Internet companies foresee a future in mobiles

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Internet companies have discovered people have different habits when surfing the Internet using a mobile phone. [China Daily]

Internet companies have discovered people have different habits when surfing the Internet using a mobile phone. [China Daily]

China's Internet companies are excited at the prospect of increasing their presence on mobile platforms.

The sector is enjoying rapid development following the introduction of third generation (3G) networks. But before they can replicate their success or experiences with traditional Internet platforms, they are having to cope with new challenges.

Tencent Holdings, the owner of QQ, the most popular instant messaging (IM) service in China, said it had to make a painstaking turnaround to meet the needs of mobile Internet users.

"In the past, we always wanted our products to be fancy because we believed this would create the best user experience," said a manager from Tencent who declined to be named. "But later we found that things worked completely differently in the mobile Internet world."

Though users of the mobile Internet and PC-based Internet have an overlap of about 50 to 60 percent, according to research firm Analysys International, mobile Internet users tend to use quick and convenient services because they usually access the Internet for very short time periods.

"As a result we have to let our products 'lose weight' now, to make them as simple and easy to use as possible, which was a hard lesson to learn," added the Tencent manager.

Tencent entered the mobile Internet five years ago and has by now put most of its PC-based Internet services on the mobile platform, including the IM service QQ, a mobile portal and mobile gaming. Its mobile QQ had about 81.2 million active users over the last quarter of 2009, ranking it top in the mobile IM market, according to Analysys International.

To gain an upper hand in the mobile market, Internet companies have to largely increase their research and development input though most of them are still looking for a way to make profits.

Alipay, the e-payment arm under the Alibaba Group, said the company spent three to five million yuan every year just in developing client software for different mobile phone operating systems.

"To come out with suitable solutions for each different operating system has become a big technological challenge for us," said Chen Lei, director of the wireless department at Alipay.

The number of China's mobile Internet users increased by 120 million to reach a total of 233 million in 2009, according to China Internet Network Information Center.

Subtle relations

Internet companies may dominate the traditional Internet, but in the mobile industry they have to work with other leading characters and sometimes play a supporting role.

These companies have to work with not only content providers but also cell phone makers and telecom carriers, which link their products and Internet users.

"Telecom carriers, to a large extent, influence the way we do business," said Wang Xiaochuan, chief technology officer of Sohu, one of the largest portals in China, referring to the resources carriers control and their dominant position in telecommunications networks.

The company is considering launching a media platform integrating different kinds of information, and is in talks with carriers about fee charging.

"If we are to charge fees for the service, we have to consider how carriers' charging systems work and how we should design our products to fit them," said Wang.

Tencent said it had to closely keep pace with carriers when launching their products.

"There are growing needs of our users, but sometimes we have to constrict the needs a little to follow carriers' development steps," said the manager from Tencent. "We will not make a new application available on all operating systems and different types of cell phones all at once because this may cause a big burden to the telecom networks. We have to do it step by step."

Tencent said its mobile QQ users more than doubled earlier last year because the carriers changed their policy for GPRS Internet connection, which largely reduced the cost of the service.

"It (the change) really stimulated users' needs," said the manager.

Telecom carriers can help Internet companies gain more market share, but the two may also generate competition.

Fetion, an IM service launched by China Mobile in 2006, claimed a 21.6 percent share of the mobile IM market, only behind QQ's 59.6 percent.

"The carrier doesn't want to see its domains, such as short message services and voice calls, affected by the popular Fetion, so it had to launch a similar service to hold on to its users and keep its position in the IM market," said Fang Li, an analyst with Analysys International.

Despite restrictions, Internet companies are likely to see a more open mobile market.

"Take the channels for Internet companies' applications for example," said Fang. "Two or three years ago, these applications largely depended on the carriers' channels, but now there are more and more free WAP channels and those offered by cell phone makers, such as Nokia's Ovi Store, so the carriers' influence becomes less, which will lead to a more open market in mobile Internet," said Fang.

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