Weibo: Lenovo, Xioami, Huawei in price wars, tributes for IDG founder
The number 1,000 took on new significance in the blogosphere this past week, with tech titans Lenovo (0992.HK), Huawei and Xiaomi in a sudden new rush to chop prices for some of their newest products to under 1,000 yuan (HK1,260). The number translates to roughly US$160, and is certainly not a bad price for the relatively high quality smartphones and tablet PCs that are suddenly being sold by the trio at that price and even less.
Meantime, tech executives were also paying tribute on their microblogs to Pat McGovern, the billionaire founder of the IDG media empire that was one of earliest venture capital investors to realize the potential of China's Internet. McGovern, who died last Wednesday, leaves behind an empire that helped to fund some of China's most recognizable Internet names, including sector leaders Tencent (0700.HK), Baidu (Nasdaq: BIDU), Ctrip (Nasdaq: CTRP) and SouFun (NYSE: SFUN), and many others.
Let's begin this week's microblog roundup with a look at the latest round of gadget price wars, which I've been predicting for quite a while now due to the flood of new smartphones and tablet PCs coming into the market from homegrown manufacturers. Lenovo kicked off the latest round of cuts when a mistake by some of its employees caused its S5000 tablet PC that normally sells for 1,888 yuan to suddenly appear on the JD.com e-commerce website for 999 yuan.
Lenovo vice president and China chief Chen Xudong lamented the mistake on his microblog, but promised that anyone who placed an order would receive the low price. Others were a bit more suspicious, accusing Lenovo of deliberately orchestrating the glitch to attract bargain hunters. Luo Hongping, an executive at rival ZTE (0763.HK; Shenzhen: 000063), called the "mistake" a case of hype, and also doubted claims that Lenovo had lost 100 million yuan due to the blunder.
Meantime, Huawei was busy cutting its own prices for the large-screen 3X smartphone model under its newly relaunched Honor brand, which the company is somewhat ironically trying to position as a high-end name. Huawei senior vice president Yu Chengdong was busy on his microblog hyping the latest cuts that brought the 3X price down to 998 yuan.
Some speculated that Huawei timed its cut to coincide with the newly announced pricing for the Hongmi Note, a similar model that has just hit the market from trendy and marketing-savvy smartphone maker Xiaomi. True to form, the microblogs of Xiaomi executives Tony Wei and Zhong Yufei were filled with promotional talk centered on the new large-screen smartphone, which will sell for 799 yuan.
Once again ZTE's Luo Hongping accused these other two rivals of excessive hype, perhaps reflecting his company's frustration at being surprised by these big price cuts. I wouldn't be surprised to see ZTE make its own belated response by cutting prices for one or more of its top models to less than 1,000 yuan, and would expect that this current round of price wars is will hurt everyone's bottom line through the first half of this year.
Meantime, let's close out this microblog round-up with a look at the tributes for Pat McGovern, who died at the age of 76. He founded his media empire in 1964, and in 1992 set up IDG Technology Ventures, one of the earliest foreign-funded venture capital companies to invest in China. As a longtime tech reporter in China, I can say that IDG's name is probably the best known among Chinese technology start-ups, and the company's investment in so many of today's tech titans testifies to that fact.
IDG partner Xiong Xiaoge announced McGovern's death on his own microblog, and executives from tech names including software security specialist Qihoo 360 (NYSE: QIHU), JD.com and video site Tudou all posted their own tributes. Qihoo's outspoken founder Zhou Hongyi was uncharacteristically demure in his post, calling McGovern the greatest investor he ever met for his early willingness to bet on the Chinese Internet. Others paid similar tributes for a man who will undoubtedly be remembered as one of China's most influential Internet pioneers.
To read more commentaries from Doug Young, visit youngchinabiz.com