Review 2015 and Predictions 2016 Edition
Our Review for 2015 & Predictions for 2016 in Asia Technology Landscape
In the latest two episodes on the Analyse Asia podcast (available on iTunes, SoundCloud, Stitcher and Acast), our host, Bernard Leong and guest, Sameer Singh reviewed the five major events that shook the Asian technology landscape in 2015 and offered five predictions to what will happen in 2016.
In the first part of the podcast, we discuss the five major events in Asia this year: (a) the surge of venture capital financing in Asia and its implications, (b) SoftBank’s Pepper with major investments from Alibaba and Foxconn totaling to US$236M, (c) the Nintendo-DeNA deal, (d) Xiaomi’s challenging year and (e) global recognition of Wechat’s messaging platform and why Facebook is learning from them to build their messaging app. We also added a short discussion on the upcoming dawn of self-driving cars and examine its implications across Asia from the on-demand taxi-hailing apps, the investors such as SoftBank, Tiger Global and the car makers.
Concluding in the second part, we built on our earlier conversation on the five major events that rocked 2015 so that we move ahead to forecast the events in 2016 which will shape the technology landscape of Asia. One interesting conclusion is that Asia is becoming the new battleground for the US companies as well as the homegrown Asian giants in the next few decades.
Here are the interesting insights from our conversation:
What will the Asia startup unicorns expect in the coming year with a record high venture capital financing in 2015?
In 2016, the reality dawns for the Asia unicorns particularly those in the ecommerce and on-demand taxi hailing apps. The unit economics for these companies will start to matter given that the companies have subsidized the customers for a long time. Given that Tiger Global has become the universal investor to Uber, Didi (China), OlaCabs (India) and GrabTaxi (Southeast Asia), it is likely that the weakest of the four will be forced to consolidate. Given that most investors often viewed China and India as markets with economies of scale, it is likely that Uber and Didi will have the ability to acquire GrabTaxi to consolidate. Since Uber has openly declared that they will not acquire any clones, Didi is the likely candidate to make the acquisition.
Why is SoftBank’s play with the Pepper robot more business to business (B2B) than business to consumer (B2C)?
SoftBank has allowed consumers to lease the Pepper robots in Japan but it has taken a different approach in their Asia expansion. They have engaged business enterprises, mainly in the retail, logistics and banking sector and suggested potential applications of Pepper, for example, a customer service officer standing in the front of retail stores or bank branches. Yet, they have not made a play for early adopters in these markets to lease Pepper for home use.
There are three reasons to why they chose a B2B approach against a B2C. First, the learning algorithms of Pepper are tailored towards the Japanese consumer and has yet to be expanded to other markets, for example, the Chinese market or markets which speak English. Second, SoftBank prefer the consumers to interact with Pepper through business uses first and then make a play in the consumer market. Last but not least, SoftBank might be searching for the killer application for Pepper through engaging with business enterprises first.
Can Nintendo resolve their innovator’s dilemma with their deal with DeNA?
The failure of Miitomo demonstrated that Nintendo still harbored hopes for the console gaming market and has not fully embraced mobile gaming in the future. Yet, their other venture with Pokemon Go, is on full throttle on mobile and takes on a similar trajectory like Google’s Ingress that has extended in the smartphone and has the propensity to incorporate virtual reality (VR) and augmented reality (AR) if Oculus Rift will ship their device out in 2016. One important thing to watch in 2016 is whether Nintendo will learn from the downfall of Kodak and fully focus their efforts in building their portfolio of game content IP instead of building consoles and technology.
An interesting point that emerged from our conversation is that Nintendo can follow the footsteps of Disney in how they have amassed strong content IP via Marvel and LucasFilm and produced blockbusters with content. It will also provide a roadmap for single hit gaming companies such as Rovio and Zynga to how they should build their future.
How is Xiaomi going to reverse their fortunes in the challenging year of 2015 and steer it towards growth in 2016?
There are two reasons why Xiaomi has gone through a challenging year in 2015. First, they suffered from having their product development and business models copied by fellow technology companies in the Chinese market: Huawei, Lenovo, Oppo and Meizu. The irony is that they suffered in the same way similar to how they had displaced Samsung in 2014. Hence the important question is to ask, “What should Xiaomi do in 2016?”
In 2015, Xiaomi has acquired a considerable amount of patents for their products and it is likely that they will attempt to enter the US or Europe market to expand their footprint. It is often difficult to describe whether Xiaomi is a hardware or software or web services company. Their next few quarters will determine where their path lies.
Can Facebook fight their different battles in the messaging apps wars in north Asia (China, Japan and Korea) and resolve their differences with Internet net neutrality advocates on the free basics program in India and Indonesia?
It is interesting to follow the trajectory of Facebook in Asia Pacific for the coming year. Facebook’s objective is to grow their users to the next two billion. The social network is facing different wars at different fronts. Two interesting scenarios may happen in the next 12 to 18 months.
The first is whether Facebook will decide enter into China. Unlike Google, they have held back for a very long time, given that very few US technology companies have managed to gain a foothold in China except Apple and Linkedin. Setting up in China will require Facebook to incur strategy tax of setting up a different infrastructure and obey the regulatory demands set by the Chinese government. Given that Wechat owned by Tencent is the dominant app in China, Facebook’s prospects in China looked bleak and difficult.
In making the play for China, there is the second narrative for Facebook which is what they will be doing with Whatsapp and Facebook messenger. Given that it will take a lot more time to bring Facebook messenger to the level of Wechat, there is a likelihood that Facebook might acquire LINE app which has been slated for an IPO but the company backed off twice last year in going public. Given that LINE has significant market share in Taiwan, Thailand, Indonesia and Philippines, it may not be a big leap of faith that they might consider an acquisition similar to what they have done with Instagram and Whatsapp.
The second scenario is the controversy generated by Facebook’s Internet.org program or what we called free basics. The backlash coming from India’s net neutrality groups and technology community would hinder the social network’s plan to acquire the next one billion users where India’s economy is more open and less restricted than China. Mark Zuckerberg has attempted to make an appeal to the Indian population and government to accept free basics but it remains to be seen how it might change the situation.
In summary, Asia will be the battleground for US companies to contest. In the past few weeks, we have seen Mark Zuckerberg visiting India, Sundar Pichai in Vietnam and Sergey Brin in Indonesia for Project Loon. Of course, the region will be brimmed with excitement and the Asian technology giants will have to defend their turf while thinking about global expansion ahead.
