Will Wechat Contacts Grab Chinese Mobile Operators’ Market?

Written by Joey Wang

2014, Nov 11^th, nearly everyone was focusing on 
Single’s day online shopping, while Tecent launched a new product called Wechat Contacts, enables users make phone calls with their friends of Wechat FREELY, which seems may give Chinese mobile operators another hit. Flashing back, the figure of short message users dropped dramatically because of the popularity of Wechat, which triggered complaints and panics of mobile operators several months ago. Today, Wechat Contacts comes to challenge mobile operators again. Thus here comes a question: will Wechat Contacts grab or even shake mobile operators market in terms of calling service?

For mobile operators, on the one hand, the bargaining power of users gets increasingly stronger as they have substitutes such as communicating through Wechat so they are gradually hard to be pleased and satisfied. On the other hand, the appearance of new threat Wechat Contacts with its FREE service and similar call quality does burden their situation. For the mentioned reasons, Chinese mobile operators should loose considerable numbers of users theoretically. However, user adoption towards new product or service depends on multiple elements because the long-term generated user habit of calling can be difficult to change. That is to say, there are still limitations existing of Wechat Contacts that cannot easily shake mobile operators’ market position from my perspective.

In spite of its call quality, is the Free service really free? Actually, this so-called free calling is nothing but a strategy to attract users. Because users still have to use it by consuming network traffic, which has the similar price with normal communication by phone or even more expensive, even when using Wechat Contacts in Wi-Fi environment, users also have to pay for Wi-Fi. On the other hand, actually, before Wechat Contacts, they are already several apps with similar functions produced to serve users but failed to generate a large user scale, shows that the free calling service is less popular than expected. Since Wechat Contacts is not a real free service, what on earth is its core competitiveness and unique differenriation to catch users’ eyeballs? As one of the users, I cannot find anything special from its current app version, which also proves that the importance of user experience towards the promotion and popularization of a new product/service.

Apart from the product itself, its penetration can also become a challenge. According to recent research, there is increasing number of young generation users who are also the main force of smartphones preferring texting to calling as texting is asynchronous (non-blocking), low bandwidth (full attention not needed; answer when ready) and convenient in almost any situation. Admittedly, such a status does bring an obstacle to the penetration of Wechat Contacts, as calling is no longer the first choice among considerable users when communication happens. In addition, it is believed that early adopters play significant roles in the promotion of a new product. And Wechat Contacts is based on Wechat, whose users mainly gather in higher tier cities. That is to say, even there are numbers of early adopters willing to use Wechat Contacts, its penetration towards lower tier cities could be limiting. Therefore, Wechat Contacts is not competitive enough to conquer with the mobile operators, not to mention grabbing their market.

However, does it mean that Wechat Contacts will not threaten the market of mobile operators? Since it is a newly developed product with much potential to be exploited, maybe an integration of some O2O services or Yellow Pages navigation can enhance its competitive force towards mobile operators. As users are always the center of the products and services, only better user experience can help grab more market share in market competition.