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Briefing Sep 18, 2020 04:01 pm EqualOcean

China's Cloud Infrastructure Spending Hits USD 4.3 Bn in Q2 2020, Up 70% YoY

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Updated 23 hours ago ·

Huawei's Mate 40 Launched – with 30% More Transistors than Apple's A14

On October 22, 2020, China's biggest smartphone provider Huawei unveiled its flagship Mate 40 series of smartphones, which global consumers have been expecting for a long time. The Mate 40 series might be the last Huawei phones that carry its self-developed chipset Kirin. Five models of the new series greeted the public – Mate 40, Mate 40 Pro, Mate 40 Pro+, and Mate 40 Porsche Edition. Living up to the reputation of Huawei's flagship phones, the Mate 40 series bear numerous outstanding features, including the quad-lens camera system on the back with a 50-megapixel main sensor, and the ability to capture high dynamic range (HDR), video for more vivid colors which adapts well to the video-sharing and live-streaming era. In terms of pricing, the Mate 40 will retail at EUR 899, the Mate 40 Pro will sell for EUR 1,199 and Mate Pro+ will cost EUR 1,399. The pricing is a bit higher than the recently released iPhone 12 series. The highlight of the launching event is the Kirin 9000 chipset, which is manufactured using TSMC's 5-nanometer process. The CEO of Huawei's consumer business unit Richard Yu claimed that the Kirin 9000 is the most powerful chip ever, with 15.3 billion transistors on it – 30% more than on Apple's (AAPL:NASDAQ) A14 processor. Compared to the most popular Android phone processor Snapdragon 865+ powered by Qualcomm (QCOM:NASDAQ), the overall performance in terms of picture processing is 52% higher and the battery efficiency is 25% higher.

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Oct 16, 2020 07:00 pm ·

DingTalk Switches On Alibaba Cloud's 'Azure' Gene

The year 2020 has been shadowed by the pandemic. Real economies shattered by the ‘Black Swan’ have adapted to the new norm, which is more digital and less intangible. In China, the sudden hit of the coronavirus swiftly helped a digital working style spread and DingTalk, an office automation (OA) platform under Alibaba Cloud, and similar OA products experienced a rapid boom. Besides the growth amid the pandemic, the connection between DingTalk and Alibaba puts the OA platform under the spotlight. At the end of the third quarter, Alibaba Cloud announced a massive restructuring plan, which emphasized DingTalk. In a brief, DingTalk founder Chen Hang left the team, while DingTalk business group was upgraded to ‘Big DingTalk’ business unit (BDBU), along with a big swallowing of other units. After the restructuring, BDBU directly reports to Alibaba Cloud President Zhang Jianfeng. Growth of DingTalk and its performance amid the pandemic DingTalk is a strategic move from the Alibaba Group, who originally intended to challenge IM apps. Prior to DingTalk, its founder Chen Hang once created an app named LaiWang as early as in 2013 to compete with the other IM mega app WeChat but it turned out as a failed try. With the same team, the founder launched the DingTalk project, initially an IM tool designed for enterprises then gradually becoming an OA platform. While Slack rose to a great success in the Western world, China was a virgin land for OA tools in the early 2010s. DingTalk’s appearance filled the void – but it was only known to a few in 2015. After four years, DingTalk had accumulated over 200 million users in total in August 2019, and the number increased to 300 million in the mid of 2020. The pandemic-triggered work-from-home style forced enterprises to re-examine their digitalization levels and act correspondently to maintain competitiveness. DingTalk’s DAU had tripled to 34 million in less than three weeks after China started the quarantine. The coronavirus crisis yielded a chance for OA platforms to show their capabilities in a digital way, ranging from online meetings to project management, teamwork collaboration and all other functions – all can be integrated On the other side of the growth, the increase of users leads to another question for Alibaba: how to benefit from the probable next phase and promising user growth. The question is not new, but it will not be brought to the table until DingTalk reaches a bigger scale – the pandemic is speeding up the scaling process. Conflicts and ‘Azure’ gene The size of 300 million MAUs makes DingTalk the largest OA platform in China. As OA products are considered to be Software-as-a-Service (SaaS), user experience is the rule of thumb for all SaaS products – stickiness drives product’s success. Tencent, ByteDance and Alibaba Cloud are all planning beyond OA platforms. The three Internet giants crave establishing their own ecosystem with their business partners to serve more people. Tencent launched Qianfan Plan to attract SaaS developers to its platform and Alibaba Cloud initiated SaaS Accelerators to help SaaS developers make products. SaaS partners can provide enterprise services like CRM, ERM, financial and accounting services and other office tools for platform enterprise users and improve the one-stop experience to increase user retention. Indeed, an ecosystem with a preferable environment can sustain users and scale faster. For DingTalk, the scale is the key; but for Alibaba Cloud, profitability is a must. To meet the balance between scale and profitability, the restructure of BDBU is Alibaba Cloud’s answer. The new business unit shows the potential to switch on Alibaba’s ‘Azure’ gene. Azure, the cloud business of Microsoft, is a top cloud service provider. AWS and Azure dominate the cloud services market but the two have clear differences. AWS has the best development environment with more tools and better business intelligence (BI) services; Azure is strong in integrating local IT environment with cloud services and is friendlier to a hybrid cloud structure. Without DingTalk’s environment, Alibaba Cloud – with the most data centers in Asia and the largest regional market share – would follow the step of AWS. However, the company proposed a ‘Cloud and DingTalk Unity’ (云钉一体) strategy, empowering it with ‘Azure’ potential. Azure’s success cannot be separated from the solid foundation of MS Windows. Companies that use Microsoft services are more compatible with Azure, which is a revenue pillar of Microsoft. The homogeneity of the Microsoft environment is a critical reason that Azure can develop as a tantamount competitor to AWS, though was founded later. DingTalk to Alibaba Cloud mirrors Windows to Azure. The combination of enterprise services and cloud services is the core of ‘Cloud and DingTalk Unity.’ Moving from AWS style to an ‘Azure track,’ Alibaba Cloud emphasizes the development of DingTalk. Finally, it formed BDBU, which carries the mission to transfer future Alibaba Cloud users from the front-end SaaS environment. It is not the only player with such a strategy in China. Tencent Cloud, which competes with Alibaba Cloud in China, pushes the Qianfan Plan to attract developers to co-build the ecosystem. More developers on one platform with more products will organically pull up the growth on the user side of the platform. The synergy brought Microsoft an evergreen business, and Alibaba and many dot-com players are believers in a such story – though with varied approaches. DingTalk is more than an OA platform, it is like a gate to bring users into the Alibaba Cloud world. The restructuring seems radical, as many business units were re-organized and senior managers were re-assigned. The departure of the founder is usually not a good sign for any company, but for a DingTalk founder, the meaning is ambiguous. Rumors had it that the founder Chen Hang would be assigned to another social network project named RealMe (similar to Instagram) of Alibaba, a field whereon Jack Ma has long desired to deploy resources to compete with Tencent’s WeChat. Chen might have the chance to pick up his social network product dream in the future.

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Oct 15, 2020 05:43 pm ·

Baidu App Launches "Shopping" Channel

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Analysis EO
Oct 14, 2020 11:16 am ·

Xiaomi and Huawei Ban Top Mobile Games, Indicating Intensifying Competition

Recently, two famous Chinese phone makers, Xiaomi (1810:HK) and Huawei, announced that they would not allow access to two popular games on their application stores: Genshin Impact and Rise of Kingdoms. The reason is that they could not reach an agreement on revenue distribution with the game publishers. According to the Chinese Apple App Store, Genshin Impact and Rise of Kingdoms’ rank number 3 and 4 on the games list, respectively. Sources released show that Rise of Kingdoms' publisher and developer, Lilith Games, asked for a 70% share of total revenue in recent negotiations with Huawei and Xiaomi. But the two parties split on this issue. Huawei and Xiaomi used to demanding exorbitant prices Unlike a 3 to 7 payment ratio, which is the case between Apple and Epic games, China's gaming distribution channels have strong bargaining power and require more. Big smartphone systems builders like Xiaomi and Huawei ask for 50% of total revenue, topped up by gamers through app stores on the premise of paying off channel fees. In fact, the game developer and publisher can only get less than 50% of the gamers' money contributions. Rewinding the history of the main channels – the smartphone app stores spent several years building their dominant positions. As smartphone shipments rose steeply from 2012 to 2016, the top phone makers in China, including OPPO, Vivo, Huawei, Coolpad and others allied, demanding 50% of the total topline for distribution. At that time, even developers like Tencent (0700:HK) had to accept this rule. The atmosphere has changed as smartphone shipments have declined in recent years. Content providers like Tencent acquired game studios, enhancing their bargaining ability. Tencent's games accounted for 65% of total sector revenue in 2019. As game censorship tightened in recent years, the reduced games supply highlighted the success of Tencent's strategy, which helped Tencent reach a 70% distribution ratio deal on its games such as Crazyracing Kartrider, Jianwang 3 with Huawei and Xiaomi. Another gaming giant, NetEase (NETS:NASDAQ; 9999:HK), claims that it only receives 70% of the total revenue on its two games: Fantasy Westward Journey and Journey to the West. Other phenomenally popular games like Onmyoji couldn't sign such a deal. Alternative distributors are thriving Official app stores, third-party app stores and vertical apps make up the field of gaming distributors in China. Now developers and publishers are cultivating alternative channels: apps like 9Game and Tap Tap, implying that the phone maker alliance is likely crashing. Tap Tap has been a runaway success, turning into a prevalent mobile game sharing community with 4,400 listed games and 7 of them downloaded over 10 million times in 5 years. And 9Game, founded in 2009, a subsidiary of Alibaba, has become the largest Chinese android games distributing platform. These two channels provide mobile gaming news, installation packages, online communities and games ranks. They primarily generate revenue through online advertisements and can return more to the upstream. Analysys, a Chinese research body, said these vertical channels grow faster than hardware channels and third-party players. Besides, alternative media have better stickiness to gamers than other platforms, reflected by their apps' average opening times per day and daily usage. Specifically, apps of vertical channels are clicked 6.35 times per day, compared with 1.94 times for official app stores and 2.24 for third party app stores. What's more, gamers spend 23.89 minutes per day. By contrast, the figures for the other two types of apps are 4.5 and 7.87 minutes, respectively. Large games developers enjoy the fruits The bargaining power between game developers and publishers and distribution channels is decided by how much loss they can afford. The more loss a company can accept, it tends to achieve the dominant position. For example, small gaming studios that generate considerable revenue from a single platform like Huawei or Apple tend to fulfill their requirements. Instead, large gaming companies like Lilith gamers may choose to give up a vital channel like Xiaomi or Huawei while seeking revenue supplements from other media when they choose to suffer the pain. As intensifying competition on downstream, companies like Tencent and NetEase benefit from more choice on selecting partners, grasping more bargaining power.

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