Monday, June 27, 2011

WSJ: China's 'Twitter' Has Big Dreams

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It's about 6 months late, but the Wall Street Journal finally wrote an in depth piece on Weibo.  Of course a huge run in the stock was missed if you focus on the 'old news' outlets solely.  But with the big selloff [May 16, 2011: Sina Breaking Down so Tread Cautiously], I suppose one saunter in hoping for another run.


This pieces focuses on the next leg of the transformation of Sina, and specifically Weibo (becoming more "Facebook-like"), and sizing up the competition, mostly focusing on Tencent.   [May 11, 2011: Tencent - a Real Chinese Internet Juggernaut - Delivers Outstanding Earnings]
  • Charles Chao has built Sina Corp. into a Chinese Twitter. Now he wants it to be a Chinese Facebook, too.  Mr. Chao, Sina's chief executive, has led the company's transformation from an online portal focused on news and blogging to China's most talked-about social-media company. 
  • Since he launched Sina Weibo—which lets users send short, Twitter-like messages to their followers—less than two years ago, the service's popularity has exploded, with more than 140 million users as of March, by Sina's count. RedTech Advisors LLC, of Shanghai, estimates that Sina Weibo has 57% of China's microblog users and 87% of its microblog activity
  • But in the ultracompetitive world of China's Internet industry, such leads are hard to keep, and Sina faces pressure from rivals, who are pouring resources into the social-networking sector. Chief among them is Tencent Holdings Ltd., an industry giant with a big pile of cash that has been aggressively promoting its own microblogging site.
  • In an interview, Mr. Chao laid out a series of changes he is making to Weibo (which literally means "microblog") to broaden its offerings and attract more users.  A new version of the site, now being tested, will change its look with prominent sections recommending users of interest and offering games and other applications. Mr. Chao is trying to make it easier for users to define their relationships with other users—such as by labeling those who are real friends, as opposed to those who are just "fans." 
  • ....unlike many other markets, China—which has more than 450 million Internet users, more than any other country—isn't dominated by big U.S. companies like Twitter Inc. and Facebook Inc. In fact, China's government blocks access to those two sites for users inside the country.   
  • Instead, a host of domestic Chinese companies are competing to fill the space.  RenRen Inc., which runs one of the biggest Facebook-like sites in China, raised $743 million in a U.S. initial public offering in May that it is using to beef up its offerings. Rival Kaixin001, held by Happy Networks Ltd., also operates a social-networking site similar to Facebook. Chinese search giant Baidu Inc. is trying to turn its popular message board, Baidu Tieba, or Postbar, into more of a social network, and had its own microblogging service, Baidu Shuoba, or Baidu Talk, which failed to gain traction against Sina and now has been suspended. Sohu.com Inc. and NetEase.com Inc. offer microblogs.
  • Tencent has a successful online-game business, but executives say they are focusing their efforts on social networking and on their Weibo site in particular, including efforts to have third-party developers make applications for it, as Sina is doing. Tencent's challenge lies largely in Sina's users, generally a cosmopolitan set of social "influencers" from which Sina can expand outward and downward, compared with Tencent's younger users in China's lower-tier cities, from which it is harder to move up, analysts say.
  • Weibo won't be turning into Facebook, Mr. Chao said, but will have more Facebook-like features to allow for "stronger social relationships based on our new applications."
  • Analysts say the transformation will be a challenge. Tencent has significantly more resources to spend on marketing, with $1.7 billion in cash as of March, compared to Sina's $577.6 million.  In addition to the more than 200 million users Tencent claims for its microblogging site—it's hard to compare the companies' user counts, with their different methods of counting—Tencent has legions of users of its flagship product, QQ, China's most popular instant-messaging platform, and runs a social-networking site called Qzone.
  • Although Sina is known for its heated discussions, at times over controversial issues such as local government corruption and soaring property prices, most talk on the site isn't political. When sensitive topics arise, the company can be creative in limiting conversation without cutting it off altogether—for example, by blocking searches of sensitive keywords but not stopping people from publishing them on their own microblogs.
  • When asked if he was concerned a government crackdown might affect the outspoken nature of Weibo, Mr. Chao said that Sina had years of experience in dealing with content regulations while maintaining its websites and that he was confident the company could handle it.

[May 13, 2011: Sina Misses EPS Targets Slightly as it Invests in Weibo, Guides Down Slightly for Q2 Revenue]
[Mar 8, 2011: Forbes (SINA) Weibo]
[Feb 18, 2011: BW - A Twitter Knock Off has China Talking
[Jan 11, 2011: Word is Getting Out on Sina's Secret - Weibo]
[Dec 9, 2010: The Twitter of China - Weibo]

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