Business / Gadgets

Titans nab apps and grab maps to fill the gaps

By Meng Jing (China Daily) Updated: 2014-03-06 07:17

"There will be more acquisitions in the coming years. To defend their territory in the mobile era, these companies need to secure as many users as possible because the shift from PCs to mobile phones is irreversible," said Dong Xu, chief analyst at IT consultancy Analysys International.

"Moreover, as the Internet's 'creative destruction' of the traditional industries continues, there are new opportunities in vertical sectors, such as online education and finance.

"The three Internet giants have strong financial power. They can turn their weakness into strength in a very short time through acquisitions," said Dong.

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Baidu's strategy is clear. Chief Executive Officer Robin Li said in an earnings conference call: "Whenever there is the opportunity to undertake an acquisition to buy us either time or resources or talent, we will be open for that."

According to Dong, the acquisitions will involve vertical sectors wherever Baidu sees a consumer demand.

"In the PC era, Baidu was famous for its search engine, Tencent built its empire from social tools, and Alibaba was the king of e-commerce.

"But in the mobile era, you can't meet all the needs of users with just one or two services. So their acquisition targets can be in any sector," she said. The goal for each company is to construct a complete ecosystem.

Since the Internet giants hope to address their business gaps in a relatively short period, their acquisition targets are expected to be leaders in sectors where consolidation has already occurred, said Dong.

For example, there are rumors aplenty that the Shenzhen-based Tencent is likely to invest in JD, China's second-largest business-to-consumer company.

Industry gossip also has it that Alibaba will spend $1 billion for a 20 percent stake in digital television network operator Wasu Media Holding Co, which will allow it to include TV in its empire.

Citi Research analysts Muzhi Li, Ravi Sarathy and Gregory Zhao identified a few acquisition targets in a recent report. They said these companies are likely to have offline facilities, valuable data, a user base and traffic that can be monetized.

Tencent seems to enjoy an edge in China's mobile Internet sector, thanks to the company's popular mobile messaging app WeChat.

"With the more than 600 million registered users of WeChat, Tencent has secured an important gateway in the mobile era," said Lu Jingyu, an analyst on the mobile Internet with iResearch Consulting Group.

By embedding a payment function and investing in local service providers, Tencent has integrated the taxi-hailing service Didi Dache, wealth management services, e-commerce and movie ticket sales on its WeChat platform.

With the investment in Dianping, users of WeChat can now access that company's group-buying services and merchant information on their handsets, paying directly through the payment function embedded in WeChat.