The history of the Penguin Empire

Born in 15, QQ global users nearly 800 million, and the advent of only two years of micro-letter, but has been in the world to recruit more than 300 million users. Tencent, a ferocious penguin, has not only tried to challenge operators and subvert old rules with micro-letters, but has gained more power of discourse and industry control in the Internet and mobile Internet.

No "micro" of the micro-letter behind, standing is a penguin: At the start of 2004, the market value of only billions of U.S. dollars, so far more than hundreds of billions of dollars in global internet companies, after Google and Amazon, and its peers Baidu, the market value of only 1/2; by revenue figures, From 2004 of 1.14 billion yuan to 2012 of 43.89 billion yuan, the annual compound growth of up to 158%; In 2003, Tencent Water Casual game business, more than the earliest into the game industry Shanda and other enterprises a full night two years, but the current Tencent in the game industry market share of nearly 50%, a single large, Is six times times more than grand.

What does Tencent do?

Starting from a popular free product, Tencent's core resource, the "high number, high activity, high frequency user", is the foundation of its vision of "making the Internet water and electricity". Throughout the history of Tencent's development, although the product form diverse, but the strategy has been related to diversification and expansion strategy, and the logic of the top design is always consistent. Although the business model of various businesses has different positioning, business system, profit model and cash flow structure, the Common Core resource capacity is the aggregation and distribution of traffic, and then realize monetization in different forms. Games, portals, music, blogs, and today's micro-letters. It is because of Tencent's success at the top of the design that it is always able to go first and finally achieve a revolutionary breakthrough.

The commercialization of micro-letters is already on the road, while the power to move the end of the "industry-wide open platform" of the "emperor" penguins will also be how to verify the great innovation of its top design? Wang Wei Wei Wei Hua Hin/Wen

On September 3, 2013, Tencent (00700.HK) closed at HK $421.2/share, with a total market capitalisation of HK $779.9 billion, with Chinese internet companies breaking 100 billion U.S. dollars for the first time. In the global Internet companies, Tencent's market capitalisation is second only to Google's $300 billion trillion and Amazon's $136 billion trillion, according to the day's exchange rate. And, on the day of breaking the market value of hundreds of billions of dollars, MA also joined Sohu Zhang Zhang, to 448 million U.S. dollars plus search and other assets to buy Sogou 36.5% of the equity, will be the bidder's 360 and Baidu two old opponents again repulsed.

From August 5 micro-letter 5.0 release, Tencent's share price began to soar, repeatedly hit new highs. From a market value of HK $600 billion to HK $700 billion, Tencent's "ferocious" Penguin only spent 50 days before and after. In June 2004, when it was listed on the Hong Kong Stock Exchange, the IPO price was only HK $3.7/share, with a market value of HK $ billions of. The small business, set up in 1998 to start with a free instant messaging software, has grown over 14 years to become an internet giant with a revenue of more than 7 billion dollars a year.

The emergence of micro-letter not only let Tencent set investors and the industry in the thousands of attention, but also to shoulder the challenge of operators and subversion of the old rules of the task. Micro-letter high-speed growth and high viscosity, so that many industries have been challenged or even overturned. How do you understand the development trajectory of the micro-credit product, and then infer its development direction? Only from the perspective of a single product can not be fully interpreted, the micro-letter must be placed in the background of Tencent, combined with its top design of the logic and the overall structure, in order to try to answer the emergence of micro-letter, in Tencent's huge product system in the position, A series of issues such as how to commercialize the future and what changes will be brought to the mobile internet ecosystem.

The practitioner of "flow realization"

In terms of the time dimension, Tencent has experienced almost every important stage of China's Internet development, and Baidu and Alibaba around their main business operation of different practices, Tencent almost did not miss any one of the key nodes, including SP services, portals, electric dealers, search, online games, video, SNS, mobile internet???? At the same time, Tencent to "make the Internet water and electricity" as the slogan, the provision of nearly thousands of Internet products and services, almost all of the Internet, and the business model of each business unit is different.

Ordinary users of Tencent may still remain in the QQ instant chat tools, but this easy-to-use instant Messaging tool, most users do not spend a penny to use it. Tencent also offers a number of other products and content, such as micro-mail, QQ music, QQ portal. An Internet user can fully use Tencent's products for free to meet most of the online life needs. Tencent relies on more than 20,000 employees and a large server base to provide these products and services, and the operating costs are not low. So how does Tencent step through these low-cost free tools to create an Internet company with a revenue of more than 7 billion dollars a year? How is QQ profitable?

Since the originator of the Internet Enterprise Yahoo opened a service free "good head" after the "burn money to make the flow" and "traffic flow" has become a lie in the face of all internet companies in front of the problem. Successful Internet enterprises, no one has opened this path, found a vast space of value and efficient way of transformation. The idea that a business model is not a worry if there is a flow of traffic is a simplification of complex issues. Do not forget Netscape, my space, happy net, 51.com, including QQ has been the imitation object ICQ countless once brilliant internet enterprises, have been sitting on huge traffic, but because of strategic mistakes, or no business model to change, can only "holding the golden starvation."

Even Facebook, which has more than 1 billion users, has been visiting more than Google's stars, and since the flow is inefficient, the share price has fallen even after the IPO. How to obtain the flow (strategic choice) and the efficiency of the flow (business model), to a large extent, can affect the profitability of Internet companies and market value performance. Looking back on the development process of Tencent, we can find that it has made a very excellent answer to the problem of "flow-changing".

The survival of the trapped

On the basis of imitation, combining user experience to carry out "micro-innovation" is Tencent's successful experience in the grass-roots era, but also become its future operation of the product philosophy, that is, "first of all, then ask for good." The early years of the "user growth, no business model" experience, but also let Tencent in the new field is not in a hurry to commercialize, this is reflected in micro-blogging and micro-letter business.

1998, software engineer Ma Hua to imitate the Israeli instant messaging software ICQ, developed the Chinese version of Oicq, and with friends to create Tencent. Although it is imitation, but Oicq has also carried out some adaptation of Chinese users use the habit of "micro-innovation." In the same period, the number of Internet users in China entered the outbreak period. The combination of internal and external factors makes the number of OICQ users grow rapidly. The first online in February 1999, two months registered users reached 200,000, by November, the number of users have exceeded million.

This results in the entrepreneurs surprise, but also brought trouble: How to Profit? From the angle of industrial pattern analysis, the same type of instant messaging products in the market have dozens of, and its own technical content is not high, access threshold is low; User network has not been established, user migration cost is low, bargaining ability is strong; And the way of payment is immature. At the time of the market environment, OICQ can not charge users. The absence of a business model makes it hard for companies to find profit, but soaring server costs, bandwidth costs, and human costs actually occur with the number of users who are growing at a high speed. What does the Enterprise think?

At the beginning, in the absence of solid products, Tencent has tried to sell virtual goods, the first thought is the sale of the beautiful number. But this business model has limited value space and cannot match the cost of high-speed growth. At the same time, a business model that relies too much on selling numbers can severely disrupt the user experience, making it easier for a completely free competitor to attract users, thereby shaking the value base of instant messaging-the number of users. At this point, the founding team members can only rely on the telecom operators to do some short-term projects to supplement.

2001, because and ICQ intellectual property Litigation and renamed QQ, registered users have reached 50 million, but still did not find a suitable business model. In this situation, the entrepreneurial team even started to sell the idea of the company. Previously, QQ imitation object, also no business model ICQ, by AOL to buy 400 million of dollars. Considering the advantages of QQ in the Chinese market, although the future is unknown, IDG and PCCW still provide Tencent with a 2.2 million dollar wind investment.

This early pressure on the brink of survival, and the temptation of growing numbers of huge users, has given Tencent the gene to grow its strategic expansion and search for business models.

First bucket of gold: three modes of charging to users

Relying on the huge number of registered users and the number of active users and the network effect between users, through the telecom value-added services to the user fees, virtual goods sales and "Freemium" three models, Tencent began the "flow of liquidity" attempt. 2004 Tencent after-tax net profit reached 450 million yuan, and successfully listed. This greatly enhanced Tencent's capital and personnel strength, so that it has the ability to enter other areas. While the main business of high margin and strong profitability, Tencent in the pace of strategic implementation of more patience, and in the early expansion of the new field more attention to user experience and the number of users.

SP mode

December 2000, the telecommunications operating market environment has undergone a great change, just from China Telecom separated shortly after the Chinese mobile, launched the "Dream Net" business plan, officially to SP (value-added service provider) opened the door, but also ushered in the Internet enterprise's first profit era: mobile value-added services.

In SP mode, telecommunications operators are responsible for providing infrastructure and fees such as channels, and the SPS and CP who specialize in service provide services and content. The division of the business system allows internet companies to avoid the problem of charging users, and to graft in the carrier's mature business model soil, through the operator to the user to collect money and then split. For the first time, the business model of Internet enterprises has a complete closed loop from product to flow to charge. SP mode saved a group of internet companies, including three major portals struggling at the edge of the retreat.

Tencent's entrepreneurial team has been working in the telecommunications system, and it is also doing outsourcing projects for China Telecom, in the face of the opportunities brought by the external environment, the breakthrough is logical. It is in tune with the Chinese habit of typing chat rather than voice communication, extending the client relationship built on the PC to the mobile end, providing instant messaging on the phone (mobile QQ), exclusive service to mobile communication. At that time this huge blue sea market, Tencent dug up the first bucket of gold. In the cooperation mode of Tencent and mobile, mobile QQ users are charged 5 yuan per month via SMS channel, and Tencent is divided into 2:8.

At this time, Tencent already has a considerable user base, in the PC-side of the instant messaging market ahead, and has basically established a "user network." With a relatively high "moat", Tencent mobile phone QQ in this period of strategic development in order to lower capital investment to obtain strong profitability.

Since then, Tencent has launched its own portal and started dabbling in portal SP services. 2002, mobile value-added services to Tencent brought 200 million yuan of revenue, accounting for its total income of 76%. By 2004, when Tencent was listed, the total revenue of its mobile value-added business rose to 600 million yuan, and the gross profit margin was more than 60%. Exclusive monopoly of specialized SP business model not only for Tencent to earn real money, but also for its future development and expansion of the accumulation of a strong capital base (Figure 4).

Surprisingly, Tencent mobile phone QQ This SP service vitality of the long-term. Beginning in 2004, mobile gradually strengthen the monitoring of the SP, mobile value-added business market inevitably appears shrinking momentum, many rely on the SP business listed companies have weakened, the three portals are also beginning to prepare for transformation, today, the SP income in the three major portals of the income proportion has been very low. But Tencent's SP service has been new and continues to this day. By 2012, the revenue from mobile value-added services remained as high as $3.7 billion (Figure 5). Even Tencent mobile phone QQ a service occupies 40% of the flow of Guangdong Mobile.

Although Tencent has made the first bucket of gold by SP mode, in this business model, which relies heavily on external stakeholders, the key aspects of flow settlement, billing and payment are in the hands of China Mobile. A business model that relies heavily on a single customer, although there is still considerable profitability at the moment, it is no easy job to have a high-growth, highly-valued company. If Tencent's business model stays in the SP ERA, its corporate value will be quite limited. This is also confirmed by future capital markets ' evaluation of purely SP business internet companies.

Virtual Goods Sales Model

In April 2004, Facebook was an online photo-scoring site on the Harvard campus, with Tencent's number of users breaking 300 million. Tencent, which sits on the gold mine of "billion users", is certainly not satisfied with the mere sharing of this model with telecoms operators. So is it possible to sell items directly to 300 million of users? Can the sales model of the goods, which is paid and delivered, be able to run in the Internet industry representing the "new economy"?

QQ is originally a communication tool, and content operation is not related. The biggest difference between it and security, players and other clients is that there is a certain social attribute. Social occasions, there are "enhance the image" and "highlight the personality" needs exist. By learning from Korean internet companies and accurately grasping the psychology of Chinese users, Tencent created a "network virtual image" and provided products and services to meet this user value: QQ Show and derivative products. Virtual QQ Show, the marginal cost of the same unlimited trend towards zero, but the marginal revenue is not the same as music, video and other digital content as infinite trend towards zero.

The business model of "virtual merchandising" requires several key resource capabilities to operate. First, a large number of user base. Without a large and active user base, the average cost of a single user is high, the convertible user base is low, and profitability is limited, thus entering the vicious circle of "fewer products-less attractive-fewer users". Secondly, "Network virtual image" service needs the basic products have a strong social attributes, in order to exist user value space. This is why the same number of users a lot of 360, thunder, Storm Audio and video, as well as portals, can not sell virtual goods profit, and Facebook, Renren, YY music have adopted the "Virtual Goods Sales" mode of the reasons.

Through the sale of virtual goods business model of the successful Internet enterprises, currently only Tencent in China, in addition to the operating capacity gap, business model operating efficiency gap is also an important reason. Business systems and profit models in this business model are not complex, but Tencent is far ahead of the two key resources of "owning a large customer base, having a network effect on products," and "products with social attributes" (Figure 6).

"Freemium" mode

In the "Virtual Goods Sales" model to achieve success, the basic product QQ Instant messaging software charges is feasible?

While QQ is trying to introduce fee-based membership services, Taobao beats ebay through a free service to win over 90% of ebay's market share. At that time, with Microsoft-backed MSN is entering the Chinese market, has been promoted to the world's largest telecom operators of China Mobile also launched a letter. In the fierce competition environment, Tencent's private enterprises flexible mechanism, strong product capabilities and operational capabilities in the successful implementation of the "majority of free, a small number of fees" of "Freemium" ("Premium") fee services, played a key role.

First of all, Tencent expanded the content of free services, including QQ Group services, network hard disk, QQ show, QQ Liang, skin, on line ringtones, look roaming, and so on, the product in the function and experience on the leading edge of expanding. Since then, it began a diversified attempt, around the user's online life needs, relying on QQ brand and low-cost, high reach rate of the promotion channels, and constantly introduce a variety of products: QQ games, QQ music, QQ browser, QQ cyclone download tools, QQ pet???? ......

When these free services occupy the top three of their respective areas, Tencent has a large product characteristics and derivative services, in order to promote the "Freemium" model has laid a solid foundation. Thus, it is able to "not harm the mass user experience on the basis of increased appeal to paid users" the core business logic is to further the competition--that is, to pinpoint the difference between 1% and 99% customers, and to launch a 1% Customers attractive paid services, and through the membership level to maintain the stickiness of paid users, and gradually expand the number of paid users.

"Freemium" mode is not Tencent original, and its member value-added services are China's Internet companies operating the most successful. The large number of users and the large number of products and service categories are the key resource capabilities for the success of their "Freemium" model. MSN, flying and QQ compared to both product characteristics and derivative services are much less, in this case, the implementation of a "Freemium" mode, or serious harm to the free user experience, resulting in a large number of users to lose, or pay users have limited appeal, the conversion rate of low pay users and poor profitability. Slow to find the business model operation tips, make MSN and fly letter is always a loss of cost center; With Microsoft and China Mobile KPI Evaluation Mechanism, the company resources naturally no longer tilt to these business units, product capacity began to decline, and QQ in the product on the gap between the bigger and larger, The fate of the two declining fortunes is inevitable.

And with the Thunder, Storm Audio and video, PPS and other use of "Freemium" mode of Internet enterprises, the number of services and products in the flow, brand and service segmentation of mutual support, Tencent can operate more outstanding reasons. The former due to a limited range of services, does not surround users of a variety of clients, can only take in the free version of advertising, pay cancellation of the artificial settings, damage experience, to distinguish between free users and paid users QQ instant Messaging software also has ads, but not rely on advertising, the number is much smaller. By contrast, the Thunderbolt's free users have to endure a lot of advertising and bundled services, and in the "High-speed download" and "Offline download" and other core functions are severely limited.

At the same time, the "Freemium" model to run the key resource capacity-"The number of service categories", but also for Tencent's future strategic expansion of the gene. It forced Tencent to continue to enter a new field, to consolidate its breakdown of the foundation, expand operational advantages, including music, blogs and other such difficult to profit independently of the product areas: Green Diamond Service makes Tencent music to become the only operation of authentic music and independent profit of the music player; Yellow diamond Services so that QQ space to become the world's largest blog at the same time to achieve independent profit, and the yellow diamond one of the privileges of a virtual image, this is based on QQ instant messaging software services; Blue Diamond Services let QQ casual games in the defeat of the joint public, but also become one of the company's profit

Cross-penetration of privileges between product lines makes Tencent more comfortable in designing "Freemium" models. And the cross recommendation between products, but also so that the number of new product users can quickly reach the "critical quantity." This allows Tencent to enter a lot of new areas, can quickly through the "burning Money stage", to avoid them in the group for a long time in the "cost center" embarrassing position. And Baidu, Sina and other Internet companies in the implementation of new strategic actions, the usual business model will not quickly follow.

At this point, in the "billion-level users," based on Tencent through cooperation into the model, the sale of virtual goods model and "most people free, a small number of charges," the "Freemium" model of three golden flower, will be directly charged to the user "flow-change" thinking of real landing.

Relying on these three types of gradually formed business model, Tencent's net profit after 2004 reached 450 million yuan, and successfully listed on the Stock exchange of Hong Kong. At this point, from the inside, Tencent users have exceeded 300 million and still accelerate growth, listing financing plus years of earnings accumulation, Tencent has a solid financial strength. And from the outside look, the number of network users are still growing rapidly, broadband is becoming popular, the internet to the traditional industry, the degree of transformation gradually deepened. Soon after the listing, MA proposed to build a "one-stop online life" strategic goal, to try to the user's offline time and behavior to move online, and to introduce more services, as much as possible to occupy the user's online time.

Layout portals, games, blogs

Under the vision of "doing water and electricity for the internet", Tencent has implemented a clear strategic expansion, with its own products into the Internet all the fields can be entered, and then through a strong channel resources, brand effects and good user experience to rapidly expand market share. Although the diversification of business is radical, but it is not easy to "cross boundary". Portals, games, blogs ... A number of business sections not only to achieve independent profitability, and product matrix, including entry, flow guidance, monetization, strengthen the brand, explore the business and so on, the cross support effect between products outstanding. By 2009, QQ instant Messaging software Active user breakthrough 600 million, Tencent also grew into the market capitalisation of China's first, the world's third internet giant enterprises.

At this time, around the QQ this tree "root pole can blossom" the story of the cash cow is just beginning. A little observation can be found, SP business, Virtual Goods sales, "Freemium" service three types of business model market space is relatively limited, and entertainment, advertising, E-commerce and the basic needs of netizens closer, but also the real potential to grow out of the field of giants. If you stop charging directly to users, Tencent will soon run into an increasing ceiling. In 2004 before and after the listing, once again around a large number of users, Tencent cloth a few key strategic pieces.

Control Internet portal

First of all, massive users, long online time, frequent interaction and high degree of attention, and other elements, naturally reminiscent of the customer from the trading object to "attention resources", as well as based on the "user to make advertisers" media model. But Tencent based on QQ for the implementation of this approach has obvious drawbacks. QQ Client Panel Interface area Small, a number of chat windows, you can place a few ads, such as forced in small space to place a large number of ads, will inevitably destroy the user experience.

To operate the media mode, the portal is the best way to display. Tencent began to have its own portal site in about 2001 years, when the domain name is www.tencent.com, and the amount of traffic and promotion has been lagging far behind the three main portals. 2003, Tencent bought domain name, and renamed to Www.qq.com, but the start has been significantly later.

But then the development experience, once again reflects the Internet at that time "content duplication, the flow of scarce, the entrance for the king" Industry pattern characteristics. With a strong financial strength, Tencent soon in the portal content quality and access experience is no less than three portals, and constantly through its client's micro-homepage, pop-up window, chat window tips and news push methods to recommend their own portal site. At the time of the Internet, chatting, playing games, "low-end" users, much higher than watching the news of the "elite" number of users. And portal stickiness is far less than chat tools such a social relationship client, the user migration cost is very low. In addition, the difference between the portal site is rather weak, from the Highland attack low Tencent quickly cut into the portal industry. 2004, in the volume of visits, Tencent and the three major portals, and then soon beyond the three portals, until today, its portal in the Alexa on the Chinese site ranked second, after Baidu. The success of the portal business has laid the foundation of Tencent's media model.

After making a breakthrough in the largest media resource of the portal site, Tencent has been exerting its force in the local portal, vertical portal, micro-blog, video, client-side advertising and search media, and began to integrate the media resources of its products. Rely on the flow of QQ instant messaging software to guide, Tencent quickly let the number of portal access to break through the "critical quantity", to successfully enter the "Internet media." After years of training, the main portal of the "Internet media" has a clear business model, the portal business quickly realize independent profit. Tencent not only mastered a flow of liquidity, but also access to the portal site this important Internet portal.

Attacking online games

The second piece of Tencent's layout is the online game (Figure 7). With its wide audience, the willingness to pay and the high ARPU, online gaming has become the most widely used method in the Internet industry today. Tencent certainly does not ignore the huge market of games, but Tencent, a good client, chooses a secure path.

2003, Tencent launched the QQ game client Water casual game market, and quickly through the window and the portal to promote the way, more than the first market share of the joint public. At the same time, combined with "Freemium" Blue Diamond Members and "Virtual Goods Sales" business model, in the leisure game to expand the user base, and gradually achieve profitability. August 2004, QQ game at the same time online number has reached 620,000 people, become the first major leisure game portal.

2004-2007, Tencent has launched the "QQ Fantasy", "QQ Pet", "QQ Sonic", "QQ Three Kingdoms" and other games, gradually from the leisure game extended to large-scale network games and competitive games, such as more confrontational, more willing to pay, more value space in the field. And through the agent, since the research, the acquisition of the way to further launch a large number of games for the future profitability of the take-off has laid an important foundation.

In the game of the industry's key elements of competition, the development team to determine the quality of the game is light assets, the way is also easy to achieve a certain number of users to imitate, both are not scarce resources, only the promotion channel is to spend heavily, with a long time to build. Especially in the market environment where the participants are soaring, the resources of the promotion channel are especially precious.

Shanda, Perfect and other professional game companies, although with the advantage of the first, but with the internet giants to join, control Internet access channel resources began to play a role in the competition. In the game quality is not weak, the same way to become the same, with Low-cost marketing channels of internet companies began to exceed the grand, perfect and so on. By 2012, the top two companies in the market had become Tencent and NetEase, and Sohu was almost as big as Shanda. The changes in rankings fully demonstrate the impact of key resources on market patterns (Figure 8).

And at this time already has the client and portal two big portals Tencent, in the promotion channel resources are advantageous: the client basically realizes to the user desktop surround, the portal website's China ranked second only to the Baidu. These traffic portals play an important role, allowing Tencent to promote the game's channels become extremely strong and low-cost (even negative costs, because a considerable part of the business itself can be profitable). In addition, the company's business attention to the game, as well as the consistent product manager culture, to improve the quality of the game quickly. By 2007, Tencent's game was basically big. Launched in 2008, "through the FireWire" and "Dungeons and Warriors" two games, but also in the future showed a staggering profitability, in the 2011 Annual report, the two games accounted for Tencent 5 billion U.S. dollars total revenue 35% (Figure 9). The strong profitability of the capital accumulation, for Tencent's development provides more strategic choice of space (Figure 10).

Defensive to offensive blog

The third piece is a defensive weapon, but inadvertently inserted, in the future becomes a powerful strategic offensive weapon.

Before and after 2005, the blog began to popular, its user production content (UGC) of the characteristics of the "go to the central" spirit of the Internet, attracted a lot of VCs, "blog China" and "blog Bus" and other sites for a while scenery no two. At this time the Internet industry is no longer 2000 before and after the Robin competition, but the beginning of the "city-state competition era" of the Clue, Sina, Sohu, NetEase and other portals quickly follow up. Soon, Sina, Sohu and so on its more in line with the Chinese people's sense of reading habits of "celebrity blog" strategy, achieved a phased victory, successfully guarding their own portal site's main business.

At this time in the flow of China is already the first big portal Tencent, nature will not despise the blog. Its defense is more simple and brutal but very effective-directly for all QQ users in the panel to open a QQ space. QQ massive high Interactive user resources to play a role, QQ space users easily over billion, quietly become the world's largest blog. By March 2008, QQ space of a single month active users have also been over billion, far ahead of Sina and the network (now renamed as Renren) and so on, and the future is no two Facebook, at this time the number of active users to reach 67 million (Figure 11).

Of course, QQ user structure to a low age users, QQ space is only the number of users in the lead, but in the content quality and Sina blog can not be compared. However, as a separate business, the blog has never found a suitable and valuable space high enough business model. And in the microblogging and other more suitable for personal release of information platform after the emergence, but gradually weakened to become a portal standard.

But QQ space is out of a different way of development. The first is in Renren, happy net, such as the impact of SNS, it in the original diary, music, on the basis of the addition of QQ farm games and other content, turned into a Tencent SNS. Even for a long time, the number of users has been more than Facebook, becoming the first social networking site for the world's users. In the future, QQ space and the transformation from QQ alumni friends, with its social attributes and 680 million active users, for the future open platform laid the foundation for today, become an important source of profit. 2011, QQ space divided into revenue, and "through the FireWire" and "Underground City and Warriors" together, Tencent's first three profit sources.

Of course, Tencent is not invincible, in the other two areas of the Internet search and electricity business, its expansion encountered a powerful sniper. In addition to the late timing of entry, strategic disorientation and executive-level lapses, it is also as powerful as the leaders in these two areas. Alibaba and Baidu in their respective areas of user experience, technical strength, user habits, data accumulation, industrial layout and ecological enterprise training and many other aspects of the far ahead of Tencent, and firmly occupy the respective areas of the flow of the entrance. Of course, competition continues. Tencent is still looking for opportunities for breakthroughs, and the "Tenpay" and "search" in these two areas have also provided strong support for Tencent's other businesses. Although the outside of the future development of Sogou is not optimistic, but the act of purchasing Sogou with Sohu, enough to prove that Tencent has begun to search the field of exerting force.

Active user breakthrough 600 million

By 2009, Tencent, after a decade of development, has grown from a small business to the market capitalisation of China's first and third-world Internet giant. At this point, QQ instant messaging software, which has broken through 600 million active users of the fertile soil, has grown several profitable towering trees (table 1), and Tencent's core business model is also basic molding (Figure 12).

At the same time, Tencent also has a clear step in the development of new business ideas. Once the new business is proven to be user-valued by other companies, it immediately organizes excellent product managers and researchers to focus on developing high-quality products. And then through the cross recommendation between Tencent products, quickly in the number of users over the opponent. Products in the vertical field after a firm foothold, according to the characteristics of the product distribution in the Product Network role (table 2).

"Open" + "reform"

The trigger of "3Q war", coupled with the growth needs, user needs, competition, the three major factors, at this time by market capitalisation is China's largest, the world's third largest Internet enterprise Tencent, in the original resources endowment and business model, launched a China's internet industry, the largest and most complex transformation- From the product portfolio company to the platform-oriented company transformation. To tie in with the open platform business model, Tencent's strategy from the previous phase of the strong expansion into a moderate expansion and some areas of contraction, into investment, acquisition or cooperation.

The revelation of "3Q war"

While Tencent is gongchenglvede in the Internet world, with the advent of the iphone, the birth of Facebook, and the success of the App Store open development model, the entire Internet industry's operating environment has been quietly changing. In China's internet world, Tencent has been the first to market capitalisation of internet companies. At the same time, because of its superior competitiveness, but also because of "observation-imitation-catch-up" product tactics, the pervasive expansion of the action, as well as "do everything themselves", "take other people's way, so that others have no way to go" business philosophy, Tencent is seen as undermining the Internet industry innovation environment, provoked many complaints and criticisms. In this context, "3Q war" broke out.

"3Q War" finally to ministry intervention mediation, 360 stop operation "buckle buckle bodyguard", QQ compatibility 360 for the result and end. For Tencent, although the wording is very careful, but "forcing" the user two choose one of the practice, in essence, or interference in the user's right to choose freely, there is a suspicion of kidnapping users. The loss of users, corporate image damage, the opportunity to profit by competitors is direct losses. Tencent's management began to rethink.

Although the products are numerous, Tencent still relies too much on the promotion channel of QQ instant messaging software, and once the number of active QQ users declines, or the road to promotion is blocked in some form, the business model built on it will be shaken. The "3Q War", for the first time, has turned this potential threat into a real crisis. In addition, we can feel the mobile, social changes in the Internet industry is beginning, in order to adapt to the changes in user habits and Internet competition, Tencent began around 2011, a product portfolio company to the platform-type company transformation.

Create "The whole industry chain Open platform"

The essence of open platform is the basic resource of platform and the positive cyclic process of applying enterprise innovation. Whether it is "Wintel" Alliance, or IBM, Cisco, Google has finally evolved into a platform-oriented enterprises. Apple has taken the open platform model to its fullest, and Internet rookie Facebook and Twitter have grown rapidly from an open platform model.

The "Mobile Dream Network" SP mode that Tencent relies on in the early development is an open platform in essence. Just then the platform is "mobile dream Net", and Tencent is the service provider on the platform. Today, Tencent is still the largest SP on the China Mobile platform.

Tencent's path to an open platform is an inevitable choice, and one reason is the demand for growth. Tencent is a consumer demand-driven company that needs to constantly launch new products to meet new needs and achieve growth. This way of growth in the development of a certain volume, you will encounter the growth limit.

First, the continuous introduction of new product growth mode, will inevitably squeeze the survival of peer enterprises space, especially small and medium-sized start-up enterprises. This inevitably requires the enterprise to change to a more harmonious environment and the growth of the way. Second, the user's demand is gradually moving towards diversification and personalization, can not be fully satisfied with the way of internal products. Only in the form of open platform and external stakeholders to better cover the long tail demand. Third, the result of the competition, Tencent's competitors Alibaba, Baidu, 360, Sina, Shanda and Renren have to open up, using their own resources in the strong field to attract application enterprises to join, enhance the competitiveness of the ecosystem. Therefore, the trend towards openness is an unavoidable strategic choice.

Before the opening of the transition, Tencent had hundreds of products. Therefore, Tencent's open platform and Facebook, 360 and other open way compared to have a significant feature, that is, multi-platform open. June 2011, Tencent announced Tencent friends, QQ Space, Tencent Weibo, Tenpay, E-commerce, Tencent Search, color shell and QQ eight open platform, and then the number of platforms has increased, there are already large to include SNS form of QQ space, small to QQ movie ticket such a market segment, Large and small, nearly 30 open platforms.

On these platforms, Tencent is responsible for infrastructure and attracting traffic, and developers are responsible for providing applications and content, and then sharing revenue. In addition, Tencent, according to the characteristics of China's market and its own resources capabilities, for the open platform developers to provide accounts, promotional resources, billing methods, data analysis, such as one-stop service.

Although the strategy of multi platform opening will bring some difficulties in the management synergy, it will exert a strong synergy effect at the entrance level. For example, the open game can be a one-time development of the game released to Tencent friends, QQ Space, Tencent Weibo, Tencent games, 3366 and other APIs the same number of platforms, greatly enhanced the game and user interface. and small and medium-sized network business can also register, will be released to the merchandise Tencent Pat, QQ online shopping, color shellfish, QQ group purchase and Tenpay, such as a number of open platform.

Multi-platform strategy allows Tencent to intervene in all aspects of the industry chain. Before opening, Tencent's products and services for its own, and turned to open, its multiple open platform covers the Internet application of various links, Tencent took the whole industry chain open platform Strategy (Figure 13).

A typical Chinese developer can use the "Tencent Cloud" platform to do cloud server; In the QQ space, Tencent friends, Tencent Weibo, q+ platform, QQ games, Tencent Application Center applications such as application platform release applications, QQ instant messaging software, QQ space, Tencent friends, Tencent Weibo and other social tools to carry out "summon old friends, remind, Invite, challenge, show off, friend request "and so on social marketing way, can also use the advertisement system that Tencent launches to" spread "the advertisement on the social platform to advertise efficiently, or to carry on the cross promotion between the application on the platform;" The Yellow diamond System "provides the tool for the open value-added service profit model, uses the Tenpay to carry on the collection and the payment, uses the data analysis tool" The Tencent Compass "to analyze the user attribute and the behavior to improve the application quality. On the Tencent platform, developers can complete all the above behaviors, just concentrate on the application and content.

Tencent has also set up the largest Internet-sharing industry fund in China, which has reached a scale of 10 billion yuan. This platform for the application of enterprises to provide funding support, to cultivate excellent content, "occupy the source" goal. Following the successful IBM CVC, Tencent, as a LP, funded the Innovation workshop, the Russian investment giant DST's funds, and established A-fund funds with Gree, DCM and KDDI. And these excellent VC cooperation, to ensure that Tencent can use its investment capacity and resources to improve their investment success rate. More can strengthen and these VC enterprise's industrial cooperation, expand their investment scope.

Many open platforms cover all aspects of the Internet application industry chain and have a positive effect on enhancing the competitiveness of the whole ecosystem. One is the aggregation of multiple platform portals, gather together the flow of each platform, let the application publisher once development, multi-platform release. Second, the improvement of industrial chain, the development of China's open platform industry is far less than the United States market, in the cloud services, unified account, marketing, payment platform and so on many links do not appear high-quality third-party services, which restricts the development of open platforms, and Tencent utilization of the existing resources of two times development, The lack of these links has been made up in its own open system, making its open system more competitive than other open platforms that provide only traffic. And Sina Weibo, Renren and other open platforms, Tencent in the import of the richness and comprehensiveness to far win; and compared with 360, Baidu, Shanda and so on, Tencent's account system and the social relationship behind it allows it to provide one-stop login and social marketing promotion, richer product lines so that it can provide a stronger means of payment and maps , music and other APIs. As Ma said: "Openness is not only a gesture, but also a kind of ability." ”

From "all-round own" to "cultivating ecology"

In order to tie in with the open platform business model, the guideline of "relying on its own product to expand rather than invest or acquire" has also shifted, and it is still in the process of transformation to "open to the application developer, help the developer to make money" and "cultivate ecology". The original "imitation Pioneer" and "micro-innovation catch-up" and so on are partly suppressed, and turned to "do basic services" and "encourage developers to innovate."

In the field of electronic business, by the acquisition of Xun to replace its own QQ mall. In the field of group buying is particularly evident, respectively, for its own QQ group purchase, the investment of the F Group and Groupon cooperation with three kinds of expansion of the network. In the field of vertical electric business is to adopt investment way to expand. And in the basic platform areas, such as SNS, micro-Bo and so on, it is still the main expansion of its own products. The expansion and contraction of the strategy is obviously influenced by the open platform business model.

Layout Moving End

Tencent's product layout at the mobile end continues its "hatching" and "horse racing" strategies on the traditional internet. In addition to the PC side, Web end of the advantages of applications, such as QQ, QQ games, QQ Music, Tencent News to the mobile terminal translation, to unified account and cloud services to enhance user stickiness and experience, but also developed a number of mobile terminals unique products, such as the application of treasure, Tencent mobile phone butler, QQ address Book, QQ reading and a variety of mobile terminal games.

Although already in various mobile terminals and operating systems on the introduction of hundreds of products, but at present its contribution to Tencent revenue is very small. They exist in addition to occupy the mobile end of the flow of the entrance, Tencent is hoping to "horse race but not the" way to cultivate a new platform-level applications. The most striking, and unexpected, is the micro-faith.