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Alibaba's Ma keeps looking to dominate social media
http://www.ecns.cn/business/2016/09-26/227917.shtml
Sep 26th 2016, 09:49
For a while now, Alibaba's influential founder Jack Ma Yun has been trying to develop a social networking service (SNS) that dominates the social networking sphere in the same way that Alipay dominates online payments in China. So far, Ma hasn't had much luck unseating Tencent Holdings Co's rival WeChat as the most popular SNS in China. Still, he perseveres. Analysts said that social networking is a must-have feature in the mobile Internet era. However, Alibaba may not be able to develop a social networking app to overtake WeChat until the next generation of mobile technologies emerge, analysts said.
Jack Ma Yun should be proud of himself. The e-commerce kingdom he founded recently topped Internet mammoth Tencent Holdings as Asia's most valuable Internet company.
Last week, Ma made the headlines when he was appointed on Wednesday to be the special adviser for entrepreneurship and small business to the United Nations Conference on Trade and Development.
Despite Ma's success, his company, Alibaba Group Holding, has continued to flounder in its efforts to create a dominant social networking service (SNS). Those efforts date back to 2008, when Alibaba's subsidiary Yahoo China launched an SNS called Yahoo Relation.
In 2013, Alibaba became the second largest shareholder of microblogging platform Sina Weibo, which was later renamed Weibo. The company also released a self-developed chat app Laiwang, similar to Tencent's WeChat.
Neither platform has unseated WeChat as China's most popular SNS. In fact, Tencent managed to steal a march on Alibaba in the mobile payment sector when it launched a competitor to the latter's dominant Alipay online payment tool.
Some industry watchers have opined that Alibaba may just not be the right company to create a successful social networking platform, yet Ma shows no signs of backing off.
Aggressive expansion
Over the past two months, Alibaba had been prominently beefing up its social networking business. In early August, it launched its biggest ever revamp of Alipay.
Alipay version 9.9 highlighted its social networking features in its interface, allowing users to share and check the posts of friends in the same manner as WeChat.
Previous versions showcased its payment capabilities, including buying flight tickets, paying phone bills and paying off credit cards.
Then, on September 10, Alibaba increased its stake in Weibo, whose market valuation reportedly grew above $10 billion in late August.
While the increasingly popular Weibo and the new Alipay is seen as ways for Alibaba to challenge WeChat on its home turf, its enterprise chat app Dingtalk, which came out in 2015, is considered a new venue to explore opportunities in the social networking sector.
Alibaba has pinned big hopes on Dingtalk. It launched the new version of the app on September 19 at a high-profile conference in Hangzhou, capital of East China's Zhejiang Province.
And a week ahead of the conference, three mainstream domestic newspapers ran teaser advertisements for the new version.
According to information Dingtalk sent to the Global Times on Thursday, the latest version enables business chat between different enterprises, while the previous ones functioned only as an internal chat tool.
At the launch conference, the app's creator Chen Hang disclosed that as of August Dingtalk had more than 2.4 million enterprise users.
Tencent's WeChat PR representative told the Global Times on Thursday that the company released a Dingtalk-like app in April. The app was designed to allow users to instantly chat with their bosses, colleagues and clients.
However, the representative refused to provide details about how the app has been received.
A mobile must-have
The purpose of Ma's never-ending exploration into social networking is more than just a battle with Tencent, said Ma Jihua, a telecom analyst with Beijing Daojing Consultant Co. "The goal is to become the dominant Internet power in the era of the smartphone."
The smartphone has become a frequently used device by Internet users around the world.
A report by the China Internet Network Information Center (CNNIC) said that as of June, 92.5 percent of the country's Internet users access the Internet via mobile phones.
And the apps that they most frequently used were largely related to social networking services, the CNNIC report said.
"The smartphone was born to be the device for connecting individuals. Therefore, social networking is a function that every mobile Internet service must possess," the analyst Ma told the Global Times Wednesday.
Without that function, an app doesn't have much of a chance to gain user loyalty and then generate income, he said.
The importance of an app's social networking feature can be seen in WeChat's success in popularizing Tencent's mobile payment tool Tenpay.
Thanks to WeChat's popularity, Tenpay has made inroads on Alipay's dominant position in the mobile payment market. In the first half of 2016, Tenpay's share of the market grew to 21 percent from 17.6 percent during the same period of the previous year, according to statistics from Beijing-based BiData-Research. Meanwhile, Alipay's market share fell about 3 percentage points to 68 percent.
Alibaba's executives had previously emphasized the importance of social networking. Ma's think tank member Zeng Ming had reportedly said in 2012 that in the following three to four years, one-third of Alibaba's business will be realized through SNS.
Fragile leadership
Alibaba's efforts can only help make up for its shortcomings in the SNS sector, and it is impossible for the company to create something that could overtake WeChat, analysts said.
WeChat has long led the SNS mobile app market in terms of active users. In the second quarter, the number of active monthly WeChat users grew 34 percent year-on-year to 806 million.
Meanwhile, the number of active monthly users for Alibaba-backed Weibo grew at a solid pace of 33 percent year-on-year, yet the total stood at only 282 million, according to Weibo's latest quarterly financial report.
"The SNS leader may change with the next generation of network technology, namely 5G, when smartphones will likely be replaced by more advanced devices - just like PCs got replaced by smartphones in the 4G era," the analyst Ma said.
Tencent Chairman and CEO Ma Huateng seems to be aware that WeChat might not dominate social networking in China forever.
In a speech during the World Internet Conference in 2015, he said that social networking will change as information terminals evolve into gadgets such as "VR (virtual reality) headsets and driverless cars."
It is hard to say which company will end up on top, as China's three Internet giants - Alibaba, Tencent and Baidu - are all aggressively exploring opportunities in VR and driverless car technologies, the analyst Ma said.
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