Rumor: China Telecom, Netease Partner on Mobile IM
Sina Tech, 4/02/13
An industry source revealed today that China Telecom (NYSE: CHA; 0728.HK) chairman Wang Xiaochu and Netease (Nasdaq: NTES) CEO William Ding have met to discuss the development of a new mobile social tool to compete with Tencent's (0700.HK) WeChat (Weixin) mobile messaging application. The tool would build upon China Telecom's Yi Liao mobile IM and multimedia communication platform, with technical support from Netease. According to the source, an upgraded "Yi Liao" will be announced, under the name YiChat ("Yixin") once China Telecom and Netease have added the necessary functionality.
The source said that China Telecom and Netease may establish a JV to operate Yi Liao, but added that Netease will assist China Telecom on adding functionality to Yi Liao regardless of whether or not this happens. Netease will allow users of Netease accounts to communicate with Yi Liao users. China Telecom reportedly hopes to interest China Unicom (NYSE: CHU; 0762.HK; 600050.SH) in the plan.
Editor's Note:
An internal China Unicom PowerPoint deck leaked by Huxiu.com sets out Chinese mobile operators' sharply different stances on OTT services:
China Mobile (NYSE: CHL; 0941.HK)
(1) believes that plans for the three operators to establish a JV are unworkable owing to high coordination costs;
(2) will continue to promote its Fetion and Fei Liao mobile messaging tools; and
(3) will implement management and control for OTT services on its LTE network.
China Telecom
(1) will continue to develop Yi Liao, and will form a strategic partnership with Netease for joint development and operation of the service;
(2) hopes for connectivity between the three operators' OTT products; and
(3) will continue to await the market's verdict on the operators' products, and will support the adoption of whichever one grows largest.
China Unicom
(1) recognizes that relying on its own products — whether developed exclusively in-house or in partnership with other companies — is unrealistic, and that no product is likely to surpass WeChat in the short term; and
(2) believes that its competitive relationship with the other two mobile operators outweighs any potential partnership, and that cooperation with WeChat may be a way to attract subscribers from other operators' networks.
For more background on this topic, please see "Rumor: China Telecom Tests New Mobile IM Product 'Yi Xin'" MD 3/27/13 issue and "Update: China Mobile to Integrate Fetion, Fei Liao" MD 3/25/13 issue.
Keywords: William Ding Wang Xiaochu Netease China Telecom China Mobile China Unicom wireless Tencent Fetion mobile IM CHL 0700.HK 0728.HK 0762.HK 0941.HK 600050.SH CHA CHU NTES Fei Liao Yi Liao WeChat YiChat
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