Editor's note: This article was written by orchid, a contributor to the Chinese site of TechCrunch. The core argument is that the impending inflation will make the mobile Internet industry a safe haven for capital, and the massive influx of capital will greatly accelerate the rapid development of the industry, speeding up the explosion of mobile Internet.
Recently, while discussing the prospects of the e-book industry with friends, we touched on the question of whether Chinese people have a reading habit. This is because one often hears criticism that Chinese people do not like to read books. In many Western countries, people generally read books while commuting, whereas in China, such scenes are rarely seen. So, I recently paid special attention while commuting and came to the following realization: it turns out that Chinese people are not uninterested in reading; they are just all looking at their phones.
On Beijing’s buses and subways, it is quite rare to see someone reading a book. However, based on my observation, more than half of people under 35 years old pull out their phones as soon as they get on the bus and stare at them until they get off. This shows that the mobile phone as an information terminal has become inseparable from the daily lives of the majority of ordinary people. But apart from common functions, what else do people use it for? Currently, there are only a few options: reading e-books, listening to music, playing games, accessing QQ via WAP, using social networking sites (SNS), or reading news and posts. Relatively speaking, fewer people use smartphones with 3G internet access.
Let me give you an analogy. It's like the second wave of computer purchases in China during 1998-1999 when computers entered millions of households. Whether it was for single-player games, listening to CDs, or using software, everything was installed via CD-ROMs, and data was exchanged via floppy disks (there were no USB drives back then). It was similar to now when people insert memory cards into their phones. But who still uses CD-ROM drives these days? With just a network cable, you can get everything you need (from this perspective, I personally think Apple was wise; memory cards are a dead-end business). Of course, ten years ago, the internet was far from widespread. Generally, forward-thinking families would try connecting a modem to a telephone line, enduring a speed of 5kb/s to visit a few portal websites and glimpse at the "wonderful world outside." A very small number of "high-end users" had already introduced twisted-pair cables and started imagining a completely new "digital life."
The subsequent story is well known. As internet speeds improved, high-speed internet also entered ordinary households, driving the rapid development of China's IT industry. Portal sites, instant messaging (IM), blogs, online games, online shopping, online payments, search engines, video, SNS, microblogs, and other sub-industries continuously emerged, making Li Yanhong, Ma Huateng, Zhou Hongyi, and Chen Yizhou, among others, extremely wealthy. It also allowed the first generation of programmers to amass great wealth.
Isn't this exactly the situation that mobile internet finds itself in today?
Limited by various issues like internet speed, most people still only use their phones as small standalone computers. Even those who use their phones to access the internet generally don't consume much data. Perhaps, China has already reached the critical point for the explosion of mobile internet.
What factors constrain it? What are the new trends? When will it explode? Below, I will indulge in some irresponsible speculation from three aspects: technology, capital, and market.
1. Technological Factors
1) The open platform systems launched by Google and Apple have led to an explosion of mobile applications with excellent and powerful features, freeing manufacturers from software development and significantly reducing software costs. However, in terms of promoting mobile internet, I personally favor Google's Android platform more because it not only opens up to developers but also to phone manufacturers, which is something Apple's iOS struggles with.
2) Technological progress continues to drive down the price of smartphone hardware. One of Li Kaifu's recent predictions is that Android phones will drop from 1500 yuan to around 750 yuan next year, which will greatly promote the popularization of mobile internet. However, this may be significantly affected by inflation.
3) 3G data communication technology is becoming more mature and widely adopted, and operators are gradually lowering prices to levels acceptable to the market. This is one of the key points currently holding back the development of mobile internet, but the overall trend will be faster speeds and lower prices. I am an early user of Tianyi. From CDMA 1X last year to EVDO now, the monthly cost of hundreds of megabytes of data traffic keeps dropping, and it hardly costs anything now. So, except for mobile media streaming which is too expensive, basically everything else works.
4) The popularization of online payment, mobile banking, and even upcoming mobile payment makes payment methods more integrated into daily life, driving improvements in mobile terminals. The upstream companies in the mobile payment industry have already welcomed spring. Data shows that there are already more than 1200 domestic chip companies, most of which are involved in researching mobile payment chips. The government has already planned to invest 25 billion US dollars in the chip industry over the next five years, and the mobile payment industry will be one of the biggest beneficiaries in the future.
5) The maturity of cloud computing significantly reduces the technical pressure on terminals. The computational burden shifts from the terminal to the cloud, freeing up some hardware resources on the phone. This might be a potential growth area in mobile gaming and mobile data processing in the future.
6) Mobile terminals show a new trend of "sensorization". In the future, mobile phones will increasingly become a "port" between individuals and the mobile internet. Unlike personal computers, mobile phones will carry more personalized, unique, and real-time "sensorized" functions. Beyond the already realized "seeing" and "hearing" functions, they will also be able to measure users' location, speed, gravity, and even detect "showing" your touch, smell, taste, heart rate, etc., which will play a huge role in future mobile healthcare, security, portable control industries, etc.
From the above technological perspectives, I have speculated on the development trends of mobile internet. However, only with sufficient industry capital and a relatively good market environment can continuous technological innovation be driven. Therefore, below I will continue to explore from the aspects of capital and market.
2. Capital Factors
1) The venture capital market is becoming more mature, and the concept of venture capital investment and financing has become the dominant rule in the startup market. The launch of the Growth Enterprise Market (GEM) and increasingly diversified equity transactions have established basic exit channels for more IT SMEs, making the flow of capital smoother.
2) The instability of other investment channels, such as the housing market's peak point, stock market fluctuations, and the accelerating deterioration of inflation expectations, will force social capital to urgently seek new investment channels. Mobile internet is likely to become a safe haven for the capital market. With the massive influx of capital, it will drive the rapid development of the industry.
3. Market Factors
1) The popularization of social networks and mobile internet has greatly stimulated the market's demand for fast, open real-time information acquisition and interaction methods (such as geographic information, online socializing, mobile entertainment, and information customization). These market demands will interact with the technological development of mobile internet, stimulating each other further.
2) Operators have gradually recognized and supported the terminal subsidy model, leading to significant price reductions. Starting this year, operators have mainly promoted the "prepay phone bills to get a free phone" campaign. Recently, Telecom and Unicom have even advertised 0-yuan phone purchases, especially for the iPhone 4, which is quite tempting. However, the subsidy threshold is currently set at over 70 yuan per month, but I believe it will move towards the mid-to-low-end market next year.
3) The damage caused by inflation to market purchasing power. This is almost certain. Inflation will definitely reduce purchasing power to some extent, but its impact on different consumer groups varies. Personally, I believe that compared to other products, mobile terminals, as a necessity of life, will have a smaller impact on mid-to-high-end consumers, mainly affecting the low-end market. Therefore, companies should be particularly cautious when advancing towards the mid-to-low-end market.
The above are some of my irresponsible speculations about the development trends of the mobile internet industry. However, whether it can bring the next wave of peaks in the IT industry like the internet wave ten years ago remains to be seen, as there are still some unstable factors at present. For example, the differences in the overall economic environment's impact on the IT industry: the previous wave of the internet boom was accompanied by a decade-long stable high-speed economic growth, but how far the Chinese economy will go in the next ten years is a question.
In conclusion, stop obsessing over group buying and quickly join the promising career of mobile internet!
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