Tencent plans $3b open platforms
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China's largest Internet company, Tencent Holdings Ltd, will share its 670 million users via a series of open platforms in the hope of creating a 20 billion yuan ($3 billion) business enjoyed together with partners and third-party developers.
The amount is equal to the company's annual income in 2010, in which 4 billion yuan went to its partners. Thus the goal is to "create another Tencent, as the largest and most successful open platform in China", Pony Ma, chairman of the company, said during a Wednesday conference call with partners in Beijing.
"The previous profits were acquired mostly by several major partners we hope to have 100,000 active developers on our future platforms," Ma said, adding that the move is also to drive more talented developers back to the Chinese Internet market.
Ma also vowed to double the size of the industrial collaboration fund to 10 billion yuan. The fund was founded solely by his company in January to invest in technology developers in search for new content and services.
"It is not a very hard decision to make to put Tencent's entire annual return into the fund," Ma said, while revealing that the fund had so far invested about 2 billion yuan.
The remark was poking fun at the company's statement during its dispute with Qihoo 360, China's biggest free security software developer, in 2010, when Tencent said it had "made a hard decision" to ban any computers installed with Qihoo 360 from using its software.
Tencent is China's largest Internet company, and world's third-largest behind Google and Amazon by market capitalization. Since being established in 1998, it has accumulated 670 million active users, nearly one-tenth of the Earth's population, making it the world's largest online community.
However, the company was long criticized for not opening its platform to developers and continuously imitating other successful software. The criticism reached a peak after its dispute with Qihoo 360.
Tencent decided after the dispute to adopt a more open and developer-friendly strategy.
Yin Yu, head of Tencent's instant messaging division, said the company will launch the core product of its open strategy, Q-Plus, in July. The software is like a desktop operating system with multiple functions such as online video streaming, online payment, instant messaging, and total open access to third party applications.
There are currently 20,000 developers lining up to switch into the platform, Yin said.
"On the previously opened Qzone platform, the most profitable third-party developer is making 10 million yuan a month," Ma said. "We want the developers to be successful, even before we are."
Eight platforms will be open to developers, and Ma promised the platforms will not copy the ideas of successful applications. "We will even invest in those creative ideas," he said.
Tencent announced earlier this month it had joined hands with Innovation Works, an incubation fund founded by Google China's former president Kai-Fu Lee. By investing in its 700 million yuan fund it aims to support companies at Innovation Works and other Internet start-ups.
"A closed platform will ultimately be replaced by one that is more open," Lee said at the conference, while giving an example of Facebook opening its platform to developers in 2007 and surpassing MySpace to become the world's No 1 social-networking site (SNS).
"It is widely accepted in America that the key to online communication has evolved from simply selling ads and buying users' flows to utilizing SNS," Lee said.
"I hope Tencent's open strategy will stimulate development in China."
Jiang Qiping, chief editor of China Netweek, said previously that if Tencent's open strategy is thorough enough, its power as an investor will be unleashed to bring massive impetus to China's emerging industries.
"A comparable example is Intel Capital, which had invested in more than 1,100 companies ranging from communication, Internet, and software over the past 20 years, and brought up a large number of creative enterprises," Jiang said.
The Hong Kong-listed Tencent rose 1.1 percent on Wednesday to HK$203.60 as of 4 pm, valuing the company at HK$374.2 billion ($48 billion).
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