Going through my notes while writing my report on last week’s Global Mobile Internet Conference for Warc.com, I am starting to realize that GMIC was one of those conferences where I wish I could have cloned myself. I’ve just fired a request for more materials to Edelman, the PR agency for the show, and I’m hoping it comes through.
One of the better tidbits of the show was a speech by Wang Jian, Alibaba‘s (OTC:ALBCF) chief architect and the CEO of its cloud computing group. Originally billed as a “Keynote and Product Launch,” the presentation was just a speech. Or, as I noted to myself at the time, a launch without the product.
All Foreplay, No Payoff
In his speech, Wang acknowledged the power and advantages of the app-based mobile phone operating systems, Apple's (AAPL) iOS and Google’s (GOOG) Android, but he noted that even these most modern of mobile platforms had a failing. Apps, he noted, cannot replace the web, and a mobile browser does not adequately deliver a web experience on the mobile phone. More important (to Alibaba, especially), the web economy on the Internet has yet to be delivered onto the mobile phone.
Wang called for an open mobile platform designed and optimized to help people run their businesses on the web, and told the assembled 3,000 delegates that the web economy (not the app economy) is the future of the mobile Internet.
This raised all kinds of red flags. The rhetoric and the way the speech built sounded like he was going to announce just such a product, and then he ended abruptly just as the speech reached a high point: “Think about a platform OS that allows you to make your web business bigger by definition.”
I could almost hear the music and see the scantily clad girls walk out with mobile devices running just such a platform.
And then Wang thanked the audience and walked off.
Waiting for the Genie
You don’t write a speech like that just to put a flag in the ground and issue a clarion call for the industry to do something. You write a speech like that when you are ready to launch the very product for which you are calling. The conclusion I’ve reached, sitting here in the Hutong after the intervening long weekend, is that Alibaba has something in the works, but either could not or would not announce it last week.
Apart from the launchus interruptus keynote speech, here are the five most important reasons why I think Alibaba has something in its lamp.
1. Baidu (BIDU) did it. The degree of rivalry and one-upsmanship between Baidu and Alibaba should not be underestimated; it's a rivalry that dates at least as far back as Alibaba’s partnership with Yahoo (YHOO) in China, if not further. Baidu has announced a mobile operating system, albeit one based on Android. Alibaba would be compelled to respond, if for no other reason than to keep from being locked out of mobile commerce by a Baidu operating system that pushes users to Baidu’s chosen commerce site (instead of Taobao) and payment site (instead of Alipay).
2. Alipay. Creating its own mobile operating system would allow Alibaba to integrate Alipay, its popular electronic payments system, into the phone. An Alipay-based electronic wallet could be integrated into the device, at the very least allowing encrypted transmission of payment information for anything purchased on the Internet, from e-books to stuff ordered on Taobao.
But that would only be the beginning. Alipay could also integrate near-field communications so that you could use Alipay to pay for a taxi ride, for your lunch at McDonald’s (MCD), for your movie tickets, and for that cute pair of shoes you saw in the store downstairs from your office. You could pass money to a friend or relative by an SMS (or an MMM -- mobile money message). With an Alibaba system, Alipay would become the default means of making every payment with your phone, regardless of what you were doing. No need to even open an app.
This could substantially expand the volume of business Alipay is doing in China, and even secure its leadership as the payment method of choice for consumers in the PRC, making it the Visa (V) of the 21st Century in a way PayPal still dreams about.
3. The Enterprise Hole in Mobile. While it is interesting to think of running a large e-commerce enterprise on a mobile phone, concerns about security and logistical challenges seem to inveigh against it. On the other hand, using a mobile device to help conduct a physical inventory, tie into a complex enterprise management system for order entry, CRM, or other enterprise functions would extend enterprise IT to mobile in a way that iOS and Android are only starting to address.
And of course, there would be an Alibaba enterprise e-commerce system integrated into the device, making it a simple matter to log onto your Alibaba page and buy, sell, update inventory, etc.
4. Taobao. This is even more compelling in the near term than the enterprise. Selling what would essentially be a Taobao phone would allow you to buy a mobile device, sign it into your Taobao account, then use the built-in camera to take a picture or video (with voice-over description) of what you want to sell, add in pricing and details, and with the push of a button upload that to your Taobao store.
You could monitor your store in real time, make purchases, and handle all of your payments via your phone. In effect, your phone becomes your store.
This would be a convenience to those already selling or buying on Taobao. And for those who aren’t, it would make doing so much easier and much more accessible, possibly tripling the addressable market for the company. And that’s in China alone.
5. Global. If Alibaba succeeds at crafting an alternate web-based mobile phone operating platform, this would be an important opportunity for the company to take its platform – and itself – global. Despite the company’s phenomenal success in China, it has limited recognition among consumers abroad, and this could change the equation radically. At that point, all Alibaba properties could be taken global, or at least to those markets without strong online platforms for small business and consumers and mobile payment systems. That would cover something like 3/4 of the planet. A tempting opportunity.
6. The Time Is Right: As I noted in my earlier post about Baidu’s bid to become a mobile OS provider, it is still early days for the mobile Internet, especially here in China. Conservatively, some 3/4 of the nation’s mobile users have yet to upgrade to a phone that offers much more than a bare-bones online experience. That is set to change, but it won’t change overnight. The timing is still good for Alibaba to get in on the game.
All of the foregoing is, of course, little more than thoughtful speculation. I would not be basing any stock purchases or investment decisions on the basis of the above. But it does suggest reasons why a bid by Alibaba to enter the mobile platform race should not be taken as a prima facie bad thing.
If Alibaba does decide to jump into the fray, it will gain little by doing so before designing a superb experience. In that sense, the company’s failure to launch anything at GMIC is heartening. It suggests that Jack Ma understands the challenges Alibaba faces in offering a whole new way for people to use the mobile Internet.