CHINA TELEMATICS SITUATION & THINKING

Manfred  Fu(GM  of  Telenav  Shanghai)  May  2015  

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Video:  1st  China_short  

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Baidu Tencent Alibaba Xiaomi Huawei

BAIDU—SEARCH ENGINE GIANT

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•  Market  Cap:  $69.33  B  •  F2015Q1  revenue:  $2.053  B  

•  In  2014,  Baidu’s  mobile  revenue  surpassed  PC  in  December  

 

•  In 2013, Baidu owned a map data vendor—长地万方Ritu

CARLIFE– BAIDU SOLUTION IN CAR

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Baidu  map(app)  •  APP  is  free  to  use  •  Map/navigaRon  APIs  are  open/free  to  

developers  •  Market  share:  65.2%  •  User:  370m(2014/9/3)  •  Day  request:  >10B  

CompaRbility  •  Phone:  iPhone,  Android  •  Car:  Linux,  QNX,  Android,  WinCE  •  ConnecRon(phone  &  car):  USB  or  WIFI  

OEM  level  HMI  &  UE  •  Sensors  with  car  •  Voice  control  •  CooperaRng  with  OEMs  &  Tier1s  

TENCENT—SOCIAL NETWORK GIANT

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•  Market  Cap:  $206.2  B(2015/4/13)  •  F2015Q1  revenue:  $3.618  B  

•  Top  2  popular  app:  QQ,    WeChat(from  mobile  &  PC)  •  Most  revenue  from  game(TBD)  •  User  of  WeChat:  >500m(by  2014)    

•  In 2014, Tencent spent $187 million in Navinfo to became later’s 2nd large stakeholder.

•  Navinfo is one of top two map data vendor in China

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2014-­‐04-­‐21,  21:11:00  

TENCENT OBD SOLUTION—LUBAO(2013)

•  BT connection to phone •  Car diagnostic •  Interact with Tencent mobile

navigation

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WEDRIVE—TENCENT ALL-IN ONE SOLUTION IN CAR

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Feature  scope:  •  NavigaRon  •  Social  life  •  News  •  Music  •  Stock  •  Online  video  •  Call  center  service  •  Restaurant  recommend  Summary  

•  Strong  in  “infotainment”  •  Not  enough  integraRon  with  HW  •  No  deep  cooperaRon  with  car  makers  

 

ALIBABA—E-COMMERCE GIANT

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•  Market  Cap:  $213.6  B(2015/5/7)  •  March  quarter  2015  revenue:  $2.81  B  

•  GMV  (Gross  Merchandise  Volume)  in  F2015Q4:  $97  B  

•  In 2014, Alibaba fully acquired AutoNavi, total of USD 1.38 billion, later is one of top two map data vendor in China

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Invest  1  billion  yuan  ($160  million)    to  develop  Internet-­‐connected  vehicles  

BUILDING THE FOREST AROUND CAR & DRIVER

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Used  car  replacement  

AucRon  

Premium  used  car  

Smart  device  &  OBD  

Lease  Designated  driver  

Car  SPA  

New  car  booking  

Car  finance  

Car  E-­‐shopping  Car  insurance  

Car  fikng  4S  maintain  

O2O  service  Fuel,  violaRon,  etc  CerRfied  accessories  

Shopping  service  

Local  service  

Used  car  

New  car  

COMPARISON TO GLOBAL GIANTS

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latest  quarter  (by  May  2015)  

Baidu   Google   Tencent   Facebook   Alibaba   Amazon  

Market  Cap  ($  billion)  

69.33   363.07   206.2   222.22   213.6   199.78  

Revenue  ($  billion)  

2.053   17.26   3.618   3.54   2.81   22.72  

SUMMARY– BAT WITH LBS

All of them: –  Own or invest map vendors –  Own navigation engine –  Cooperate with HW partners –  Cooperate with Auto makers to host HU screen –  Trying to understand all details around driver & car

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In  2014,  Xiaomi  invested  $14  million  to  own  Careland,  later  is  map  content  vendor  and  No.1  navigaRon  SW  market  share  in  beforemarket  car  navigaRon  

XIAOMI —WORLD'S THIRD LARGEST SMARTPHONE VENDOR

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HUAWEI —LEADING GLOBAL INFORMATION & COMMUNICATIONS

TECHNOLOGY (ICT) SOLUTIONS PROVIDER. AND A TOP SMART DEVICE

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In  2014,  overall  Group  revenue  reached  $46.5  billion,  up  32.7%  year  on  year  

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Revenue  from  oversea  is  higher  than  it  from  China  37.8%(from  China)  vs  62.2%(from  oversea)  

WHY THESE GIANTS SUCCESSFUL IN CHINA-1

Same/unified origin: –  One large nationality, total 1.226 billion Chinese are

the Han nationality –  One language, Mandarin is popular and accepted by

most Chinese –  One currency, Renminbi(RMB) –  Unified policy

18 Demographic  Dividend  

WHY THESE GIANTS SUCCESSFUL IN CHINA-2

User habits: –  User experience: Simple –  Willing to accept new things –  Like free software, few people paid –  Half of Chinese living in city –  With University (college) education level: 8.73% –  China's GDP per capita(by 2014): $ 7,485

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WHY THESE GIANTS SUCCESSFUL IN CHINA-3

•  Originally, foreign players inspired them

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WHY THESE GIANTS SUCCESSFUL IN CHINA-4

But soon, they did better:

•  In 1998, ICQ is the No.1 IM(instant message) SW in China. In 1999, QQ(Tencent’s IM) was established and only two employees(two founders), one year later(year 2000), QQ became the No.1 IM SW in China, easier to use and free, better UE than MSN

•  When Taobao(Alibaba’s) launched his first E-commerce platform in 2003, Ebay is the E-commerce giant in China. But in 2006, Ebay closed his server in Mainland, was quickly beat by Taobao in China. Taobao’s platform is more open and free.

•  Similar story for Baidu, in 2000 Baidu set up and at that time Google is search engine giant in China. But in 2003, Baidu’s market share in China surpassed Google.

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WHY THESE GIANTS SUCCESSFUL IN CHINA-5

•  More open platform •  Free to end user, making profit from Ads and 3rd party •  Quickly update •  More respect for Chinese users, more attention on detail

improvements

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Xiaomi's key to smartphone success: 'Be friends with our fans'

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Create  saYsfacYon  

Create  loyalty  

Create  evangelism  

THEY ARE CHANGING TO KEEP LEADING POSITION, FROM MEET MOST PEOPLE TO MEET YOU

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PASSENGER CAR SALES—CN(2011-2019)

14.47   15.50  17.99  

19.71   21.09  22.57  

24.37  26.32  

28.43  

0.00  

5.00  

10.00  

15.00  

20.00  

25.00  

30.00  

2011   2012   2013   2014   2015   2016   2017   2018   2019  

Passenger  Car  Sales(2011-­‐2019)(M)  

Notes:  Data  from  CAAM  

40+ LOCAL PASSENGER CAR BRANDS

CHINA BEFORE MARKET NAV RATE(2011-2019)

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7.08%   7.52%  

9.28%  

12.70%  14.12%  

16.54%  

18.96%  

21.38%  

23.80%  

0.00%  

5.00%  

10.00%  

15.00%  

20.00%  

25.00%  

2011   2012   2013   2014   2015   2016   2017   2018   2019  Notes:  Data  from  CAAM  

EUROPEAN OEM’S NAVIGATION IN CHINA

•  Connected HU(call center, cloud search, infotainment, etc)

•  Knob + some hot buttons to operate HMI •  Rich functions but w/ normal UE •  Chinese search UE is poor

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JAPANESE OEM’S NAVIGATION IN CHINA

•  Performance is amazing

•  Traditional step by step HMI design •  Rich functions with many detail settings •  Chinese search UE is poor

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US OEM’S NAVIGATION IN CHINA

•  Relatively simple HMI design style

•  Connected solution focus on safety and Remote control, lack of interaction with driver

•  Lack of enough localization •  Chinese search UE is poor •  Whole system UE is normal

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CHINA AFTER MARKET NAV RATE(2009-2014)

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169.5  

342.7  

510.4  

662.4  704.2  

75.30%  

102.20%  

48.90%  

29.80%  

6.30%  0.00%  

20.00%  

40.00%  

60.00%  

80.00%  

100.00%  

120.00%  

0  

100  

200  

300  

400  

500  

600  

700  

800  

2009   2010   2011   2012   2013  

volume  growth  

SMARTPHONE PROJECTION DRIVING COMMODITIZATION

§  No differentiation between vehicle segments §  Same experience in every vehicle §  No head unit upgrade potential

§  No control of UX & innovation

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CONNECTED NAVIGATION LEVERAGE THE ENTIRE CANVAS & CAR DATA

The car can surpass smartphone UX §  Instantly on §  Immediately helpful §  Surpass current expectation through

customization and integrated experience

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UNLOCKING THE DATA POTENTIAL TO DELIVER A SUPERIOR EXPERIENCE

PERSONAL DATA

VEHICLE DATA

ENVIRONMENT DATA

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OUR INTEGRATED SOLUTION

SMART CLOUD MOBILE SDK LIVING MAP &

BEST-IN-CLASS CONTENT

AUTO HMI & SDK

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WHAT WE LEARN FROM THEM

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Chemical  ReacYon   Physical  ReacYon  

Internet  +   +  Internet  

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Win-­‐Win:  In  Car,  Forget  the  Phone  

THANK  YOU  

Manfred  Fu  傅杰伟