Chinese whispers update from February 2010

Shane Lennon, senior vice president of marketing & product management at Gypsii talks to telecoms.com about mobile social networking and the encouraging uptake of the medium in China.

What’s driving the adoption of social networking on the mobile?

There’s a sea change happening on three levels; the consumer level, device level and distribution level. Consumers have been looking to do more on mobile, particularly in emerging markets where they don’t have access to the internet via a PC. Even two years ago you saw people trying to use WAP to mobilise Facebook and MySpace. If you think about social networking and the things you do throughout the day, most of the things that are important happen while you’re physically away from the PC, so there’s an inherent business case there.

The device itself is the ultimate personal device. Think of it as a three screen world; the TV you share with everybody and the PC you share with others, but the phone is one to one device with just your profile.

As for distribution, the biggest change came from Apple. It set a benchmark for the user experience and for devices. They took the vertical chain and made it easy. People can build an app in their garage and make money. Consumers can download it really easily. They just nailed it.

Where do you see the main business opportunities?

China still has massive white space – new users – where there is the potential to sell 300 – 400 million phones. Operators in China are now pushing data services, there’s China Unicom with the iPhone and China Mobile with the OPhone. These operators are learning fast about how much consumers are willing to pay and I think you will soon see data plans in China mirror those in Japan and Korea.

Don’t forget China has a 100 million strong luxury market and 300 million middle class consumers. It’s like taking all of Europe and making it all middle class. Also, Chinese users are ferocious users of social networking. They’re about ten times more active than those in Europe and US. They are coming out of a closed society so there is a lot of curiosity and a massive migration from rural to urban areas. There is a natural embrace of the platform – Chinese users actually want to make friends.

Do you see a struggle for ownership of the customer?

Yes, you see a lot of players who are basically future competitors working very closely with one another at the moment. Also, operators like Orange and Vodafone are going after a stake of the market as well. But the battle will vary by region. In China for sure the operator is going to be the main player when it comes to social networking, but we’ll see some more consolidation among the operators, as well as in the smartphone market where there is realistically only room for two or three big players.

How do you monetise social networking?

Social networking features will drive the viral uptake of apps. Apple and Android are getting there but no other provider has come close. At the moment it’s a difficult experience for the consumer and for the application provider to get in there and get certified.

Our ultimate model, our long term goal is advertising revenues. E-commerce is now mobile commerce and you have premium content services. We will see lots of talk around advertising. We’re working with navigation players who want in on the ad revenue model and want to enhance their capabilities so people can make more transactions. Gypsii was designed as a mobile social network from the ground up, so location is important. People also want to connect with people beyond who they know to where they are, who they want to see, what they want to do. It’s more interactive and driven towards application needs that are beyond pull/push such as ‘I want a single piece of information’ or ‘give me a coupon’. This isn’t the kind of research you’re going to do on Google.

Also consider users searching for advertising by looking for vouchers, which has a natural place in location based services and mobile. The trick is not repurposing what is done on a website, you need to do it totally differently.