Ten Specific Predictions About The World TMT Industry In 2017

(Chinese Version)

Editor’s Note:

As we bid farewell to the old and usher the new, as the lanterns are lit and firecrackers are set off, we still need to set aside some time to contemplate on the past and the future.

As a matter of fact, clues over the development trend of various industries in 2017 are already hidden in 2016. As we all know, concepts such as VR, short-video, blockchain, smart vehicle, sharing economy have always hit the headlines of various tech media for the past year and have already become an inseparable part of 2016.

In 2016, TMTPost has issued various reports discussing the development trend in these sectors: in “The New Era of VR: Half Virtual, Half True”, we analyzed why the fad for VR rose in the first half of 2016 but ebbed away in the latter half; in “The Battle to Explore the Commercial Value of Blockchain Has Broken Out”, we discussed the commercial value of blockchain; in various reports, we discuss in details Jia Yueting and his LeEco’s ambition in the smart vehicle market.

TMTPost’s reports, as well as our team, have always left people two types of impression: both passionate and calm, both bold and cautious. Although they seem completely paradoxical, they are actually unified.

What do you want to know about the Year of Rooster? Are you still entangled with the past, or are you already planning for the future?

In 2016, Hejuan Zhao, founder and CEO of TMTPost, repeatedly cited Winston Churchill to illustrate the importance of letting go of the past and looking forward to the future:

"If we open a quarrel between past and present, we shall find that we have lost the future."

Therefore, we are no longer satisfied with predicting the general trend, but rather focused more on developing accurate prediction over the specific problems that may emerge in the coming year.

However, we are well aware that it has been increasingly difficult to develop accurate predictions. This is especially true right now, as we see a series of “Black swan events” in this ever-changing world, such as the success of Brexit, the election of Donald Trump, the rise of artificial intelligence, etc. Therefore, the business world is also becoming increasingly unfathomable.

In response, TMTPost’s veteran editors and columnists relied on various professional research institutes and professionals to conduct in-depth interviews and research in a variety of industries year in and year out. It is only by this way that can we continue to be known as a professional tech media.

What changes will occur in the coming year? In which industries? In this article, we summarized our ten specific predictions over the possible development in world TMT industries. It is our belief that when we look back on this article at the end of 2017 and tell which predictions are true or false we will be able to better grasp the pulse of the times.

No.1: WeChat is to surpass Alipay in the Chinese mobile payment market (in terms of market share)

Speaking of mobile payment, we have to mention one tiny change: this is the first time WeChat officially states that it won’t participate in the “Red Envelope” battle during the Spring Festival. Why did WeChat make such decision? For the past two years, WeChat has been occupied with nurturing users’ payment habit; today, when WeChat QR codes can be found almost everywhere in Beijing, we’ve got to admit that WeChat has already fulfilled its goal. WeChat’s next goal is, for sure, to further expand its market share. After all, Alipay is still a potent rival.

However, the gap is gradually narrowing. With over 700 million MAUs and 50 per cent of users using WeChat for more than an hour and a half a day, WeChat has been gradually grabbing Alipay’s market share in offline user scenarios, such as retailing.

In the coming 2017, WeChat is to pay more attention to offline QR codes. WeChat “Mini Program” is a typical part of WeChat’s effort to do so. Shortly before this Spring Festival, WeChat added “Pockets Nearby” function to WeChat Wallet and allowed users to give red envelopes to others by scanning the QR code offline. Therefore, we really look forward to hearing Pony Ma share WeChat Wallet’s progress at the end of 2017.

The Chinese third-party mobile payment market is still rapidly expanding, so does the competition. Based on the current development of all major Chinese mobile payment tools, we predict that it is more likely WeChat Payment (or TenPay) will stand out.

No.2: IBM is to acquire Twitter

When Microsoft acquired LinkedIn for $26.2 billion in 2016, the public got so excited. However, LinkedIn’s net loss has grown from $8 million to $42.5 million and then to $119 million for three consecutive quarters since 2016. Although LinkedIn has over 433 million users and a MAU of 100 million, it fails to find an effective profitability path.

This also applies to Twitter. From Q1 to Q3 of 2016, Twitter’s net loss has always been about 100 million. Twitter’s senior executives have already set up plans to become profitable in 2017. While Facebook has a MAU of 1.65 billion, ten-year-old Twitter has already reached the upper limit and gained an MAU of 310 million.

Throughout 2016, there had been news over Twitter’s acquisition. Potential investors include: Salesforce.com, Google, Apple and even Disneyland. However, all of them have gradually withdrawn from the acquisition negotiation. There was a time when Twitter’s market value reached $25 billion, but it has already dropped by almost a half to $12 billion at the beginning of 2017. Still, no company seems to be willing to acquire Twitter.

However, we believe that IBM might be an appropriate buyer of Twitter.

No.3: E-commerce featuring live broadcasting and internet celebrity is to boom

2016 witnessed the disappearance of demographic dividend and the rising importance of internet traffic. However, if we look at the new innovation models in 2026, we may have some clue.

Concepts such as Groupon, WeChat Shop, community e-commerce, content e-commerce have become the symbol for innovation for the past two years. New entrants in the e-commerce market might often be caught in a tough choice: whether to develop more difficult products, or to adopt more complicated business models. However, the more reasonable way of thinking has to do with traffic innovation, which is, bringing traffic via innovation in an inexpensive manner.

As a matter of fact, this might be the only chance left in the Chinese e-commerce sector.

No.4: VR all-in-one headsets are to be eliminated in the mainstream consumer market

The fad for artificial intelligence industry gradually ebbed away in the latter half of 2016. While some AR manufacturers went bankrupt, content producers also failed to create popular IPs. Therefore, we have to focus our attention on VR hardware market first.

Although HTC Vive and Oculus Rift are referred to as the “father of VR hardware”, Google Cardboard is the VR hardware that’s accessible to the general public. However, after the advent of Gear VR, many Chinese VR hardware manufacturers began to develop VR all-in-one headsets.

However, we don’t think most consumers will purchase VR all-in-one headsets in the near future. Our prediction is that VR all-in-one headsets might be eliminated from the mainstream consumer market due to the poor user experience (this is also true for HTC Vive), but enter the 2B market through customized products in the education, medicine industry.

No.5: A large number of free General SaaS solutions are to die out

The widespread application of cloud services has accelerated the "clouding" process of the underlying structure of Chinese enterprises’ IT systems. General SaaS, including CRM (focusing on customer relationship management), ERP (focusing on personnel, finance, social security, salary and other HR SaaS module), OA (focusing on automated office) and other processes, which provides functional services within enterprises, is naturally the first to be placed on the enterprise cloud platform.

We believe that opportunities and challenges abound. 2015 is the Year Zero of SaaS, while 2016 is the Year of Changes. After rapid and blind development, some General SaaS solutions began to be thrown in to confusion and expose hidden hazards both inside and outside of enterprises. With the return of rationality in the capital market, the deepening of cloud computing and AI applications, as well as the burgeoning development of Dingding , Enterprise WeChat and WeChat Mini Program, 2017 will witness another wave of changes in the General SaaS market.

No.6 Galgame is to regain its glory

The advent of VR hardware creates incredible playing experience for traditional Galgame. In other words, the long-awaited immersive playing experience is finally to be achieved in 2017.

2016 witnessed the release of several great games, Battlefield 1 to from Dark Souls III and FPS game DOOM. However, the game we find most interesting is HuniePop, a match-3 style puzzle dating game on Steam first released in 2015. Ratings for the game reach as high as 98 per cent. Popular user-defined tags for the game include: Nudity, Mature and Dating Sim, etc.

For young game players who are still busy collecting SSRs in the game Onmyoji, Galgame may sound like an unfamiliar name. However, this used to be a very popular game on PCs and PSPs a decade ago. Basically, Galgame is a type of Japanese 18+ video game centered on interactions with attractive girls. As adult elements in games were increasingly criticized by the public, PC-based Galgame gradually fell out of fashion.

However, when we look into Dating Sim games on Steam, we find a very interesting phenomenon: there are 113 Galgames in total on Steam, among which 43 are released in 2016; there are 35 games with the tag “Adult” on Steam, among which 14 are released in 2016; In other words, Galgame, similar to other popular types of games, are on the rise Steam. After a decade of insignificance, it might be time Galgame regain its glory.
The more important reason that may explain the rise of Galgame is the incredible playing experience created by VR hardware. In other words, the long-awaited immersive playing experience is finally to be achieved in 2017.

No.7: iPhone is to be made in the USA

“Bringing back American Manufacturing” has already become a key concept in Donald Trump’s administration after his election.

During the election, Trump promised that he would raise tax on Chinese imports. According to American law, President can impose as high as 15 per cent import tax during the tenure. If Trump would do as he promised, the Chinese manufacturing industry’s advantage (low labor cost) would be significantly reduced. Besides, Trump also promised that he would significantly reduce enterprises’ tax burden. Were Trump to do both things as he promised, manufacturing cost of American enterprises such as Apple would be encouraged to bring their manufacturing business back.

In fact, Softbank Corp has already agreed to invest $5 billion and create 50,000 new job opportunities in America. In a twitter update on December 17th, Trump declared that his administration would be based on two simple principles: BUY AMERICAN and HIRE AMERICAN.

Near the end of 2016, it was said that Apple had already asked Foxconn and Pegatron to assess the probability to bring iPhone’s manufacturing lines back to America.

The wheel of history has already started to roll. It is likely that we might be able to see Made-in-USA iPhone, iPad and other American tech companies’ products soon. Welcome to the end of globalization.

No.8: Blockchain is to be widely adopted in the real estate industry

After China Central Bank made it clear that it would issue digital coins at the beginning of 2016, blockchain, the supporting technology behind digital coins, have grown from an abstract concept to a more specific and vivid one. In fact, it is one of the hot words for 2016.

Nevertheless, most money, whether paper or digital-based, will go to the real estate. What blockchain technology will do is change the way real estate industry works, combine various complicated procedures real estate companies used to have to deal with, expedite the transaction process, reduce fraud and create a more transparent and safe transaction environment.

Predicted by Jeff Garzik, founder of Bloq and a bitcoin entrepreneur. Although Bloq hasn't released applications established based on bitcoin blockchain, it has already teamed up with a few well-known companies, including Deloitte, Microsoft and IBM, to develop a general platform for the real estate industry.

No.9: A large number of internet automobile companies are to be eliminated from the market

As opportunities abound in China, the Chinese automobile industry is to enter a year of great changes. With Silicon Valley counterpart Tesla as the example, both LeEco and Lucid have already been busy developing their own smart vehicles. As a matter of fact, it has already become a common trend to develop and manufacture smart automobiles in China.

With an auto-making capacity of over 40 million automobiles and the auto sales of 25 million, China is known as a gigantic market of automobiles. This trend started in 2014, when Alibaba teamed up with SAIC Motor to manufacture smart automobiles. According to TMTPost’s incomplete survey, there are already over twenty smart automobile-making startup projects in China. These projects can be divided into three groups: those initiated by internet companies, those initiated by traditional automobile makers, and those co-initiated by internet companies and traditional automobile makers.

It has already become an inevitable trend for the century-year-old automobile industry to turn to new energy and other new technologies. However, not all traditional automobile makers can seize the opportunity and stand out in the competition. Those who fail to figure out appropriate answers to the following four questions may not be able to survive the fierce competition in the coming year: a) How much money do they need to develop and manufacture smart automobiles? b) Are their R&D teams mature enough or not? c) Are their product development plans adequate enough or not? d) Should they manufacture smart automobiles by themselves or via contractors? After all, the Ministry of Industry and Information Technology has already laid out strict qualification check and management procedures for new energy automobile makers and products.

No.10: VR, AR and genome big data are to boom

Against the background of steady early-stage investment and with the further spread and adoption of artificial intelligence in 2017, Xu believes that investors should focus their attention on areas such as VR/AR and genome big data. More specifically:

VR/AR: The world VR industry is to be upgraded in aspects such as cost, technology and user experience. Therefore, Xu reminds investors that they should focus more attention on the above three aspects.

Genome big data: An increasing number of Silicon Valley startups have started to accumulate and analyze medical data and then share it with various American medical players including pharmaceutical companies, insurance companies and hospitals.

(Predicted by Xu Xiaoyu, administrative partner of Amino Capital, a Silicon Valley early-stage venture capital firm, and edited by Peng Juntao, TMTPost Silicon Valley correspondent)

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[The article is published and edited with authorization from the author @Taimeier, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.

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