Kai-fu Lee: O2O will change Chinese entrepreneurs still need to be cautious

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Photo of Innovation Workshop chairman and CEO Lee Kai-fu speech

Tencent Science and Technology (Lotte) October 19 News, Innovation Workshop CEO Lee Kai-fu Li (micro-BO) today at the Mobile developers Conference said today, O2O future will change China, online, offline once connected, this is a huge burst of power. However, for the entrepreneur, still need to be cautious.

Lee said that O2O in foreign countries appears to be about to explode, so that everyone is full of expectations and confidence, there are O2O to help Americans take a taxi to help Americans to play advertising. But when entrepreneurs enter the O2O industry, they still need to consider the difference between China and America. There is little difference in the game between China and America and it is easier to accept games or socializing.

But O2O is not the same, Chinese users are very avantgarde, are able to catch up with Americans. But Chinese businesses, those grocery stores and restaurants, are not ready. Instead, American businesses are very well prepared to pick up with mobile internet users. O2O will be a slow process, slowly developing from the areas of preparedness such as tourism.

The following is the record of innovation Workshop chairman Li Kaifu's speech:

The topic I want to talk about today is about penetration and value.

What is penetration and value? When we look at the beginning of any field, there may be a small group of users who will start the market with a willingness to try new areas. There will be new users, they have new needs, new habits will continue to penetrate, and they will use this area more deeply.

What I want to talk about today is that we have seen the last few years, when we started this conference two years ago, we can say that we are just getting started. Last year we saw a spread, and today I want to talk about infiltration.

Today, I want to talk about three points, the first is to share a good news, today's internet has entered the 200 million era of successful spread. The 2nd I want to talk about is how mobile internet will deal with the future 300 million or 500 million of users, how to penetrate. Finally, I want to talk about how to make money, is a problem of monetization.

Chiang has used this very good data just now. If we only look at user behavior, global smartphone devices are already over 600 million, and only 45 billion apps have been downloaded in iOS. What is particularly exciting is that every user using the app has 94 minutes each day, which is a long time. Their habit of using, or the degree of addiction to the mobile Internet is more than the Internet, more than 30% of the time. It can even be said that people using the PC Internet time is eroding, is declining, mobile internet usage is growing.

If we look at the operating system, on the right-hand side of the chart, Android is basically the leader in all mobile options. In the past three years, its growth rate is very amazing. In mobile applications, the game is still the world leader, accounting for 70%.

What will happen in China? If you are very excited about this picture, feel the rapid rise of mobile internet, the era of mobile monetization has come, we can see that China's development will be faster, the habit of mobile internet penetration is faster, China's Androcheng long faster, China's game ratio will be greater. From the global perspective China, the difference between China and the world is a word, is "more", the mobile internet exciting things, in China we are more exciting.

One of the most exciting things about mobile internet in China is that it has entered the age of 200 million of users. Today we can see, if we say last year we are optimistic that there will be 150 million next year, will not have more, the end will reach 150 million, many people are discussing this matter. But it is not until the end of the year that China's mobile internet users have reached 200 million. This is based on the data obtained from our investment in the League of Friends. iOS has reached 60 million and Android has reached 140 million. We all saw 5,000 people attend the meeting last year, everyone is boiling, very optimistic. The numbers we've seen this year are far bigger than last year, and that's a very exciting thing to do.

How fast is this speed? If carefully measured, we will find that the mobile internet growth rate is about 6 times times the Internet. It took 36 months to grow on the Internet, and in the mobile internet it took only 6 months.

Over the past two years, I have made bolder predictions at meetings and conferences, and there have been some more severe questions. Today we can just recap whether these predictions are correct.

By the time the Innovation Workshop was founded in 2009, the mobile internet and smartphones would bring forth the wave of the Internet, a day that has been fully seen.

The second is that Android's platform will prevail. There was a lot of scepticism about the percentage of Android in that time, but it turned out to be true.

Third, we see that the first batch of applications will be tool-oriented, and now these are very popular. From the pea-pod games, security guards, security assistants, stores, 91, and so on, it does prove that the tools are the first wave.

And we predicted that China will have a unique number of mobile applications, bandwidth is very small, but the client is very bad. In 2010, we boldly predicted that the price would drop to 1500 pieces of an Android phone. In 2011 it was 750 dollars. Some users may feel that this price is not good to use, but do not worry, at that time the bad use of the next year will be good. 2010 we predict that entertainment and social networking will become the mainstream application development opportunities. Today we have also fully witnessed, we also predict the international download fee model in China does not work, in China we need to take a new monetization model. From the data we also see that the free download is the real mainstream.

In 2011, we talked about Android will be a ride in China dust, users will be from white-collar development to mainstream users. The game will be the first batch of the best money, the best universal opportunity. It's not any game, it's not a PC transplant, it's just a simple stand-alone game, and it's slowly getting into asynchronous socializing. and the high quality of the game, today we are indeed beginning to see. On the whole, our predictions are more accurate. What predictions will we make today?

We see last year's mainstream so-called thousand mobile phones and this year compared to a huge difference, 1000 dollars can buy a very good dual-core mobile phone, but also is 4.3 inches, and is high-definition. The mobile phone on the right is 2000 yuan last year and has dropped to 1000 this year. Last year, 1000 of mobile phones, this year to 700 yuan, a rapid decline in the price, the ability of thousand yuan mobile phones, we saw the mobile phone 400 yuan this year, and even someone said that 200 yuan can buy an Android phone. The fall in prices is certainly an important factor in its popularity and spread.

In addition, the capacity of the thousand-dollar mobile phone has also been rising, bringing a completely different user experience. We watch music, in the past, we are more accustomed to the choice of listening to music, as the mode of listening. Now the processing is getting faster, even in some new software, such as love singing, you can sing while singing, and put your own echo into the ear, let you feel that you sing very well, although you may sing very bad. This effect was not achieved a year ago. With the iphone and high-end thousand or more Android able to do so, the music experience from listening into participation, into a karaoke experience. This was not achieved a year or two ago.

On the right is some games, a year ago played a game, most of the simple 2D, stand-alone, a person to play the game. Now some of the games have been a bit long like the end of the tour, more feeling and "journey" is not a bit like. In China, we can have a 3D plus page tour experience in the iphone and ipad. More and more games will be more and more fun, the day of monetization has come. Developers need to note that, in the past to find a few students to get some pictures together to do 2D games, there will be a lot of people to use, this day has passed.

Because the user expects the experience to be higher, because the handset ability is higher, the game experience is also higher. The examples of music and games I've given here are just a few apps, and we can see more apps in other areas that are running on more popular, more efficient mobile platforms.

In this environment, we also see some exciting situation, the user growth in China is more than the global, the chain of growth, the world is 33%, this is already very amazing. Android users around the world grew by 33% in the second quarter to the third quarter. If each quarter is 33%, it will turn several times a year. China is 87%, a quarter over the previous quarter, is a huge growth. The upper-right corner is the user's activity, which is China's growth figures. In the first quarter of this year, if the app starts with a number of 100 people, it becomes 245 in the second quarter and becomes more than 700 in the third quarter.

Everyone used to be in the first quarter, or the Andro as a telephone to use, call, send text messages, to the second quarter, almost everyone in the app, this speed is only in the two quarter of the growth, let us full of confidence, the development of the app must be a bright road.

In the lower left corner we see the situation of broadband, we predicted the last year the broadband situation is not optimistic, we predicted that the initial application should be a strong mobile phone, but as far as possible to use less bandwidth, because it is expensive, but not necessarily. After the operator's efforts, this situation has been resolved. A year ago, 46% of the people were on the broadband mobile internet, which today has reached 58% from 46%. What is broadband mobile Internet? It's basically a combination of 3G and WiFi. WiFi is a very effective solution to the cost of the 3G matting base station. A lot of places on campus have WiFi, which makes us more optimistic, the future bandwidth will be more and more good.

The lower right corner is the user's spread, the mobile internet used to be basically five to one level of the world, especially Guangdong. There are also North Canton, Zhejiang, Jiangsu's users are the most. If the five provinces and cities have been removed, the northwest and northeast provinces in the past accounted for only 45% of the flow, now accounted for 60%. This is a phenomenon that spreads to the whole country. Just talked about the spread of the phenomenon is absolutely happening, users grow faster than abroad, using more and more apps, broadband more and more easy to use. Not only the more developed provinces and cities, but also spread to the whole country. So the use of mobile Internet is a national movement.

The following I want to talk about on the basis of just now, let us very optimistic about the explosion of growth. Whether it's a price, a habit, or a user base.

The beginning of mobile Internet is a group of high-end users with tool-type things. Then the cheaper it gets, a lot of people start using it. Next, more people have to have a stronger habit of using, not only to buy a thousand cell phone, but every day with app, on different websites. This is the infiltration we see. Infiltration has begun to occur, and we have just talked about the use of Q1 to Q2,q2 to Q3,app about 7 times times the growth.

We think the biggest difference today from two years ago was that two years ago it was for 50 million to 70 million of high-end users. Of the 200 million users today, about 130 million are not high-end users, perhaps young, perhaps students, even blue-collar and so on, are within the user base. These 130 million and the next 30 million, if there are 500 million mobile internet users, this inside of the 430 million, what do they need? Their needs are not the same as they were two years ago, and two years ago it was a tool-oriented, PC-dominated, moving slowly toward the mobile. Today's users need four things, simple, useful, fun, carefree.

Simple, such as Papa Products, the last day has tens of thousands of downloads and registration, is the photo plus voice, a word to understand, a minute can learn how to use a very cute, very interesting products.

Useful, the Internet fast Bird is also a minute to explain clearly, can help you save half of the traffic.

Sirt in the lower left corner, you can tell jokes to it. If you're not reading a joke, you can talk to it with the iphone and let it tell jokes, which is the best place to play. There are strange places, like yesterday's Weibo uploaded.

The lower right corner is just the singing, let you feel the singer's experience, singing a bad person feel that they sing well. In fact, the next 300 million users need these things, not the need for special high-end tools, basically is simple, useful, fun, carefree.

In this development, we believe that social interaction is very important. If a product spreads quickly and seeps into 200 million, 300 million, 500 million people, socializing is very important. Ma always talked about how to use micro-mail, QQ or Sina Weibo to make the product quickly spread. Two years ago, the opportunity appeared to be a successful integrated social platform for Sina and Tencent, but developers need not worry, just as there are many opportunities in the United States. We can see that in the past year there have been some relatively vertical social products, such as social networking, hormonal socializing, business networking.

This year, the field of music, the field of pictures, the field of outings, as well as the field of video, voice, shopping areas are developing more and more vertical social. This means that socializing will continue to go perpendicular, and we have plenty of opportunities. Not everyone needs to build a complete social chain, we can fully use Tencent and Sina's social chain, let us get better development.

If you are interested in the development of social networking, our understanding of society is the following four words, we think that a good social product should be able to directly to the people, feel warm and need. The second is for a group of people, so that they can indulge and wide heat, not just for you think they have needs, but a group of people can be described. We want the product to be sustainable. Finally, we want user behavior to be important. If the behavior is over and gone is not good, behavior to be able to precipitate as content, can give the social field to bring the sustainable advantage.

We talked about O2O last year and we talked about O2O. O2O in foreign countries seems to be about to explode, so should let us full of hope and confidence. There are O2O to help Americans take taxis and help Americans advertise. I would like to remind you that when you jump into the O2O, you should consider the difference between China and America. The difference between the US and China in the game is not particularly big, and it is easier to accept games or socializing. But O2O is not the same, our users are very avantgarde, are very able to catch up with Americans. But our online businesses, the grocery stores, the restaurants, they're not ready, they're not as ready as consumers and users. In the United States is different, the U.S. business has been very well prepared to connect with mobile Internet users. O2O itself is the behavior of online users to connect to outline merchants. In China, because the business is not so mature, there are some challenges.

There are two trends that can now be seen, one of which is rapid online development. I think that whether it is pudding or a hotel housekeeper, this kind of product is developing quickly on line. But this kind of product faces the problem of homogeneity, if others also do how to do? Because there is only line, there is no line. On the right is the behavior of the line, home food sinks is a very interesting example, did the line to serve the meal, they used very hard, but very competitive way, once made, may be a bit like the Beijing-east approach. is if you do the delivery team, and then contact with each business, they do not understand the Internet, it does not matter, I will help you explain, I will help you to do. If you are willing to go so deep, it can be made O2O, but the cost is higher, the development is relatively slow.

Finally, I want to talk about how to make money. We can see that there are basically four business models on the Internet. The first is by the entrance or the portal. The second is game or virtual money, virtual props. The third is to rely on business services. Four is by advertising. There is no doubt that the mobile internet will take these four steps.

What we are seeing now is that some companies have become the so-called portals, whether Tencent, 360, pea pods, 91, and so on, they have formed a certain degree of entrance. There are certainly more opportunities in the future.

We are very optimistic about the game, charging mode and PC is very similar.

The third is business, we are more worried, but we feel that sooner or later we have to break through, we continue to work hard.

The last is advertising, the future will be very bright, but may have to wait.

Let's talk about the game first. The game is the most understandable, many of you here are the development of the game. We heard that Chiang and Ma always analyzed the game, and we were all very optimistic. Here are two examples of "Wang Xian" and "World Online", the monthly income reached more than 12 million. The characteristics of these products are more and more beautiful, more and more of the effect of the.

In the game field, many developers here say that the game will be done abroad, to do the iphone, IOs, Android can not earn money, we have to make a prediction that Andrew is very profitable. For a game developer, it must be Android that brings more opportunities. That doesn't mean you can't do the iphone, but Android is better.

We're seeing more Android users, probably from 3:1 to 5:1, compared to iOS. The upper right corner is the up value more and more optimistic, just start relatively backward, now getting better. The lower left corner is the ability to charge, iOS have a lot of trouble to charge the place, hope that the future can result, but the past needs of two currencies, so that its payment behavior in Chinese users more difficult to produce, foreign users is another matter. The lower right corner is the open system that provides more space. In foreign countries, I think the iOS approval process is a very painful thing. Does anyone think that iOS approvals are too long? Are there only a few? Everyone I met complained about the problem. This problem is causing us trouble, but in the long term, lengthy approvals can make game development and updates slower.

At home, if you want to do a game, there are many channels to do the shop, there are four or five large stores in Android, from large companies, Tencent, 360, and so on, until small companies, to 91, pea pod applications, there are many markets available. Android can make it easier for you to pull traffic over. Many games are required to be predictable every day, every week with money to buy users and traffic, put these traffic to a number of servers above. Such moves are far better than the iphone in Android. So we're more optimistic about Android. If there's a clear point here, we're optimistic about iOS and more optimistic about Android than about the bad iOS.

At the innovation Workshop, we just talked a lot about predictions, we're not analysts, we're not forecasters, what did we do? A lot of talk, predictions right or wrong, many people say is empty talk. You can see the project from 2009 to today. You can see that our investment and forecasts are exactly the same. So we share with you that if you think our forecasts are accurate, our investment is good. When we talk about Android ecosystems and tools, the Android industry chain is our investment project. Later we talked about the game, from stand-alone to asynchronous social, slowly have the style of online games and a higher quality 3D trend, we cast a group of mobile game industry chain.

We have just talked about the O2O, we analyzed the different O2O, 1.5 ago, we think that tourism is relatively can be done O2O, because there are art dragon, Ctrip such company education for a long time. We have a lot of concerns about O2O, but we can do a vertical field in one field, and most of the O2O we do is in the field of tourism. In the lower right corner, social networking is in the vertical, especially in the special vertical crowd, and we've invested in several of these companies.

What do you think of a lot of people down there? We are also exploring, there are many different directions, here are a few examples, such as voice and music, video in the mobile internet role, some more vertical social, there are cloud services and tools, there may be business-to-business opportunities. We are still exploring. If you want to guess what we think, it's the best way to see what we're investing in.

To make a summary, we see five phenomena today or five views of the future. First of all, we think today we are very happy to enter the 200 million Internet era, we believe that the end of next year will enter the era of 500 million Internet, truly achieve universal. In the past 6 times times the speed reached 200 million users, the future will be 6 times times the speed to greet the next 300 million users.

Second, we think social networking is great, allowing products to spread very quickly, and in the future will be developed in a vertical and entertaining society.

Third, we think the game is still the undisputed best money, monetization, even the only proven area, we think next year there will be several monthly 40 million revenue games. This is a very large number. We also think the entire industry chain will be over 5 billion.

Four, we believe that the future of O2O will change China, online and offline once connected, this is a huge burst of power. We are worried about whether the online business of O2O is ready. This is a slow process, from the prepared areas, such as tourism, slowly develop.

Finally, we think how to let everyone connect to the world, so that social communication to achieve the best, the main channel, the future channels and tools will be more mobile internet, rather than PC.