June 13th 2016: Radio Free Mobile widens its coverage of global ecosystems with the publication of China Ecosystems – BATmen.
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Baidu, Alibaba and Tencent (BATmen) dominate the scene in China. Almost every smartphone is user in China has an active relationship with all three of these companies. This means that none of them have yet developed fully-fledged ecosystems but remain focused on one or two services only. This is where the big battle will be fought and while Tencent has best armoury, Baidu demonstrates the best understanding of how to use it.
- China has grown up as a mobile first market. In many ways it is more advanced than its counterparts in the West and the usual rules do not apply. Internet control has meant that China is a huge market offering Chinese services for Chinese users almost exclusively by Chinese companies.
- Services are highly developed but the ecosystem is not. Between them the BATmen dominate the Digital Life pie but unlike Google and Apple, none of them outright control the Digital Lives of Chinese users.
- Ecosystem. Consequently, all of the BATmen need to expand beyond their areas of strength. This will lead them to start competing fiercely with each other as long term growth depends on them developing a thriving ecosystem where users spend almost all their time with one player rather than bits and pieces with all three.
- Baidu is the smallest of the BATmen but RFM thinks it has the most potential to surprise. It is not a leader in Digital Life but critically it demonstrates understanding of exactly what it needs to do to evolve into a thriving ecosystem. Even with serious shortcomings in corporate governance, the ADR is very attractive.
- Alibaba is the weakest of all the BATmen when it comes to the ecosystem. It is an e-commerce powerhouse but beyond that its understanding of the ecosystem appears limited. There is no sign of this changing which, combined with poor corporate governance and an expensive ADR, leads to potential downside.
- Tencent is in pole position with a dominant position in Digital Life and the greatest resources to invest. Unfortunately, Tencent does not demonstrate deep understanding of the ecosystem and RFM fears that much of its potential may go unrealised. There is a lot of upside should things change, but of this there is no sign.
- Xiaomi and China Mobile are the also rans as Xiaomi’s ecosystem has not seen real development for 18 months while China Mobile appears to be more interested in providing capacity. The BATmen are fortunate, as China Mobile is a heavy weight that could cause them real problems if it decided to get serious on the ecosystem.