China Mobile on Services Steroids 中国移动重拳出击
After praising China Mobile (HKEx: 941; NYSE: CHL) just last week for finally returning its focus to the present under a new top management team installed earlier this year, I feel compelled to update my previous view by expressing a slight concern at a sudden flurry of new initiatives from the company. In the last 24 hours alone, I’ve read reports of at least 3 new moves by China’s largest mobile carrier all aimed at tapping the growing market for high-speed telecoms services.
This new flurry of initiatives contrasts sharply with China Mobile’s stance over the last 2 years, when the company did very little to promote high-speed data services and instead focused on its yet-to-be-built 4G network. That focus cause it to rapidly lose market share to more aggressive rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA).
I previously welcomed this “return to the present” for China Mobile, following its announcement last week of plans to develop its own brand of mobile phones and also to set up a company to become the focus of its Internet services. (previous post) Now, just a week later, I’m reading reports that China Mobile is planning a major push into e-commerce (English article) and also that the company is launching 4 new products for its self-developed music service. (English article) What’s more, Hong Kong media are reporting China Mobile’s is also launching a subscription-based mobile TV-viewing service that will be available in the former British colony.
According to the reports, China Mobile’s e-commerce initiative is just beginning, with the company now hiring software makers and system developers to build the product. This particular initiative does seem quite forward-looking, since e-commerce is already growing fast in China and mobile e-commerce will inevitably become a wave of the future. But the space is already quite crowded and competitive, with established players like Alibaba, Wal-Mart (NYSE: WMT) and Jingdong Mall all vying for a piece of the pie.
The music initiative also looks interesting, and will see China Mobile offer music and related information to consumers for use on their mobile phones. But again, the company will be entering a relatively crowded space where names like Baidu (Nasdaq: BIDU) have also launched similar services. The Hong Kong initiative is relatively self-explanatory, and will see the company offer services that allow users of any mobile service to watch TV over their mobile phones.
Any one of these initiatives would have been a positive sign for China Mobile, as most of them look well-conceived and are in important growth areas as the company looks to earn more money from data services. But the sudden appearance of so many new initiatives at the same time after such a longer period of quiet is just slightly alarming, since China Mobile is unlikely to have the necessary resources and management expertise to implement so many new programs at the same time.
That means many of these initiatives could stand a higher chance of failure if they don’t get the resources and attention they need to succeed. It’s still a bit early to predict such failure, and China Mobile is indeed a huge company that should be capable of handling any of these new initiatives individually. But I do predict we could see some signs of disorder and other dysfunction appear, as well as a few failures, if the company continues to roll out new initiatives at this current new rate.
Bottom line: China Mobile’s sudden introduction of a number of major new initiatives is a good sign but also a bit worrisome if it continues to roll out new programs at such a rapid rate.
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