What's up for Alibaba's mobile app strategy?

Mon Feb 24, 2014 4:00pm EST
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By Denny Thomas and Paul Carsten

HONG KONG/BEIJING Feb 25 (Reuters) - Billionaire Jack Ma's Alibaba, the dominant force in China's $1.6 trillion e-commerce market, may already have lost a battle with rival Tencent for the world's biggest mobile market.

While Alibaba Group Holding Ltd dominates in e-commerce, Tencent Holdings Ltd has taken over China's smartphone screens with its WeChat, or Weixin, social messaging platform.

It's a battle that is being more closely watched after Facebook Inc's $19 billion WhatsApp buy, and puts the spotlight on Ma's mobile strategy, especially as Alibaba winds up for a mega IPO that could value the company at close to $130 billion.

The WhatsApp acquisition and that of mobile messaging firm Viber by Japan's Rakuten Inc have driven home this month how crucial mobile messaging platforms are to controlling user experience on smartphone screens.

"The world's major tech companies are realizing that having a really popular mobile messenger has simply become table stake for competing in this era of computing," said Ted Livingston, CEO of Kik Messenger, a WhatsApp rival. "If you want to play in mobile, you need to have a popular mobile messenger. You don't have one? You don't get to play."

Alibaba has been grappling with its mobile business in China, and its Laiwang mobile messaging app has yet to make a big impact - either as a chat app or a portal for mobile gaming. As of November, Laiwang had 10 million users, according to Alibaba. As of September, Tencent's WeChat mobile messaging app had 272 million monthly active users, booking taxis, topping up phone credit and even investing in wealth management products.

Some observers say that's too big a catch-up for Alibaba.

"WeChat has won China," said Ben Thompson, who writes about technology at stratechery.com in Taipei. "It's going to be the dominant application there. Tencent controls the channel, the customer relationship (and) that means they can promote their services and e-commerce offerings to the exclusion and detriment of Alibaba."   Continued...