31 Dec 2015

Analyse Asia Podcast: The Five Major Events in Asia 2015

In part 1 of our year-end episode, we discuss five major events in Asia that occurred in 2015: (a) the surge of venture capital financing in Asia and its implications, (b) SoftBank’s Pepper with Alibaba and Foxconn, (c) the Nintendo-DeNA deal, (d) Xiaomi’s challenging year and (e) global recognition of Wechat’s messaging platform. We also added a short discussion on the upcoming dawn of self-driving cars and examine its implications for on-demand taxi-hailing apps, investors and car makers.

Here are the interesting show notes and links to the discussion (with time-stamps included):

Event 1: VC investments in Asia have reached a record high in China, India and Southeast Asia. On-demand hailing apps and E-Commerce dominate the conversation. [1:10]
Event 2: Foxconn, Alibaba invest US$236M in SoftBank’s Pepper. Will Asia to dominate the conversation for robotics and hardware? [9:40]
    • Asia’s always held the upper hand with hardware. But as hardware improves, it becomes important to build the brains (data layer as a hive mind, much like for Google’s self-driving cars). Baidu and Google are leading the way.
Event 3: NintendoDeNA deal and how it changed the landscape of gaming not just in Japan but the world. [14:02]
    • Their first attempt, Miitomo, was pretty disappointing (their stock slid right after – ~10% decline).
    • Attempting to link mobile games to consoles will likely hamstring both businesses. Strategy not driven by market needs, but needs of primary profit center.
    • See our earlier podcast episodes 26 and 50 with Serkan Toto and his recent article “Nintendo Shock”.
    • Interestingly, Niantic Labs’ attempt with Pokeman Go might have more of an impact.
Event 4: Xiaomi’s challenging year [18:00]
    • According to some estimates, Xiaomi saw its first YoY decline in some quarters. In danger of missing annual sales target. Clear case of low-end disruptor in turn facing low-end disruption. Need to move upmarket (expand overseas) to continue growth. Conservative expansion strategy fraught with dangers. Expansion into home tech, etc. are not a substitute, but rather a (higher margin) way to monetize the base created through the smartphone business.
    • The empire strikes back as traditional Chinese technology companies are fighting back against Xiaomi by copying their go to market strategy. Huawei is the third largest global smartphone maker with 8.7% and Lenovo is the 5th with 4.7%. (Ref: Episode 59 with Kitty Fok on why Huawei has competitive advantage in building smartphones with chips and carrier technology)
    • Report on Xiaomi missing their sales target by Wall Street Journal
Event 5: WeChat gaining global recognition and going mainstream – 650M users in Q3 2015 [23:30]
    • This year, senior executive from a top US company (Dave Marcus from Facebook) accepted that Facebook is learning from WeChat.
    • Is Wechat the roadmap for platforms with no operating system capabilities such as Facebook as to how one can innovate against the mobile operating system layer? Can its model even be replicated in the West?
Side event: Investments in self-driving cars from Google, Uber and its implications to Asia. [28:37]

    • Competitive advantage of ride sharing companies is the network effect between drivers and riders. With self-driving cars, one side of the network goes away completely, i.e. competitive advantage purely becomes accessibility (fleet size) and reliability (data/AI) of self-driving cars. In the short-run, this benefits companies that own the best self-driving car tech, once self-driving cars are “good enough” biggest value in licensing tech to other ridesharing companies.
    • BL’s pet theory on how SoftBank’s play in taxi apps with Pepper can align with a world of self-driving cars.
Other references: App Annie Predictions 2016

Source: Analyse Asia