With this newsletter we hope to: 1)

highlight the best content and

opinions from non-mainstream

independent bloggers. 2) provide

overviews and commentaries on the

views of innovators, and 3) give

thoughts on both hot and new topics

in Chinese web industry. We hope to

bring innovators, entrepreneurs and

venture capitalists to the forefront to

spark both conversation and original

thinking.

nnn

The report includes 3 parts:

Focus We highlight the brightest and newest startups in Chinese Internet and wireless sectors. Explore We recommend new products,

services, companies and explore the

trend in Chinese market.

Review We review and discuss the

viewpoints covered at the NTalks, a

popular event organized by

MOBINODE monthly.

This month's Startups Watch is edited by WEB20SHARE’s WatsonXu and

MOBINODE's LuGang, CindyJiang, This is a monthly bilingual report. Thanks much to our English translator MoyHau and English editor Dan Ciez. We look forward to hearing your feedback. Feel free to drop us message via mobinodetv@gmail.com

This year, no matter what kind of discussion on innovation we have, it seems that people just cannot help but come back to a few key topics: microblogging, location-based services, group purchasing, the iPad, and mobile networks.

Thus, it’s not surprising that in the space of one year we’ve seen a massive explosion in group-purchase sites; portal-sponsored a n d g r a s s r o o t s m i c r o b l o g platforms; checking-in becoming both popular and fashionable; and p e o p l e g o i n g crazy over the iPad. More and m o r e d e v e l o p m e n t teams are moving towards mobile networks, and capital markets are seemingly moving towards backing Android as the number one choice for mobi le ne twork development.

People on the edge of innovation seem to agree that opportunities abound, even though they may be very well hidden – the key is just

finding, exposing, and exploiting them. The problems that have to be addressed, however, are not few: how to judge these opportunities; how to cater to and fit into the conditions they come with and create; how to forge one’s own path; how deal with violent competition; how to stand out from the crowd; and how to deal with r i s k a n d c h a n g i n g m a r k e t conditions.

In this issue, we’ll e x p l o r e h o w t h e s e m a j o r factors affecting development of t h e m o b i l e network market within China, and at the same time i n t r o d u c e t h e d o m e s t i c microblogging scene and its state of development.

We’ll take a peek at the iPad and the development opportunities it presents for us, and through these themes showcase the directions in which innovation is proceeding in China.

A M U S T - R E A D T O E X P L O R E T H E L O C A L W E B P R O D U C E D B Y M O B I N O D E

STARTUPS WATCH

!"#

A U G U S T , 2 0 1 0 , V O L U M E 2

On July 28, Sina announced publically that its official, open microblogging platform was coming online, with the list of projects including collaboration with other websites, desktop clients and cellular clients. This integration with other platforms is the main strength of the service, and close cooperation with other services will grow the user base more quickly. The ease and portability of the microblog account lowers the barrier to entry in terms of registration convenience, and allows users to enjoy other benefits through the same account at different locations. When users post pictures, video, and other content on their microblogs, this will motivate other users to sign up. The use of official microblogs within the community also aims to provide a social driving force within it.

Sohu hopes with its microblogging service to provide a platform through which it provides real, quality content that doesn’t lag behind its other products and thus have the microblog site become a real part of the company’s product line-up. For instance, the microblog site could be linked to Sohu’s own group purchase site, providing users with real-time updates on sales and purchases by friends and followers, and potentially resulting in massive gains because microblogging is much more effective than forums for cross-promotion. Additionally, various activities or star sightings could be coordinated through the microblog service, with university students and the like organizing conferences and parties, and then recording the events as they take place.

Tencent came onto the microblog scene with a high emphasis on “media platforming” as an effort to bust into the microblog scene. The service is heavily integrated into the 2010 release of the QQ software, with many QQ users being unwittingly roped into the service. It’s not hard to imagine how with five hundred million users, the service might be taking off – making it the real competition that Sina has to worry about. In contrast with the other services, Netease is the only one that’s not trying to boost itself with celebrity posters. The approach that the company is taking is that everybody is a star and can become the center of a discussion, putting its users at the core of the strategy. The service focuses on wide-reaching coverage and real

A survey of China’s 4 major microblogging sites

Sina MicroblogLaunch Date: August 2009Strengths: Sina’s upper management is really focusing on the service, and it currently enjoys the largest user base in China, with a number of celebrities using the platform. It is also an open platform.Registered Users: more than 10millionLength Limit: 140 characters

Sohu MicroblogLaunch Date: April 11, 2010Strengths: entertainment and sports stars; integration with blog, video, SNS, and news products. Registered Users: No statistics.Length Limit: none

Netease MicroblogLaunch Date: May 20, 2010Strengths: post through email; follow news; integration with games; and a large grassroots movementRegistered Users: ~3 millionLength Limit: 163 characters

Tencent MicroblogLaunch Date: April 4, 201 0Strengths: Ties into QQ, which has a user base of 500,000,000Registered Users: no statisticLength Limit: 140 characters

Focus

!"#$%&$'%()$*+,"-*%./")+%#"/,0$%-$+1"2&*%,-%34,-.

1: Corpora te versus smal l development teams: who’s set to come out ahead?In just this year alone, Tencent has already recruited more than 100 developers for the Android and iPhone platforms. UC.cn has also made no small amount of campus hires. For innovators, it can be incredibly easy to have a go at development even while short of human capital and cash, only later to be crushed by a big corporate name. Individuals and smaller players need to find an area in which they can excel and leverage the experience they accumulate in order to avoid becoming an example for others of what not to do.

2: When it comes to ideas and execution with a dev team, who plays the key roles?In talking with a number of local dev teams, we’ve found that there is great variety in the methods of execution between individual groups. A lot of people will complain that they don’t see their ideas executed the way they want them to be due to a lack of resources, with the principal or at least common reason being a lack of clarity about future trends and directions. If you have a clear goal, you can leverage what you have in your hand to the maximum extent. Having a good

vision of your execution path is a core strength for a development team. 3: “Geek spirit” or corporate practice?Owing to the popularity of app markets, as well as the advent of popular open-source platforms like Android, the barrier to entry is becoming lower and lower. I n d e p e n d e n c e a n d c o r e competitiveness are going to be two properties that we see grow in importance. In the area of mobile networks, we’re going to see more and more of this “geek” vibe, whether we’re talking about small groups or individual development; they’re going to shake the market with small apps.

4 Creating new apps, or copying others: what’s really going survive in the long term?Currently, a lot of mobile network developers here are still going for the “copy” model -- just look at the number of teams that have turned out what amount to essentially clones of Foursquare’s app. (Something we will look in-depth at later in this issue.) If you actually take a close look at these products, they show very little individual innovation. This isn’t to say that basing your work on others’ is a fundamentally flawed principle, but we need to see people adding at least some innovative aspect to make their product worth the consumers time – for example, better adaptation to

local user needs, or a flashy (and hopefully useful!) point or feature to d raw users in . Th is i s something people really need to pay attention to in the future.

5: Android or Symbian: who will lead the market in these next few years?The Chinese scene changes quickly. Sometimes things go a bit overboard – the Chinese capital market jumped on the bandwagon so hard that in the past few months we’ve seen dozens of Foursquare clones and literally hundreds of group purchasing sites. The Android scene is more or less the same, and MTK joining in made the trend even stronger. Since the capital side of things is going, people are scrambling to make Android apps, but we also have another major player, Symbian, to consider. It may very well be that Symbian will take lead in the next few years, and we’ll see it as the largest mobile phone platform in China down the road. It is better for Dev teams to strike a balance between the various platforms to ensure long-term safety.

Reference: PlusApp

discussions. Netease hopes to see the microblog service become a unifying link between its mail, games, photo, picture, and search services – users should be able to register as a microblog user to enjoy all services associated with the brand.

We’re going to see some very fierce competition between the services in the near future, with different products trying to one-up each other and become the top choice. Try them out for yourself and see which you like.

iPad and e-books in ChinaApple’s announcement of the iPad really made waves in China, and reignited interest in the already very large e-book landscape here. Recently, China Mobile announced that it was developing an e-book product in conjunction with its mobile network, and China Netcom and China Unicom soon after announced similar services. Domestic consumption of e-books is up, with research showing that more than 70 per cent of net users now being e-book readers. This represents an increase of more than two-hundred per cent over 2008 figures.

Official statistics show that there were 155 million users of mobile phone e-book technology at the end 2010.

However, when you mention this, there are no specific vendors or distribution channels that come to mind. With so many users, where is the problem?

Fragmentation

On the one hand, you have players like the Shanghai Century Group and China Publishing Group, which all come out with their own readers to which they tie their own contents to. On the other hand, you have groups like Hanwang and Edo that make more versatile readers but also push their own content. Then you have players like Apple, busting into the market and adding heat, and others like Asus and Founder – established electronics manufacturers that are just getting into the e-book game. There’s also a wealth of knockoff readers at a varying range of price/quality points which attract a number of consumers. Nobody seems to have a good idea as to how to develop the market.

Poor Quality

A lot of what’s out there isn’t exactly caviar. A lot of the books that we’re seeing in electronic format are online publications that may not correspond with any actual printed work. This has a lot to do with current distribution formats – simply putting a text file online allows people to bypass restrictions on publishing and revision, and it’s easy to do. Along with it, however, comes a lack of quality.

It’s Free

We like free things in China. Copyright isn’t something we’re crazy about, and the option of getting what just came out on paper for free to read on whatever device you please is very enticing. Billing for text files isn’t something that many people are going to be amenable to, especially when they’re used to what we have now.

The aforementioned problems show that China’s e-book landscape doesn’t exactly constitute a “market” in the economic sense. If Apple thinks that they’re going to be able to sell content on the iPad + iBook model or something along the lines of Amazon’s Kindle strategy, they should ask for a wake-up call, because they’re dreaming.

Luckily, a few big players have pounded away and come up with some landscape-changing results. SNDA’s Bambook has made some big news, as it's the first solar-powered e-book reader in the world, which does a lot to counter the “it needs batteries” argument we hear against electronic text. Additionally, it has TTS, search, and private book capabilities. SNDA also has a large range of content go with it, and we may see some good results in the content + channel + client model on this one.

Explore: Rising Stars

Gewara is a venture to supplement real life with information from digital networks, allowing consumers to enjoy benefits outside the traditional areas of shopping, travel, restaurants, and lodging. It’s the first site of its kind to integrate financial, business, and user community advice. The site currently covers movie theaters, KTVs, fitness centers, and entertainment facilities. It provides names, addresses, phone information, pictures, and other information such as seating for theaters, class times for fitness centers, and prices for KTVs, bars, and other locations.theatercenter Users can evaluate all aspects of businesses listed, and arrange meetups and events. Link!http://www.gewara.com/

16Fun!Chinese for “Always Fun”"# is a

geolocation-based games service. Users are able to make virtual reports and purchases of products and real-estate in game, and also link to real promotions and activities in the true world.Services like 16Fun and My Town differ from Foursquare’s service in that they add the game element. Foursquare’s product works on a gain/loss model, whereas 16Fun operates on the geolocation principle, attracting users through new functionality and adding more opportunities for fun. This is strong evidence that the location-based services trend is growing in China. Link!http://www.16fun.com/

Shangjie is an online graphic advertising service that integrates static image content into its strategy. Consumers select the pictures they prefer which take them to websites they’ll enjoy.This is an offshoot of the Pixazza (Via) lineage, which received investment from Google at its inception to the tune of $12 million USD. Shangjie seems to be the first major copy in China. Link!http://www.instreet.cn

Coent is a professional social network that allows users to check ratings and discussions on other companies, as well as their hiring and interview practices. Users can publish their own opinions and experiences. Based on a collaborative system, users have to contribute before they can view others contributions on the site, which keeps quality higher. The service is free, as long as you share. The service maintains anonymity for all users, and has stats, evaluations, and interview information on over 100,000 companies as of now.

Link! http://www.coent.cn/

This is an information aggregation and push platform as well as a real-time communications technology for mobile phones. It allows users to distribute pointers to information, webpages, blogs, novels, and shows through mobiles, MSN, fetion, QQ, Skype, Gtalk, and other services. Users of this services will able to “push” this content to their friends in real-time through a unified platform, which gives people a lot of space in which to play.

Link!http://zhui.cn/

Duqi is a photo sharing site for the Chinese language community that allows people to post photos with descriptions. The site is currently the most popular photo sharing platform for young people in China, and integrates simple online photography and upload services, along with text publishing services and social functions, as well as promotion capabilities.

Link!http://www.duqi.com

Review of the Fourth Round of NTALKS"#$%

NTALKS "#$ is an offline event organized by

MOBINODE on a regular basis to tighten the

connection among local start-ups.

NTALKS is a platform and community for grassroots

and startups to demonstrate their works, share their

experience and communicate with the potential

partners and investors.

The main focus of the last NTalks event was “Groupon like model and how we define real value”. People have been going crazy in discussions over the group-purchase phenomenon and how great it’s going to be. With enough said on those topics, we tried to explore the phenomenon and come up with conclusions on where it will go; what problems it will face; and the trends and future we can expect to see.

We had a number of large players in the scene show up this time: the founders of Lashou, Ftuan, 55tuan, Yiqi001.com, and Kutuan, as well as Tuanp, Tuan800, 122.net, Tuan123, and third party expertise from DCCI.

The key points touched on were:

The group purchase model itself:

People are still forming their habits with regards to this phenomenon, and the phenomenon itself is slowly shaping their habits.

Grouppurchasing is providing a completely new experience to end-users, and is providing a new option for distributors. The two groups are coming up with new ways to work together.

Competition in the market:

If people aren’t setting expansion or IPO as their goal, then we’re going to see different sites existing and surviving for different reasons. Local and specialized services will still have a lot of opportunities to do well.

The entry of big corporations into this space shows just how big the potent ia l for expansion is . Entrepreneurs need to get a solid grasp on user needs and fulfil them to cement themselves in a good place.

As for value:

People are definitely pumped about the phenomenon, and there’s a lot of attention focused on it.

There’s a huge opportunity for advertising that we’re going to see here.

Innovative services are going to provide an even wider channel for this to expand.

P r o b l e m s c o n c e r n i n g survivability;

We’re going to see these kinds of groups taking on promotional responsibilities of their own,

which means that they’re going to challenge business on resources, cost, and service.

Trust is still a big issue: fierce competi t ion at the s tar t is unavoidable, but only through good grasp of user needs will users be able to enjoy good service and want to stick around. For example, a 72 hour return window would be a nice trust building step.

The future of the sector:

We’re going to see a lot of localized services.

We’re going to see great value for societies in general.

Just like with other forms of e-commerce, we’re going to see stratification in group purchasing.

We’re going to see the integration of a lot of new technologies into the sector, such as location-based services, social games, and mobile network technology.

A U G U S T , 2 0 1 0

Special Thanks to OrangLabs Beijing, BlueRun China and TrilogyVC

STARTUPS WATCH

!"#

Feel free to contact us via!mobinodetv@gmail.com

Please keep a lookout for our blog!www.mobinode.tvwww.mobinode.comwww.web20share.com