ZTE launches Grand Memo mega phone and announces shift in mobile industry – #mwc13

This post was written as part of a blogger trip I organised for the Live Orange Blog. Connect to the blog for the latest on that event!

On February 25th, at ZTE’s press conference at Mobile World Congress, the show was not where you’d think it was. The announcement of ZTE’s new launch of devices (one of which with the brand new Firefox OS) has given way to a real scrum amongst journalists who were fighting for a good space in conference room 1 of the MWC media village. Why so?

Heads; it was a Press Conference

Tails; Journalists fighting for a scoop (already leaked on CNET 3 hours before)

journalists fighting for a scoop at ZTE's conference

Even though the video demo of the brand new ZTE Grand Memo led to chuckles in the room when the conference room’s sound system refused to reproduce anything more than hisses, the launch of the large screen high end smartphone by the Chinese manufacturer was nothing to laugh at. Indeed, our 2012 live Orange blog readers had already got a hint of the Chinese offensive on the Western front. ZTE and Huawei were indeed very present at MWC last year (remember the horse?). 2012 was the sign that Chinese manufacturers were entering that market and penetrating foreign markets way beyond the borders of China.

Now, today’s announcement was anything but laughable, it was a clear signal that, to put it in the words of He Shiyou EVP and head of mobile devices division, the main objective of the company is to “be a player in high-end devices and even become one of the top 3 players in the World by 2015”. As a matter of fact, Chinese manufacturers benefit from a very large domestic market and now it is time for them to deploy around the world. Once again quoting the ZTE exec, “IDC declared we sell 65 million devices per annum” he said, “we are the fourth device manufacturer in the world and 70% of ZTE’s revenue is made of mobile devices”; the company also expects to grow its revenue y 30% in 2013.

The famous ZTE Grand Memo (photo ZTE)
The now famous ZTE Grand Memo (photo ZTE)

What was new today is the Grand Memo smartphone “4S” (as in slim/screen/speed/safe), a super-sized 5.7 inch screen device packed with features (including full 1080p HD video recording), which also includes Dolby’s sound solution. This shouldn’t come as a surprise, as “70% of smartphone users think that sound quality is essential in providing great experience for a phone” the Dolby representative said. The big phone also has designed a special interface so “that dialling is possible even with one hand despite large screen” therefore showing that “one of the key areas is the development of the user interface and easier navigation menus, which have been created and are unique to ZTE”. The launch will take place this year and should “provide the springboard for success” He added.

ZTE also announced a brand new entry-level smartphone based on the Mozilla Foundation’s brand new Firefox operating system, and the phone is named, very logically, “ZTE Open”. Even though there are still some grey areas such as pricing, availability, and – in the case of the ZTE open phone – specific number of applications running, one can sense that the mobile industry is just about to turn a new page. China is no longer the place for producing cheap phones which were originally designed overseas, it’s mostly becoming a centre for innovation and mobile phones are no exception.

Chinese Internet: the global battle has begun (1/2)

In a previous series, Alban Fournier, a young French professional who fell in love with Asia warned us that China was the next worldwide International giant in the making. In this piece, he is expatiating on this previous report and delving into the details of what makes Chinese Internet players stand out from the crowd.

[this report is published in instalments, type http://bit.ly/albanchina2 to put all the pieces back together]

Fournier: the man who prefers QQ ID: 1557637787 to his Twitter handle

What is currently planned at Alibaba, Tencent, Sina, and Baidu is worth further investigation, hence this sequel to my initial piece on Chinese Internet. My duty is to continue the story published last year and called “Chinese Internet industry ready to grow beyond borders”.

People were quite sceptical in 2008 when I announced that China, as a country, was good at disruptive innovation following a trip in Beijing. At that time, I placed my bets on a Chinese Internet becoming almost the only alternative to its American predecessor. Who would have imagined that change would accelerate so much at the very beginning of 2012?

China: already an Internet giant

China has the world’s largest Internet traffic thanks to its population, the world’s biggest with more than 1.3 billion people. With the strong increase of its Gross Domestic Product, extraordinary engineering talent, plenty of venture capital, Chinese entrepreneurs and large firms now have the necessary resources to compete worldwide.

[Baidu : screen capture by Alban Fournier]

From a social behaviour point of view, there is a fundamental difference between American and Chinese people: in the U.S.A. (and in Europe too) a majority of online users are “spectators” while a majority of users in China are “creators”[1]. China is therefore much more active market and its users generate a lot of UGC (user generated content) every day. This discrepancy is one of the reasons behind the success of QQ games, a Tencent service dedicated to free online gaming.

Now that Chinese Internet players are giants at home, aren’t we just about to see them thrive beyond borders?

Strategic investments before 2012

In 2011, Tencent formed several strategic partnerships in China: among them, Kingsoft Corporation Limited, an Internet security software editor and eLong, Inc, a leading online travel service provider in China. Outside China, in addition of being active in the U.S.A., Russia, India, Vietnam, Thailand, Tencent acquired a majority stake in Riot Games, a Los Angeles-based developer and publisher of online video games. [2] In 2010, Tencent invested $300m in Digital Sky Technologies (DST) of Russia, bringing two internet powerhouses of the emerging markets together in a long-term strategic partnership.

Alibaba prepared the future of Alipay reaching an agreement with Yahoo!, and SoftBank. Alipay is a leader in China in providing payment processing services. Alibaba also developed operations in the U.S.A. and formed a partnership with Turkey’s Logo Group to reach Turkish companies.

Among others, Renren and Dangdang are listed on the New York Stock Exchange. We can expect more US IPOs by Chinese companies. There are at least 10 Chinese Internet companies which have made confidential filings through the Security Exchange Commission. Those Chinese tech companies aiming at an IPO are also growing their business through innovation.

to be continued …

[1] http://blogs.forrester.com/gina_sverdlov/12-01-04-global_social_technographics_update_2011_us_and_eu_mature_emerging_markets_show_lots_of_activity

[2] http://usa.chinadaily.com.cn/epaper/2011-03/01/content_12095412.htm

Chinese Internet industry ready to grow beyond borders (2/2)

Photo: Tencent home page

by Alban Fournier (http://www.value2020.net)

QQ ID: 1557637787

Alban Fournier is a graduate from Essec Management School in Paris. He has proficiency in Management, Change Management, Marketing and Consulting services. He has worked on various engagements with Schneider Electric and Tencent, the leading Chinese Internet company.

This is part two of an article on Chinese Internet companies

A success story named Tencent

Founded in November 1998, Tencent has grown into China’s largest and most used Internet service portal. In its ten year history, Tencent has been able to maintain steady and fast paced growth. In 2005, Tencent entered the social network market with QZone and Internet shopping with PaiPai.com platform. In 2006, the firm decided to compete directly with Baidu and Google with the launch of the Soso search engine.

above picture: the soso.com search engine: wait a minute, I think the graphic design vaguely rings a bell …

Tencent’s QQ Services is China’s largest and most used Internet service portal, with the largest customer base in the world. Key platform statistics are 647.6 million of active Instant Messaging (“IM”) user accounts and a peak of simultaneous online IM user accounts of 127.5 million. Active user accounts of Qzone, a social network included in QQ Instant Messaging, numbered 492 million. [2]

R&D staff group is large at Tencent. The company has obtained patents relating to the following technologies: instant messaging, on-line shopping and payment services, search engine, information security, gaming, and many more. In 2007, Tencent invested more than RMB 100 m (note: RMB stands for Renminbi, which is the other name of the Chinese Yuan)  and in setting up the Tencent Research Institute, China’s first Internet research institute, with campuses in Beijing, Shanghai, and Shenzhen. The institute focuses on developing core technologies.  The revenue of the firm increased by 57% in 2010 compared to 2009, which means that Tencent is now more profitable than Microsoft Online or Google.

The business model of Tencent is not only based on advertising but based mainly on revenue generated by users and online sales. The firm is very well positioned in latter market. Furthermore, it has already a large user base which it can leverage. Online sales in China are a fabulous market for Tencent. We can expect at least a 35% increase per annum in the three coming years.

Estimate in growth of revenue generated by virtual micro-transactions will be outstanding according to Strategy Analytics[3]Compared to 2009, the global market of 2015 will be multiplied by seventeen (from US$ 1 billion to US$ 17 billions).


As a conclusion, you now know that the Internet industry in China and Tencent in particular are rather successful on their home turf. Now you must be wondering whether Tencent or any other Chinese Internet firms will  decide (and when) to go beyond its borders and tackle the rest of the world.

[1] http://www.cnnic.net.cn/

[2] Tencent corporate website http://www.tencent.com, Alexa site

[3] Source: Strategy Analytics, Inc

Chinese Internet industry ready to grow beyond borders (1/2)

Attribution Chinese flag photo, some rights reserved by Philip Jägenstedt

by Alban Fournier (http://www.value2020.net) QQ ID: 1557637787

Alban Fournier is a graduate from Essec Management School in Paris. He has proficiency in Management, Change Management, Marketing and Consulting services. He has worked on various engagements with Schneider Electric and Tencent, the leading Chinese Internet company.

China will be the World’s next Internet giant!

Which Internet company generates the greatest number of micro transactions for virtual goods on a daily basis? If they were asked this question, most of our Western readers would undoubtedly mention Google, or Facebook and they would be wrong. In this piece, I will explain why China is virtually the only country that is able to compete with the United States of America with regard to the growth of its Internet industry.

China has the world’s largest Internet audience thanks to its population, the world’s biggest with more than 1.3 billion people. With the strong increase of its Gross Domestic Product, extraordinary engineering talent, plenty of venture capital, Chinese entrepreneurs and large firms have now the resources to compete worldwide.

What makes the the Chinese market stand out is that Chinese people use intensively their mobile phones. They are not just using their devices to communicate with other people : they also play games, issue payments and perform many other things online.

Overall, Asia is ahead of us with regard to the usage of mobile devices, Japan and Korea being the most advanced countries. This high and ever growing usage of mobile communications empowers local players such as China Mobile (70% of the market), China Unicom (20%) and China Telecom (10%).

[China Telecom phone booth image AttributionNoncommercialShare Alikesome rights reserved by mjaniec]

According to CNNIC[1], the total number of wireless Internet users in China reached 302.7 million at the end of 2010, representing 66.2% of the local Internet user base. Such high equipment rates were mainly driven by the superior wireless data infrastructure in the country and the availability of mobile applications such as WAP portals, Instant Messaging (IM) and social games. Secondly, while traditional Text Messaging (SMS) continued to develop after a year of strong growth in 2009, microblogging enjoyed explosive growth and emerged as a major social media contender in China.

Telecom is still a local industry in China … as of now

A characteristic of the Chinese technology industry however is that few of those Chinese companies, however successful, have decided to go beyond their own borders. There are counter examples with firms like Huawei which has now managed to become a global company and has clients in many countries, namely by providing infrastructure equipment to Western network and service providers.

And the winner is … Tencent

Getting back to the question I asked at the beginning of this post, the World’s leading Internet company in terms of the number of online transactions on a daily basis is neither Google or Facebook; it is a Chinese company and is name is Tencent. The next part of this piece will be dedicated to their success story.

… to be continued.

________________ [1] http://www.cnnic.net.cn/