100+ speakers from over 25 countries. The GMIC 2012 will again take place in the China National Convention Center in April 2012. Connect Connect with prominent executives worldwide and find your strategic partners & clients in Asia. Learn Learn exclusive insights and innovations from the industry cutting-edge leaders and create your own opportunities for advancement. Promote Market your brand & product via multiple channels and access large media conglomerates from around the globe. >> http://gmic.greatwallclub.com Stay tuned… …we will continually update the details of the Global Mobile Internet Conference 2012 on our website!
  23. 23. ABOUT US The Great Wall Club (GWC) is a CEO member-based company focused on the rapidly growing mobile internet market. GWC seeks to develop a more innovative and competitive landscape in the mobile internet industry through events, executive trips, reports, research & consulting and investment. BO YIQUN | CEO OF GWC CHINA, CO-FOUNDER OF THE GWC GROUP  Main host of Global Mobile Internet Conference 2011, annual event of GWC and the #1 mobile Internet conference in Asia. Now leading GWC China office.  10+ years experience in ICT industry. Prior to joining GWC, he was Consulting & Research director at Plus Eight Star, focused on Internet & Mobile innovation in China, Japan and Korea.  The clients he had served include MIH, Mitsui Global Strategic Studies Institute, Bouygues Telecom, Mobilkom, SK Telecom, Adidas, etc.  MBA from Université Paris I, he speaks Chinese, English and French. yiqun@greatwallclub.com ARNDT FOCKE | SENIOR RESEARCH & CONSULTING MANAGER  Arndt Focke is in charge of research and consulting services at GWC.  Experience in ICT industry since 2005, worked in R&D for Deutsche Telekom Laboratories and Fraunhofer Institute for Open Communication Systems.  In China since 2007, performing research on innovation in Chinese ICT companies, also worked for Daimler Northeast Asia in Beijing.  German degree (Dipl.-Ing.) in Business Administration and Engineering (ICT) from Berlin Institute of Technology. He speaks fluent German, English, and Chinese. arndt@greatwallclub.com SHAWN MICHAEL CUI | STRAT. MARKETING & CONSULTING MANAGER  Shawn Michael Cui is in charge of strategic marketing and consulting services at GWC.  5+ years experience in strategic marketing and cross-cultural project management, worked with Nokia, Plam and HP on marketing consulting service.  Former entrepreneur (2 years), a keen belief and enthusiasm in startups, social media and developer ecosystem.  MA in Business Leadership (Strategic Leadership) from Trinity Western University, Canada. He speaks fluent English and Chinese. shawn@greatwallclub.com HTTP://WWW.GREATWALLCLUB.COM HTTP://WWW.MOBISIGHTS.COMYingu Mansion, Office #901 info@greatwallclub.com#9 North 4th Ring West RoadHaidian District Tel: +86 10 8252 5377Beijing, China, 100190 Fax: +86 10 8252 5217