Tencent shows Facebook how to reinvent itself for a mobile era

Tencent shows Facebook how to reinvent itself for a mobile era

BY HAMISH MCKENZIE 
ON OCTOBER 18, 2013

One of Facebook’s vulnerabilities is its ongoing attempt to reconfigure itself for the mobile era. The social network was built for the desktop-first era and is saddled with the legacy of that time’s way of thinking. It’s not just that Facebook hasn’t been able to build strong mobile products – Home and Poke are both failures, and its flagship mobile app is a difficult rendering of its native desktop experience – but it’s also that it hasn’t enjoyed the advantage of starting from the ground up with mobile.In the desktop era, your social graph was built around the people you friended on Facebook. In the mobile era, your social graph is built around your address book. In the desktop era, photos were uploaded to social networks via USB cable. In the mobile era, they come straight from your phone. And in the desktop era, voice communications were decoupled from email communications. In the mobile era, they’re tightly integrated. There are many other crucial distinguishing factors, too, that require desktop-oriented Facebook to play catch up while mobile-first startups have built themselves around them since day one: payments, impermanence, new operating systems, and new gaming platforms, to name just a few.

The upshot is that Facebook, while an immense media network with a strong mobile presence, has become vulnerable to mobile threats, not only from Google, whose apps dominate the user experience on mobile and whose Android operating system is dominating handsets globally, but also from messaging apps, including Snapchat, WhatsApp, Kik, and, in Asia, Line, KakaoTalk, and China’s WeChat. Facebook neutered the threat from Instagram by agreeing to pay $1 billion to acquire it.

Meanwhile, for an example of a company that has reinvented itself, boldly, for the mobile era, Facebook can look to China. There, Tencent has provided an example of what it means to adapt to an utterly new way of understanding the Internet – one that sits in your pocket instead of in a box on top of a desk.

Tencent, which in its first incarnation made its fortune from selling virtual items its ICQ-like instant messaging app and then for free-to-play games, has become a company that is primarily known for its smartphone communications app, WeChat (or Weixin, as it’s called in China), which is totally different from QQ, the product that made it rich and famous in the first place. While QQ is an MSN messenger competitor, WeChat is more like WhatsApp on steroids, providing not only free messaging, but also a timeline for sharing photos, group chat, a video-calling function, voice messaging, payments, and, in China, a game distribution node. It is the reason that I’ve been arguing that the new Facebook lives in China.

Last month, in an effort to bolster its mobile transition, Tencent paid $448 million for a 36.5 percent stake in Sohu’s Sougou search engine, a former competitor. Sohu chairman Charles Zhang told Bloomberg that “Tencent’s investment means that it is betting its future on mobile search with Sogou.” Tencent has also boosted its efforts for mobile security.

While for Facebook, the transition to the mobile era throws up numerous challenges, for Tencent it has been reinvigorating. Tencent founder and CEO Pony Ma told his staff in a closed door meeting last week that the company feels like new again. “In recent years, as we are striving to create excellent products and increasingly engaging ourselves in mobile Internet industry, I feel the same strong passion as I had 15 years ago, since we grew from a single product to a complete and prosperous business model,” Ma said, according to Chinese tech blog Huxiu.

WeChat, in other words, is the second coming of QQ, with the potential to be something so much bigger. After all, many Chinese consumers are experiencing the Internet for the first time through their smartphones. Desktop computers never enjoyed the rate of penetration that smartphones are now having in the world’s largest Internet market. No wonder Tencent feels new again.

Still, Facebook can comfort itself by looking at its financials. Today, its market capitalization is sitting at around $130 billion. Tencent, on the other hand, is at just over $100 billion. The winds of change in the mobile era, however, may mean that that hierarchy ultimately proves unsustainable.