Gaming Dominance Solidifies Tencent’s Leadership

Gaming remains Tencent’s most dominant segment, with revenues from its Value-Added Services (VAS) business—comprising gaming and social networks—rising 9% YoY to RMB 82.7 billion.

Domestically, hit titles like Honor of Kings and Peacekeeper Elite continued to deliver solid growth, supported by Valorant and the newly launched Delta Force. In the international market, Tencent expanded Valorant to consoles, boosting gross receipts by over 30% YoY.

This success underscores Tencent’s ability to maintain engagement in a competitive gaming landscape. The company’s investments in AI-driven personalized experiences and enhanced live-service elements further strengthen its position globally.

Social Media: Expanding Beyond Communication

Tencent’s social media platforms, Weixin (WeChat) and QQ, remain integral to its ecosystem. WeChat’s combined Monthly Active Users (MAUs) grew to 1.382 billion, while QQ saw a modest increase in MAUs.

WeChat Mini Programs achieved a Gross Merchandise Value (GMV) exceeding RMB 2 trillion, driven by expanded use cases like food ordering and electric vehicle charging. These initiatives reflect Tencent’s strategy of embedding commerce and services directly into its social platforms, enhancing user convenience and stickiness.

Leveraging AI, Tencent improved WeChat Search’s ability to handle complex queries, significantly increasing commercial click-through rates. QQ also saw innovation with upgraded infrastructure and new features, marking a return to YoY MAU growth.

Marketing Services and Advertising Resurgence

Tencent’s Marketing Services revenue, which rose 17% YoY to RMB 30 billion, demonstrates strong demand for its advertising solutions. Key contributors included Video Accounts, Mini Programs, and WeChat Search.

The Paris Olympics provided an additional boost, as advertisers sought to capitalize on high-profile events. Notably, eCommerce and gaming advertisers increased spending, offsetting weakness in categories like real estate and food and beverage.

FinTech and Business Services: Mixed Growth Amid Economic Headwinds

Revenue from FinTech and Business Services rose by 2% YoY to RMB 53.1 billion. FinTech services, encompassing payment and wealth management, showed stability, with the latter benefiting from increased user activity and assets under management.

Payment services, however, faced subdued consumption. In Business Services, growth in cloud services revenue was a highlight, aligning with Tencent’s broader focus on supporting digital transformation.

Tencent’s ongoing partnerships, such as the integration of JD Logistics with Taobao and Tmall, reflect its strategy of extending its influence across China’s digital ecosystem.

AI-Driven Innovations: A Key Pillar of Future Growth

Tencent’s AI investments came to the forefront with the launch of Hunyuan Turbo, an upgraded foundation model leveraging a heterogeneous Mixture-of-Experts (MoE) architecture. This model delivers double the training and inference efficiency at half the cost compared to its predecessor, underscoring Tencent’s commitment to deploying cutting-edge AI across its businesses.

The company has integrated AI capabilities into various offerings, from personalized gaming experiences to Weixin’s search algorithms and targeted marketing services. These initiatives aim to enhance operational efficiency and deliver value to users and advertisers.

Financial Strength and Shareholder Returns

Tencent continues to demonstrate financial resilience, with gross profit rising 16% YoY to RMB 88.8 billion and non-IFRS profit for equity holders increasing 33% YoY to RMB 59.8 billion. Free cash flow stood at RMB 58.5 billion, reflecting strong operational performance.

The company’s share repurchase program, totaling HKD 35.9 billion during the quarter, underscores its commitment to delivering shareholder value. With net cash of RMB 95.5 billion, Tencent is well-positioned to pursue strategic investments and initiatives.

Challenges and Strategic Focus

While Tencent’s diverse portfolio shields it from sector-specific risks, challenges such as fluctuating consumer spending in FinTech services and intensified competition in the cloud space remain. However, its strategic investments in AI, content, and ecosystem integration signal a clear focus on long-term growth.

Tencent’s third-quarter performance highlights its ability to adapt and thrive in a rapidly evolving market. By aligning its core businesses with emerging trends in AI, digital transformation, and consumer engagement, Tencent is not just navigating challenges but setting a course for sustainable growth.

Tencent’s Q2 2024 Results

Tencent Holdings announced its unaudited consolidated results for the second quarter of 2024, showcasing robust growth and strategic advancements across its diverse business segments. The company’s performance underscores its commitment to leveraging its platform plus content strategy, with notable successes in both domestic and international markets.

WeChat Video Accounts and Mini Programs:

Video Accounts: Tencent reported a substantial year-on-year increase in total user time spent on Video Accounts, driven by enhanced recommendation algorithms and an expanded array of local content. The company is systematically strengthening transaction capabilities within this platform to deliver seamless shopping experiences, thereby driving sales for merchants.

Mini Programs: The total user time spent on Mini Programs also grew by over 20% year-on-year, benefiting from the platform’s robust commerce and content ecosystem. Notably, the gross merchandise value (GMV) facilitated by Mini Programs experienced double-digit percentage growth, and total gross receipts from Mini Games increased by over 30% year-on-year.

Tencent Channels and Long-form Video

Tencent Channels: This community-based platform, which evolved from QQ, was rebranded and upgraded to enable moderators to manage channels with customizable tools. Users can now interact through text, image, and live streaming features, accessible from Weixin/WeChat, game apps, and QQ.

Tencent Video: The release of popular drama series fueled a 13% year-on-year growth in long-form video subscriptions, reaching 117 million subscribers. Notable titles like “Joy of Life 2” and “The Legend of Shen Li,” based on IPs from China Literature and produced by New Classics Media, were significant contributors to this growth.

Gaming

Domestic Games: Tencent’s flagship domestic games, such as “Honour of Kings” and “Peacekeeper Elite,” resumed year-on-year growth in gross receipts. Additionally, “Naruto Mobile” achieved a new milestone with 10 million monthly average daily active users (DAU) in May 2024, while the newly launched “DnF Mobile” showed promising retention rates.

International Games: International Games revenues reached RMB13.9 billion, marking a 9% year-on-year increase. “Brawl Stars,” with frequent content updates and social features, achieved a historical high in quarterly average DAU and saw gross receipts grow more than tenfold year-on-year.

Advertising and AI Initiatives:

Online Advertising: Revenues from online advertising increased by 19% year-on-year, primarily due to the strong performance of Video Accounts and long-form video advertising. The company upgraded its advertising technology platform to analyze user interests more effectively, resulting in deeper insights and more relevant ad recommendations.

AI Initiatives: Leveraging its top-tier foundation model, Tencent Hunyuan, the company released its AI assistant application, Yuanbao, to the public. Yuanbao is noted for its competitive strengths, including accurate image understanding, advanced natural language processing, and enhanced AI search capabilities.

Financial Highlights

Tencent’s financial performance in Q2 2024 was marked by significant growth across key metrics, reflecting the company’s successful execution of its strategic initiatives.

• Total Revenues: Tencent’s total revenues for the second quarter reached RMB161.1 billion (USD22.6 billion), representing an 8% increase year-on-year.
• Gross Profit: The company reported a gross profit of RMB85.9 billion (USD12.1 billion), a 21% increase compared to the same period last year, with a gross margin of 53%.
• Non-IFRS Operating Profit: On a non-IFRS basis, operating profit grew by 27% year-on-year to RMB58.4 billion (USD8.2 billion), with an operating margin of 36%.
• Net Profit: Profit attributable to equity holders of the company increased by 53% year-on-year to RMB57.3 billion (USD8.0 billion), highlighting strong profitability.
• Free Cash Flow: Tencent generated RMB40.4 billion (USD5.7 billion) in free cash flow during the quarter, up 35% year-on-year, contributing to a total cash position of RMB415.2 billion (USD58.3 billion).
• Shareholder Returns: The company repurchased approximately 103.7 million shares on the Hong Kong Stock Exchange for a consideration of HKD37.5 billion and paid a final dividend of HKD31.7 billion for the year ended December 31, 2023.

Tencent’s Q2 2024 results underscore the company’s resilience and adaptability in a competitive market, with its diverse business segments continuing to deliver strong growth and profitability.

Tencent’s Impressive Q1 2024 Financial Performance Sets Strong Foundation for Future Growth

Tencent Holdings Limited has announced its unaudited consolidated results for the first quarter of 2024, showcasing robust growth across various sectors despite challenging market conditions.

The company, a leading internet and technology conglomerate in China, has reported substantial improvements in gross profit and net profit, reflecting its strategic focus on high-quality revenue streams and innovative technological advancements.

Strategic Initiatives and Business Review

Tencent’s latest quarterly results highlight the company’s dynamic approach to growth and innovation. The tech giant has focused on enhancing its core business segments while venturing into new revenue streams, leveraging its technological prowess and market leadership.

In the gaming sector, Tencent continues to solidify its dominance both domestically and internationally. Several flagship titles, including “Fight of the Golden Spatula” and “CrossFire Mobile,” achieved record-high gross receipts. Meanwhile, international hits like “PUBG Mobile” and Supercell’s “Brawl Stars” reported impressive gains in user engagement and revenue, underscoring Tencent’s global appeal in the gaming industry.

The company has also made significant strides in digital content. WeChat Video Accounts saw a dramatic increase in user engagement, with total user time spent rising by over 80% year-over-year.

Similarly, Mini Programs, a staple feature of WeChat, reported a 20% increase in user engagement, reflecting Tencent’s ability to continuously innovate and expand its ecosystem.

Tencent’s advertising sector has benefited greatly from its advancements in AI technology. The introduction of generative AI-powered tools has revolutionized its advertising platform, resulting in higher engagement and more effective ad campaigns. This innovation has been particularly impactful for Video Accounts and Mini Programs, driving substantial growth in advertising revenue.

In the FinTech arena, Tencent’s wealth management business has shown robust growth, marked by a surge in user numbers and average fund investments. Tencent Cloud Media Services, a leader in the media and entertainment sectors, has maintained its strong market position, further demonstrating the company’s diverse and resilient business model.

Operating Metrics

• Combined MAU of Weixin and WeChat: 1,359 million, a 3% YoY increase.
• Mobile Device MAU of QQ: 553 million, a 7% YoY decrease.
• Fee-based VAS Registered Subscriptions: 260 million, a 12% YoY increase.
• Video Accounts Total User Time Spent: Increased over 80% YoY.
• Mini Programs Total User Time Spent: Increased over 20% YoY.

Financial Highlights

Tencent’s financial performance in Q1 2024 reflects its strategic focus and operational efficiency:

• Total Revenues: RMB 159.5 billion ($22.5 billion), a 6% year-over-year (YoY) increase.
• Gross Profit: RMB 83.9 billion ($11.8 billion), up 23% YoY.
• Non-IFRS Operating Profit: RMB 58.6 billion ($8.3 billion), a 30% YoY increase.
• Net Profit Attributable to Equity Holders: RMB 50.3 billion ($7.1 billion), up 54% YoY.

Segment Performance

• Value-Added Services (VAS): Revenue slightly decreased by 0.9% YoY to RMB 78.6 billion, with social networks and domestic games experiencing minor declines, while international games revenue grew by 3%.
• Online Advertising: Revenue surged by 26% YoY to RMB 26.5 billion, driven by increased engagement and enhanced AI-powered ad targeting.
• FinTech and Business Services: Revenue increased by 7% YoY to RMB 52.3 billion, with solid growth in cloud services and wealth management.

Tencent’s first-quarter results highlight its resilient business model and strategic adaptability. The company’s revenue growth, though moderate, is accompanied by a substantial increase in gross profit and operating margin, indicating improved operational efficiency.

Comparing these results with previous quarters and industry peers, Tencent stands out for its balanced growth across diverse revenue streams. The company’s focus on high-margin businesses, such as cloud services and digital content, is a strategic move that is paying off well.

Key Developments in China’s AI Industry

According to the “2024 World Artificial Intelligence Legal Blue Book” released at the conference, China’s core AI industry reached a scale of 578.4 billion RMB in 2023, a year-on-year growth of 13.9% according to TMT Post.

Despite a decrease in the number of investment and financing events by 18.2% compared to 2022, the total financing amount surged by 51%, totaling 263.1 billion RMB.

China’s AI industry has seen a significant number of investments, primarily from industrial investors such as Qiming Venture Partners, Sequoia Capital, Shunwei Capital, Alibaba, Tencent, and Baidu.

As of December 14, 2023, the Chinese AI industry recorded 10,110 investment events with a total financing amount of 377.62 billion RMB. The primary investment areas include enterprise services, advanced manufacturing, and automotive transportation.

Global AI Landscape

Globally, there are approximately 30,000 AI enterprises, with the US accounting for 34% and China 15%, totaling over 4,500 companies in China. The period from 2023 to the first quarter of 2024 saw 234 AI unicorns globally, with the US hosting 120 and China 71.

The report indicates that there are currently 1,328 AI large models worldwide, with the US leading at 44% and China at 36%. This positions China as a significant player in the AI domain, with a robust development trajectory.

Expert Insights and Predictions

At the WAIC 2024, several experts provided their insights into the future of AI.

Tao Mei, a foreign academician of the Canadian Academy of Engineering and founder and CEO of Zhixiang Future, emphasized the rapid growth of the AI industry.

Mei predicted that generative AI would contribute to a 14% increase in global GDP, with 74% of the world’s economic output being impacted by AI technology. He also forecasted that 26% of China’s GDP growth would be related to generative AI.

Mei likened generative AI to fundamental infrastructure like water and electricity, suggesting that it will revolutionize human-computer interaction and various sectors, including AIGC and the metaverse.

The Emergence of AI Super Apps

Li Xuexia, co-founder and CEO of Wu Wenxin, described AI large models as “super models” and AI-native applications as “super apps.”

The discussion at the conference highlighted the growing anticipation for AI super apps akin to WeChat, TikTok, and Toutiao. However, industry leaders urged patience, noting that the development of such applications involves multiple factors beyond just technological advancements.

Zhang Peng, CEO of Zhipu AI, emphasized the importance of taking action rather than merely anticipating the arrival of super apps. He pointed out that the maturity of technology, market readiness, and demand discovery are all crucial elements in the emergence of these applications.

Jun Jie, founder and CEO of MiniMax, projected that it would take at least three years for AI super apps to become mainstream, underscoring the need for a step-by-step approach to achieving this goal.

The Future of Generative AI

Zhou Zhifeng, managing partner at Qiming Venture Partners, shared his expectations for the future of generative AI at the forum. He predicted that within three years, AI video generation technology would see widespread adoption, transforming industries such as film, animation, and short videos.

Other key forecasts included:

• The gradual fusion of GPT and diffusion models, unlocking new capabilities.
• Significant improvements in high-quality data acquisition and organization, with synthetic data playing a larger role in pre-training.
• Advances in multi-agent technology enhancing the efficiency and effectiveness of generative AI.
• The emergence of unified continuous representation of images and text, leading to more powerful multi-modal models.
• A five-fold increase in the compression rate of image and video latent space representation, accelerating generation speed.
• The rise of super multi-modal large models incorporating diverse modalities like text, images, voice, music, 3D, and sensor data.
• A reduction in the cost of commanding machines to complete complex tasks, driven by AI’s ability to bridge human and machine languages.
• Significant growth in edge-side inference, propelled by advances in inference optimization algorithms, edge-side inference chips, and large models.

Zhou concluded by emphasizing the transformative potential of AI in various industries, advocating for patience as the world anticipates the advent of AI super apps.

Conclusion

China’s AI industry is on a trajectory of significant growth and innovation. With substantial funding and strategic investments, the sector is poised to make transformative impacts across various fields.

As experts predict the emergence of AI super apps and advancements in generative AI, the global AI landscape will continue to evolve, driven by technological breakthroughs and strategic foresight. The future of AI promises to be a dynamic and integral part of economic and technological development.

Operational Highlights

AI and Cloud Services

CEO Robin Li noted the stability of Baidu Core’s online marketing revenue and growth in AI Cloud revenue driven by the optimization of their AI technology stack. The ERNIE family of models has been expanded with several lightweight versions, enhancing affordability and efficiency for various applications.

Intelligent Driving

Baidu’s Apollo Go, the autonomous ride-hailing service, provided approximately 826,000 rides in Q1 2024, a 25% increase year-over-year. As of April 2024, Apollo Go has provided over 6 million cumulative rides.

Mobile Ecosystem

In March 2024, Baidu App’s monthly active users (MAUs) reached 676 million, a 3% increase year-over-year. Managed Page accounted for 50% of Baidu Core’s online marketing revenue, demonstrating significant user engagement.

AI Developer Community

The PaddlePaddle developer community grew to 13 million by mid-April 2024. Baidu launched and improved tools on its MaaS (Model as a Service) platform, facilitating the development of AI-native applications and customized models for enterprise customers.

Financial Highlights

• Revenue: Total revenues for Q1 2024 were RMB31.5 billion (US$4.37 billion), a 1% increase year-over-year.
  • Revenue from Baidu Core was RMB23.8 billion (US$3.30 billion), a 4% increase year-over-year, driven by a 3% rise in online marketing revenue
  • 6% increase in non-online marketing revenue, primarily from the AI Cloud business.
• Operating Income: Operating income was RMB5.5 billion (US$760 million), a 10% increase year-over-year.
  • Baidu Core operating income was RMB4.5 billion (US$629 million), with a 19% operating margin.
  • Non-GAAP operating income was RMB6.7 billion (US$924 million), with Baidu Core contributing RMB5.6 billion (US$774 million).
• Net Income: Net income attributable to Baidu was RMB5.4 billion (US$755 million), a 6% decrease year-over-year.
  • Non-GAAP net income attributable to Baidu was RMB7.0 billion (US$971 million), reflecting a 22% increase year-over-year.
  • Non-GAAP diluted earnings per ADS were RMB19.91 (US$2.76), up 24% year-over-year.
• EBITDA: Adjusted EBITDA was RMB8.2 billion (US$1.14 billion), maintaining a 26% margin. Adjusted EBITDA for Baidu Core was RMB7.1 billion (US$986 million), with a 30% margin.

Since the beginning of Q1 2024, Baidu has returned US$229 million to shareholders, bringing the total repurchase to US$898 million under the 2023 share repurchase program.

Unified Branding and New Releases

One of the most notable changes is the rebranding of ByteDance’s AI models. The previously known “Lark” models are now unified under the “Doubao Model Family” name.

This family includes nine models, streamlined into two primary categories: general-purpose models and seven specialized models tailored for various functions, including role-playing, speech recognition, speech synthesis, voice cloning, and text-to-image generation.

The Doubao general-purpose models are available in two versions: Pro and Lite, catering to different user needs. This approach contrasts with competitors’ broad, all-encompassing models, highlighting Doubao’s more focused strategy.

Impressive Performance Metrics

In terms of performance, Doubao models are impressive, according to data shared at the conference.

Currently, these models process an average of 120 billion tokens of text and generate 30 million images daily.

The Doubao App, a major AI application built on these models, leads the domestic AI-generated content (AIGC) market, topping download charts on both the Apple App Store and major Android platforms in China.

According to Zhu Jun, ByteDance’s Vice President of Products and Strategy, the app has seen the creation of over 8 million intelligent entities and boasts 26 million monthly active users.

Competitive Pricing Strategy

Volcano Engine also announced a groundbreaking pricing strategy, setting the cost at 0.0008 yuan per thousand tokens. This is significantly lower than competitors, such as OpenAI’s GPT-4o, which charges approximately 0.035 yuan per thousand tokens for input and 0.1 yuan per thousand tokens for output.

In comparison, domestic large model providers average around 0.12 yuan per thousand tokens.

This substantial price reduction is attributed to several factors, including optimization in model structure and the adoption of distributed inference methods, which enhance computing efficiency.

Volcano Engine’s head, Tan Dai, emphasized that this pricing strategy is not intended as a price war but follows a sustainable business logic aimed at fostering long-term commercial cooperation.

AI Market and Future Developments

Despite the advancements, the AI application market is still in its early stages.

According to QuestMobile, the AIGC industry had 73.8 million users as of March 2024, a significant increase from the previous year but still only 6% of the total mobile internet users.

The competitive landscape is gradually intensifying, with companies like Alibaba Cloud and Tencent Cloud also announcing price cuts, although primarily for CPU-based general computing power rather than AI-specific GPU computing power.

ByteDance’s aggressive pricing for AI capabilities is a strategic move to lower the barrier for AI adoption and expand market reach.

This strategy is expected to continue throughout the year as foundational model prices further decline, driven by technological advancements and increased market competition.

Human-like AI and Accelerated B2B Adoption

The trend towards more human-like AI is evident in this year’s major tech releases. OpenAI’s GPT-4o and Google’s Project Astra have set new standards for interactive AI, with real-time conversational capabilities and emotional intelligence.

Similarly, ByteDance’s Doubao App aims to provide a more human-like interaction experience, with enhanced ASR (Automatic Speech Recognition) and TTS (Text-to-Speech) technologies, making AI interactions feel more natural and intuitive.

In the B2B sector, ByteDance’s AI ecosystem is rapidly taking shape. Volcano Engine is building a robust developer ecosystem and AI services platform, supporting a wide range of applications from mobile phones to smart vehicles.

Strategic partnerships with major automakers like Geely, Great Wall Motors, and Seres, along with integration into smartphones from Oppo, Honor, and Xiaomi, highlight ByteDance’s comprehensive approach to AI adoption.

Volcano Engine has also launched the enterprise version of its low-code AI development platform, “Coze” (Kouzi), offering high flexibility and various integration options for developers.

This platform is already being utilized by leading enterprises such as China Merchants Bank, Haidilao Hot Pot, and Super Monkey fitness centers to build intelligent assistants and personalized services.

According to IDC, by 2027, AI-integrated PCs are expected to constitute 85% of new computer setups in China, marking a significant shift from cloud-based to device-local AI applications.

This transition heralds a new era where PCs are not merely tools for computing but evolve into sophisticated personal assistants

AI’s Role in Reinventing PCs

As AI technology permeates everyday devices, its impact on the personal computer market is profound.

Lenovo’s CEO, Yang Yuanqing, noted that despite the growing ubiquity of smartphones, PCs remain the preferred platform for running sophisticated AI applications due to their superior processing power.

This sentiment is echoed by major PC manufacturers worldwide, who view AI-enhanced PCs as a pivotal market opportunity.

Industry-wide Transformation

The infusion of AI is redefining the entire PC ecosystem—from silicon and operating systems to the end-user experience.

AI integration is not just about enhancing computational capabilities but also about reimagining the PC as an intelligent entity that can anticipate user needs and handle complex tasks.

This shift is prompting a radical restructuring of the PC industry, affecting hardware components like chips, storage solutions, and thermal management systems.

Market Predictions and Pricing Challenges

IDC’s forecast that 85% of new PCs in China will be AI-equipped by 2027 highlights the anticipated widespread adoption.

However, this technological advancement comes with heightened costs. AI PCs, such as the Yoga Book 9i and ThinkPad T14p, are currently priced significantly higher than their traditional counterparts, a factor that could hinder their accessibility to the average consumer.

Chen Shuxin, IDC’s Senior Research Manager in China, points out that the enhanced performance requirements of AI PCs necessitate more sophisticated, and consequently more expensive, hardware components.

Addressing Cost Concerns

In response to these pricing challenges, Lenovo’s Liu Jun asserts that AI PCs are currently viewed as premium products.

To counteract this perception and make AI PCs more accessible, Lenovo is actively engaging with its supply chain to negotiate cost reductions and streamline production processes.

The goal is to position AI PCs within mainstream price ranges, making them as common as traditional PCs.

The impending dominance of AI-integrated PCs in China represents a significant technological leap and a potential market shift.

While the benefits of such advancements are clear, the industry faces the dual challenge of managing costs while maintaining the pace of innovation.

As manufacturers like Lenovo lead the way in making AI PCs more affordable, the next few years will be crucial in determining whether these intelligent machines become the standard in personal computing across China.

The user base has exceeded 200 million, with daily API calls also surpassing 200 million. The service now caters to 85,000 customers and has more than 190,000 AI-native applications developed using the Qianfan platform.

Robin Li also noted that one doesn’t need to know coding to create certain applications; it’s possible to develop smartphone apps without programming. AI is fostering a wave of creative energy. “The future of application development will be as simple as making a short video; everyone will be a developer,” Li stated.

After officially announcing the open access to “Ernie Bot” in August last year, Baidu has on one hand used large models to rebuild client-side products for consumers and integrated AI features across multiple Baidu products. On the other hand, in the business sector, it has launched the enterprise-level one-stop large model platform “Qianfan Large Model Platform” through its cloud business.

Baidu’s GenAI App Offers Digital Twin Creation

In early 2024, Baidu has announced an innovative feature within its Wenxin Yiyan app (its GenAI product; a.k.a. Ernie Bot) that allows users to create digital twins with unprecedented ease. Both iOS and Android users can access this feature for free upon updating to the latest version of the app.

The new function simplifies the creation of a digital twin to just a photo and three voice recordings. Users can customize their digital counterpart with a unique name, voice, and even MBTI personality type. This flexibility extends to the choice of making their digital twin public or keeping it private, catering to various needs such as companionship, knowledge exploration, and entertainment.

Traditionally, creating a digital twin involved complex processes like 3D scanning to create a model, texturing through rendering technologies, and integrating motion capture and voice synthesis. Baidu’s latest update significantly reduces the complexity and time required to create a digital persona.

Baidu also teased upcoming themes for digital twins, including various New Year backgrounds and exclusive digital personas for a “mysterious national idol,” AI God of Wealth, and AI family portraits among other activities.

Recently at the tenth Wave Summit, a biannual deep learning developer conference hosted by Baidu, the Chinese AI giant unveiled remarkable achievements in artificial intelligence.

Ernie Bot has reached a new milestone, surpassing 100 million users as of Dec 2023.

ERNIE Bot: A Versatile AI Tool

Since its public release on August 31, 2023, ERNIE Bot has rapidly become an indispensable tool for users across diverse fields. It has generated 3.7 billion words of text in workplace environments, aiding over 2 million users, according to information CIW received from Baidu.

ERNIE Bot’s versatility is further highlighted by its ability to write 300 million lines of code and process 400 million words of contracts, showcasing its utility in technical and legal domains. Additionally, it has created 5 million travel itineraries and drafted 10.83 million messages of care and support, reflecting its wide-ranging applications in personal and emotional contexts.

The popularity of ERNIE Bot is also reflected in the user feedback, with 20 million likes and appreciations, signifying high satisfaction and reliance on this AI tool.

Technical Innovation and Industry Empowerment

The Wave Summit also shed light on Baidu’s commitment to technical innovation and industry empowerment through its PaddlePaddle platform. Dr. Haifeng Wang, Chief Technology Officer of Baidu, revealed that PaddlePaddle has been instrumental in supporting over 10.7 million developers and 235,000 enterprises.

A staggering 860,000 models were created using the platform as of December 2023, indicating the platform’s significant impact on AI development and application.

The Future of ERNIE Bot and Baidu’s AI Initiatives

The continuous improvement of the ERNIE Foundation Model, which saw a 32% overall performance enhancement in just two months, clearly indicates Baidu’s dedication to advancing AI technology.

ERNIE Bot’s growing popularity and increasing user inquiries highlight the potential and demand for advanced AI solutions in various industries.

Baidu’s achievements with ERNIE Bot and the PaddlePaddle platform underscore the company’s position as a leader in China’s AI innovation. As Baidu continues to break new ground in AI technology, the global community eagerly anticipates further advancements and applications that will transform industries and everyday life.

originality.ai’s founder and CEO, Jonathan Gillham, recently wrote an in-depth analysis article discussing Baidu’s ERNIE Bot and its latest model- ERNIE 4.0, which you can find here.

AI-Enhanced Automotive Assistants

NIO’s incorporation of AI through Microsoft Azure OpenAI service into its NOMI assistant is not just an upgrade—it’s a transformation.

NOMI now employs a car-specific version of GPT (Generative Pre-trained Transformer) to handle complex queries and provide intuitive, vehicle-specific information. This enables drivers to receive more accurate and relevant responses without diverting their attention from driving, enhancing safety and user experience.

The AI capabilities include personalized greetings, weather updates, and a new range of interactive features designed to optimize journey experiences by providing timely operational guidance for vehicle features.

For example, when asked, NOMI can now explain how to adjust mirrors or check tire pressure directly via the car’s display—tasks traditionally requiring manual lookup in user manuals.

Interactive Features and User Engagement

Beyond the basics, NOMI GPT introduces enhanced interactivity through a new FAQ feature that educates users about NOMI’s capabilities and preferences, personalizing the user experience further.

This feature allows users to engage in more natural conversations with their vehicle, asking about NOMI’s favorite music, games, or even its opinions on other AI systems.

Phased Rollout and Language Support

To ensure the best and safest user experience, NIO has begun a phased rollout of the NOMI GPT feature, starting from April 5, 2024.

The feature is initially available in English, German, and Norwegian, catering to NIO’s diverse European market. This strategic deployment underscores NIO’s commitment to accessibility and customer satisfaction through its leading over-the-air (OTA) update capabilities.

Implications for the Future

The integration of advanced AI into NIO’s vehicles is more than a mere enhancement; it’s a forward-looking move that signals the future direction of the automotive industry.

As articulated by NIO’s European Product Experience Director, Benjamin Steinmetz, the new AI features not only make the user’s journey more valuable but are also set to expand quickly, bringing exciting new functionalities with each update.

This development is not just about enhancing individual vehicles but about pushing the entire industry toward smarter, more interactive, and more intuitive automotive solutions.

The partnership between NIO and Microsoft, through the use of Azure and OpenAI technologies, exemplifies how collaborations between tech giants and automotive innovators can drive significant advancements.

Conclusion

The evolution of AI in vehicles through initiatives like NIO’s enhanced NOMI assistant demonstrates the potential for AI to transform everyday experiences and interactions with technology.

As these technologies mature and become more integrated into various aspects of driving and vehicle management, they pave the way for more connected, intelligent, and user-centric automotive environments.

This trend is set to continue, reshaping how we think about mobility and technology’s role in it, with China at the forefront of this technological revolution in the automotive sector.

Financial Highlights: A Glimpse into Growth

Tencent’s fiscal narrative for 2023 is one of notable achievements, underscored by a 10% year-over-year growth in total revenues, reaching an impressive RMB609.0 billion (USD86.0 billion).

This expansion is further emphasized by a 23% increase in gross profit, showcasing the company’s enhanced profitability in a fiercely competitive digital marketplace. Furthermore, the non-IFRS profit attributable to equity holders witnessed a substantial 36% increase from the previous year, indicating strong core earnings performance .

The final quarter of 2023 continued this trend, with revenues escalating by 7% year-over-year to RMB155.2 billion (USD21.9 billion), and gross profit and non-IFRS profit attributable to equity holders of the company experiencing significant increases of 25% and 44% respectively.

In 2023, Tencent’s revenue breakdown highlighted the diversity of its business portfolio, with significant contributions from various segments.

The FinTech and Business Services sector emerged as the largest revenue source, representing 31% of the total revenue and amounting to RMB189.0 billion. This segment’s leading position underscores Tencent’s stronghold in the FinTech industry and its successful foray into comprehensive business services.

Following the FinTech and Business Services sector, the Online Games segment was the second-largest contributor to Tencent’s revenue, accounting for 29% and totaling RMB177.0 billion. This demonstrates the continued vitality of online gaming within Tencent’s business model.

The fastest-growing segment in 2023 was Tencent’s Cloud Computing business, which experienced a remarkable 30% year-over-year revenue increase, reaching RMB109.0 billion. This growth outpaced the other segments, notably the Social Networks segment, and underscored Tencent’s effective strategy and execution in the competitive cloud services market.

Overall, Tencent’s 2023 financial performance showcased the strength of its FinTech and Business Services as the leading revenue generator, with the Cloud Computing segment leading in growth, reflecting the company’s adaptability and strategic positioning in China’s evolving digital landscape.

Strategic Endeavors and Innovation

2023 saw Tencent advance through strategic milestones:

Enhancing User Experience: Tencent’s WeChat Video Accounts doubled in user time spent, thanks to improved algorithms and creator support. Additionally, the Mini Games platform’s gross receipts soared by over 50%, reinforcing Tencent’s leadership in China’s casual gaming sphere .

Pioneering in AI: The launch of Tencent Hunyuan, an AI model of a trillion-parameter scale, marks a leap in Tencent’s technological prowess, solidifying its commitment to spearheading digital innovation .

Commitment to Society and Environment: Tencent’s digital philanthropy platform set a new record with RMB3.8 billion raised during the 99 Giving Day campaign, while its New Cornerstone Investigator Program supported 104 scientists, promoting scientific research .

As of the end of 2023, Tencent Music Entertainment Group (TME) reported a notable increase in its music subscribers. The total number of online music paying subscribers reached 90 million, marking an 18% year-over-year growth.

Market Engagement and User Dynamics

Tencent’s operational statistics reveal evolving trends in user engagement:

• The MAUs of Weixin and WeChat stood at 1,343 million by December 2023, a 2% increase year-over-year, highlighting the platforms’ expanding influence in social media .
• Despite a marginal decline in VAS revenues, Tencent’s strategic emphasis on content diversity and innovative services positions it for sustained growth amidst market challenges .

Tencent’s 2023 saga is one of strategic brilliance and financial vigor, positioning it at the forefront of China’s digital transformation. With its commitment to innovation, user-centricity, and societal impact, Tencent is poised to continue shaping the contours of China’s digital future.

Mobile reach in China: Tencent, Alibaba, Baidu, ByteDance, vs. Kuaishou

Focusing on the Chinese market, investments in AI are projected to hit $38.1 billion by 2027, accounting for nearly 9% of the global investment pool.

In recent years, rapid technological advancements and market maturity have spurred Chinese companies to accelerate their intelligent upgrades. The emergence of large AI models at the end of 2022 provided a crucial overtaking opportunity for new entrants to the market.

Previously, the widespread adoption of large models was limited, creating bottlenecks as companies sought to transition AI technologies from pilot trials to full-scale applications, hampered by a fragmented talent and resource landscape.

The introduction of large AI models has significantly lowered the barriers to technology adoption and enhanced AI’s generalization capabilities, fostering the development of innovative applications and solutions. The model-as-a-service business model could potentially reshape the current market dynamics, leading China into a new era of digital business development.

IDC’s recent release, “IDC FutureScape: Worldwide AI and Automation 2024 Predictions – China Implications,” offers vital insights for IT and business decision-makers responsible for leveraging solutions and directing AI and automation expenditures.

The report, outlining ten predictions for the AI and automation markets from 2024 to 2029, assesses each forecast based on its impact and time frame. These predictions are designed to guide strategic planning, adjustments, and resource allocation in the AI and automation spheres for IT and business leaders.

Key Predictions for China’s AI and Automation Market

1. GenAI Security and Governance: By 2025, 40% of cloud and software platform providers will integrate GenAI security and governance with their primary services, tripling the reduction in GenAI-related risks.
2. Regulatory Divergence: AI regulatory differences across regions will pose significant challenges for multinational companies by 2026, increasing the time and effort required to manage sensitive issues by 20%.
3. Digital Assistants Over Software Interfaces: By 2027, GenAI digital assistants will replace 20% of enterprise software interfaces, playing an increased role in business processes.
4. Outcome-Focused Automation: Following GenAI technology attention, 50% of enterprises will focus on the outcomes of GenAI rather than the implementation of specific technologies by 2024.
5. AI in IT Expenditure: By 2026, China’s top 500 companies will allocate over 30% of their core IT spending to AI, accelerating product innovation and process improvement at a double-digit rate.
6. Stabilizing Economic Impact of AI: By 2028, the overall economic impact of AI will stabilize as companies address fundamental issues and refocus resources on innovation and new business opportunities, promoting steady growth.
7. Practical Application of Automated Knowledge Retrieval: Two-thirds of enterprises will use a combination of generative AI and RAG for domain-specific automated knowledge retrieval by 2027, improving decision efficiency by 55%.
8. Disruptive Business Models: By 2025, 50% of China’s top 500 companies will leverage innovative business models to double the profit potential of generative AI.
9. Impact of AGI: By 2027, 25% of China’s top 500 companies will experiment with AGI systems, heralding transformative societal impacts along with significant opportunities and challenges.
10. Reversal in Chip Revenue: By 2028, spending on accelerator chips (GPUs, FPGAs, ASICs, or ASSPs) versus traditional CPUs will invert, reaching a 55/45 ratio.

China’s AI Market Booms with Focus on Professional Services, Government, and Finance

This achievement signifies DingTalk’s dominance in the communication platform sector and reflects China’s accelerating digital transformation.

The platform’s president, Ye Jun, announced this milestone, emphasizing DingTalk’s commitment to enhancing workplace productivity through cutting-edge technological integration.

The recent introduction of an AI agent, powered by Alibaba Cloud’s Tongyi Qianwen, into the platform, is a testament to this commitment. This AI agent, designed to serve as a versatile workplace assistant, can perform various tasks ranging from drafting documents to facilitating business trip bookings on external platforms.

DingTalk’s customer demographics reveal a diverse clientele, with small and micro enterprises forming 58%, medium-sized businesses at 30%, and large corporations at 12%.

As of March 2023, DingTalk had already garnered over 100,000 businesses subscribing to its paid software services, highlighting its expansive reach across various business sizes and sectors.

Integrating AI into DingTalk marks a significant shift in the platform’s capabilities.

Users, both individuals and enterprises, can now customize their AI assistants to perform tasks tailored to their specific workplace needs. This level of customization allows for a more efficient and personalized user experience.

For instance, corporations can leverage AI agents for intricate tasks like recruitment and financial analysis, whereas individual users can utilize them for routine tasks.

Furthermore, DingTalk’s expansion of its corporate user base to 25 million, with 28 million daily active paid users and 120,000 paying enterprises, indicates its growing influence in the digital workspace sector.

The platform’s strategic focus on generative AI and the planned launch of a marketplace for AI agents, expected to grow to over 10 million in the next three years, positions DingTalk at the forefront of AI integration in business communications.

DingTalk also boasts a low-code platform, enabling the rapid development of custom applications for various industries. This feature has proven especially beneficial for sectors like education and large-scale event management.

For instance, schools and universities have adopted DingTalk for online assignment distribution and grading tasks. The platform has also been customized for major events like the 19th Asian Games in Hangzhou, streamlining communication and task management for the organizing committee and participants.

DingTalk’s recent achievements and ongoing innovations firmly establish it as a pivotal player in China’s digital landscape, setting new standards for workplace communication platforms worldwide.

Alibaba’s DingTalk user profile

China’s market share is predicted to grow within the five-year forecast, surpassing the Asia-Pacific region (excluding China and Japan) by 2024, and approaching 8% of the global total by 2026.

China’s big data and analytics market maintains strong growth due to new policies like Digital China, Data Elements, Big Data Initiatives, post-pandemic business project demands, and various industries seeking to leverage data value after completing basic information technology infrastructure.

IDC has observed that vendors are actively investing in foundational computing and storage, data middle platforms, and big data analytics services, particularly focusing on industries such as finance, government, energy, and manufacturing.

Customers are also embarking on a new round of investment. Notably, the success of ChatGPT has drawn significant capital attention to the data computation and storage sectors, pushing the big data market towards larger scale, increased computing power, and more specialized services.

China’s big data IT investment will continue to flow into the hardware market in the short term, with hardware accounting for nearly 40%, according to IDC.

Read more: China’s AI Market Booms with Focus on Professional Services, Government, and Finance

In the long run, the software shows strong performance, with a five-year compound annual growth rate (CAGR) close to 28%, and is expected to surpass the hardware market in size by 2026, becoming the dominant technology sector.

The integration of data intelligence and AI with the big data market leads to spiraling growth and mutual promotion, with the popularity of ChatGPT and AIGC driving investments and updates in data governance, business query, and predictive analytics platforms.

Improvements in underlying data quality and scale, as well as secure sharing and circulation, will promote the upgrading of upper-level intelligent application services. The data middle platform is experiencing a new wave of development.

Vendors are actively creating full-cycle data governance and development platforms for specialized business scenarios and domains, such as graph and voice/text data. The overall trend for the services market remains relatively stable, with the total market size expected to exceed $11 billion by 2026.

Government, finance, professional services, and telecommunications are the main industry users of big data-related IT expenditures in China, accounting for over 60% of the total market. Among them, professional services have the largest share, surpassing 15% by 2026.

Internet companies possess massive user and internal/external data, including various dimensions such as time, space, and user information. As recommendation, prediction, decision-making, and risk management services face demands for more accurate and faster identification and response, CIOs will place increasing importance on underlying data investments and middle platform construction.

Local governments rank second with an 11.7% share and a five-year CAGR of nearly 23%. Digital China drives further upgrades in government construction, with significant room for improvement in unified data governance and automated service dispatch development.

In the future, government data will need to circulate more securely and traceably among enterprises and universities, inevitably promoting more significant investments in big data and its deep integration with artificial intelligence, cloud computing, and blockchain.

From a growth rate perspective, seven industries, including healthcare, discrete manufacturing, and local governments, have a five-year CAGR exceeding the average growth rate of China’s market, indicating promising development prospects.

As society’s data literacy improves, government policies, international environments, underlying support, and application services provide better development opportunities and market space for the big data market.

Scenario specialization, high scalability, loose coupling, and security and stability have become the keywords for developing the big data market.

Dubbed the “Land of Hope”, the XiRang platform enables up to 100,000 online attendees to interact simultaneously in the same space.

According to Robin Li, Baidu CEO, Chairman, and Co-Founder, intelligent transportation will see a significant transformation in the next 10-40 years that will greatly influence the future.

Purchase restrictions limiting the number of cars sold in China’s first-tier cities, and number plate restrictions reducing by 20% the number of cars on the roads on weekdays will be lifted within five years and improved traffic efficiency will solve urban congestion within 10 years.

Li believes that intelligent transportation can address three major problems: Firstly, it can reduce road traffic accidents by 90%. Secondly, the problem of urban congestion can be resolved. Lastly, autonomous driving and intelligent transportation will help reduce carbon emissions.

From autonomous driving to smart cars and smart roads, Baidu has deeply integrated AI, 5G, and cloud computing into the transportation sector.

With a total of 115,000 rides provided by the third quarter of 2021, Baidu’s autonomous ride-hailing platform “Apollo Go” has become the largest autonomous mobility service provider in the world.

Baidu’s future goal is to expand the “Apollo Go” service to 65 cities by 2025 and 100 cities by 2030.

Also read: Top 10 AI Cities in China

Baidu AIR intelligent road system will achieve real-time optimization of “city-level” signal control at hundreds of thousands of road intersections, greatly enhancing vehicle safety over millions of kilometers across the country.

Baidu believes that automotive robots will be the ultimate form of vehicle transportation in the future. Having L4 intelligent driving capabilities, Baidu’s smart EV venture, Jidu Auto, has been designed to operate under the concepts of “free movement”, “natural communication”, and “self-improvement”.

Li said that Jidu is planning to release its first concept car in the first half of 2022, followed by mass production and delivery by 2023.

At the convention, Baidu Chief Technology Officer Haifeng Wang released Baidu AI Cloud digital avatar platform XiLing, which is a platform level product integrating digital avatar generation and content production.

It can provide creation and operation one-stop services such as virtual host, virtual idol, brand spokesperson creation and operation for radio, television, Internet, brand and other customers.

Apart from providing an “AI toolkit” to creators, Baidu Brain also provides the technological foundation for digital transformation in society and many industries. Baidu Brain’s approach relies on standardization, automation, and modularization for industrial mass production, which allows it to evolve into an AI mass production platform.

“Wenxin”, Baidu Brain’s recently-released technological breakthrough, is the world’s first knowledge-enhanced 100-billion-scale pre-trained language model and the largest Chinese-language monolithic model.

Baidu’s open-source deep-learning platform PaddlePaddle has garnered 4.06 million developers, served more than 157,000 enterprises and units, covered dozens of industries, and created almost 500,000 models. PaddlePaddle’s combined market share ranks first among China’s deep-learning platforms.

Computing power is one of the core elements to support AI development. Baidu created the base for green computing, including self-developed Kunlun AI chips, an AI heterogeneous computing platform Baige, and a green data center to support AI technology research and a wide range of applications.

Baidu Brain can support across 1,400 capabilities. Baidu AI Cloud can distribute the AI technology capabilities to various industries, contributing to digital transformation and intelligent enhancement of China’s industries, economy, and society.

Report: China growth AI companies overview

Powered by Alibaba’s cloud computing infrastructure and IoT, the Hangzhou-based factory offers SMEs a digitalized end-to-end manufacturing supply chain that allows for fully-customized, demand-driven production.

This gives smaller businesses and manufacturers in particular the ability to benefit from the digitalization of China’s over RMB30 trillion (over USD4 trillion) manufacturing market through being able to respond better and quicker to customers’ changing needs.

Data is the core of New Manufacturing and harnessing data insights is key to capturing new opportunities in the shift in consumer preference for personalized rather than mass-produced goods. New Manufacturing transforms traditional manufacturers with data-driven intelligence and technology to move towards a more agile model of production based on real-time demand,

said Alain Wu, CEO of Xunxi Digital Technology Company, Alibaba Group. “This allows traditional manufacturers to improve profitability and reduce inventory levels while still being able to meet these personalization needs.”

The introduction of New Manufacturing is another milestone in the implementation of Alibaba’s “Five New” strategy which was first introduced by founder Jack Ma in 2016 and comprises New Retail, New Manufacturing, New Finance, New Technology, and New Energy.

At an early stage, apparel was identified as the starting point for Xunxi – a sector in which the lengthy production cycles and high inventory levels have long been a problem for small and large players alike.

Powered by new technologies such as real-time resourcing, process and cost planning, automated in-house logistics and Xunxi’s manufacturing operating system, the factory is able to produce small-batch orders at reasonable costs and with shorter delivery times, consequently increasing manufacturing efficiency from 25% to an average of 55%.

Xunxi’s trend and sales forecast model alongside its own artificial intelligence-aided integrated product design platform give manufacturers insights into consumer preferences.

This enhanced information flow can reduce research and development costs and enable businesses to capture the fast-evolving opportunities for consumer personalization.

Apparel has consistently been one of the biggest categories on Alibaba’s retail marketplaces in China, which has given the company an unparalleled advantage in gathering customer insights.

In the past, excess inventory has led to a 30% loss in revenue across the industry. The Xunxi pilot demonstrates Alibaba’s commitment to making it easy to do business anywhere. Leveraging this ‘made-in-cloud’ production, SME businesses can stay competitive in the fast-moving fashion market.

Since its inception, the factory has collaborated with Taobao and Tmall merchants, live streaming broadcasters, and streetwear designers to explore and experiment with new possibilities of apparel manufacturing.

On September 14, the World Economic Forum (WEF) designated Xunxi Digital Factory a Lighthouse as part of its Global Lighthouse Network, a community of world-leading companies that have succeeded in adopting Fourth Industrial Revolution technologies at scale.

The designation recognizes Xunxi’s achievements in combining powerful digital technologies with consumer insight and bringing a fully digitalized New Manufacturing model to life.

The Xunxi showcase comes at a time when the COVID-19 pandemic is catalyzing an acceleration in the digital transformation of different industries.

In the future, Xunxi Digital Factory will help apparel customers reduce inventory levels even further while continuing to increase efficiency as well as the level of customization.

As the initiative progresses, the technology will be replicated into other sectors in addition to the current focus of fashion and apparel.

Mobile reach in 2020: Tencent, Alibaba, Baidu, ByteDance

The purchaser is Science City (Guangzhou) Investment Group Co., Ltd., with a project valued of nearly 460 million yuan, which has become the largest bidding project order in the field of intelligent transportation in China this year.

The order includes the construction of vehicle road network infrastructure, intelligent intersection, Internet of vehicles, and other related application systems, which is expected to accelerate the construction of Guangzhou Development Zone and Guangdong Hong Kong Macao Bay Area Intelligent Network.

Baidu Performance in Q2 2020

Baidu App daily active users (“DAUs”) reached 204 million in June 2020, adding 16 million users in the last 12 months but 18 million less from March 2020, according to its financial results.

Over 800 sessions of topical live streaming were broadcasted in the second quarter of 2020 on Baidu’s platform, with sessions like Baidu Wiki Virtual Zoo, Summer Art Festival, and Wandering through Civilization Season 2, attracting over 40 million views.

Baijiahao (“BJH”) publisher accounts reached 3.4 million, up 52% year over year, in June 2020. The large scale of Baidu’s platform is drawing more original content creators to join BJH, which allows easy sharing of content across Baidu App, short-video app Haokan, Quanmin, and Baidu’s knowledge products.

Baidu Smart Mini Program’s monthly active users on Baidu App reaching 339 million, up 25% year over year or down over 4% from March 2020.

Revenue from Baidu Managed Page increased to approximately 30% of Baidu Core’s online marketing services revenue in the second quarter of 2020. Merchants with HTML5 websites across many industries are switching to Managed Page, as the landing page for their search results.

Baidu’s new AI businesses, including cloud, smart devices, and smart transportation, saw double-digit growth in the second quarter and stand to become an important revenue driver in the years to come.

Baidu is also diversifying its revenue streams through membership, online games, and others to increase the ARPU of the existing traffic according to Herman Yu, CFO of Baidu. The growth of Baidu App and new AI businesses have enabled Baidu Core’s adjusted EBITDA margin to reach 41% in the second quarter.

Baidu returned US$540 million to shareholders under the 2020 Share Repurchase Program in the second quarter, bringing the Company’s cumulative repurchase for the last two years to approximately US$1.9 billion.

Baidu’s board of directors recently approved a change to the 2020 Share Repurchase Program, increasing the repurchase authorization from US$1 billion to US$3 billion, which is effective through December 31, 2022.

DuerOS

In June 2020, Baidu’s DuerOS monthly voice queries on Xiaodu devices (its smart speakers) reached 2.8 billion, nearly doubling from last year, and DuerOS total monthly voice queries reached 5.8 billion, up 57% from last year.

DuerOS skills store now offers 4,000 skills in wide-ranging genres, including education, video, online game, and live streaming. DuerOS developer community has grown to over 42,000 members.

JD.com announced that Xiaodu series of smart displays and smart speakers were the best-selling in the smart speaker category on its platform during this year’s June 18 Shopping Festival.

Cloud, AI Services & AI Platform.

Baidu formed a strategic partnership with China National Building Materials Group (CNBM Group), the parent of 13 listed companies.

CNBM Group plans to use Baidu AI PaaS, equipped with big data and IoT edge computing capabilities, to provide intelligent logistics, intelligent factory and industrial autonomous driving.

For example, CNBM Group plans to use Baidu AI PaaS paired with Baidu intelligent map to improve the routing efficiency of its logistics vehicles and track the vehicles whereabouts to optimize operational costs and increase traffic safety.

Baidu’s AI open platform, built on top of Baidu Cloud, offers over 260 AI capabilities, which are tapped by over 2.1 million developers.

Apollo

The Apollo robotaxi operations in Beijing, Changsha and Cangzhou have expanded into larger networks and more complex road conditions, such as downtown streets.

In May 2020, Baidu completed the 145,000 square feet Apollo Park in Beijing, an autonomous driving and V2X testing facility that supports testing, operational command center, cloud control system, vehicle warehousing, maintenance, and calibration.

iQIYI

One of the top online video platforms iQIYI’s subscribers reached 104.9 million, up 4% year over year, in June 2020, and membership revenue was up 19% year over year.

Financial Results

Total revenues reached RMB 26.0 billion ($3.69 billion), decreasing 1% year over year.

• Online marketing revenues were RMB 17.7 billion ($2.50 billion), decreasing 8% year over year.
• Other revenues were RMB 8.3 billion ($1.18 billion), increasing 18% year over year, driven by the strong growth of iQIYI membership and Baidu’s cloud and smart transportation solutions.
  • Revenue from iQIYI reached RMB 7.4 billion ($1.05 billion), up 4% year over year.

Its share price fell more than 6% in the extended session Thursday.

Revenue from Baidu Core reached RMB 18.9 billion ($2.68 billion), decreasing 3% year over year.  iQIYI membership revenue grew 19% year over year, partially offset by online advertising revenue declining 28% year over year.

Cost of revenues was RMB 13.1 billion ($1.86 billion), decreasing 19% year over year, primarily due to a decrease in traffic acquisition costs, sales tax and surcharges, and costs of goods sold. The decrease in traffic acquisition costs reflected decreasing union revenues, as Baidu focused on optimizing profitability over revenue growth.

Selling, general and administrative expenses were RMB 4.4 billion ($625 million), decreasing 16% year over year, primarily due to decreased marketing spending and personnel-related expenses.

Research and development expenses were RMB 4.8 billion ($685 million), increasing 2% year over year.

Operating income was RMB 3.6 billion ($516 million) and operating margin was 14%. Baidu Core operating income was RMB 5.0 billion ($703 million) and Baidu Core operating margin was 26%.

Non-GAAP operating income was RMB 5.6 billion ($793 million), and non-GAAP operating margin was 22%. Non-GAAP Baidu Core operating income was RMB 6.5 billion ($917 million), and non-GAAP Baidu Core operating margin was 34%.

Total other income was RMB 366 million ($53 million), decreasing 70% year over year, primarily due to loss from equity method investments, which is booked a quarter in arrears and reflects the impact of COVID-19 on its investees.

Income tax expense was RMB 1.2 billion ($174 million), which included tax withholding accrual for dividend distribution to offshore entities, compared to RMB 416 million in Q2 2019.

Net income attributable to Baidu was RMB 3.6 billion ($507 million), and diluted earnings per ADS was RMB 10.31 ($1.46). Net income attributable to Baidu Core was RMB 4.4 billion ($626 million).

Non-GAAP net income attributable to Baidu was RMB 5.1 billion ($719 million), and non-GAAP net margin was 20%. Non-GAAP diluted earnings per ADS amounted to RMB 14.73 ($ 2.08). Non-GAAP net income attributable to Baidu Core was RMB 5.7 billion ($801 million), and non-GAAP net margin for Baidu Core was 30%.

Adjusted EBITDA was RMB 7.0 billion ($993 million) and adjusted EBITDA margin was 27%. Adjusted EBITDA for Baidu Core was RMB 7.8 billion ($1.1 billion) and the adjusted EBITDA margin for Baidu Core was 41%.

As of June 30, 2020, cash, cash equivalents, restricted cash, and short-term investments were RMB 154.1 billion ($21.80 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 144.6 billion ($20.46 billion).

Free cash flow was RMB 7.3 billion ($1.04 billion). Free cash flow excluding iQIYI was RMB 8.8 billion ($1.24 billion).

Baidu may spin off its online storage business

Baidu recently plans to split multiple internal businesses, which may be listed independently, according to Business Data.

Baidu declined to comment on the news.

If spun off, Baidu online storage business can benchmark the US cloud storage company Dropbox for its valuation. The market value of Dropbox has exceeded $9.016 billion at the intraday price on July 28.

After 360 Cloud disk, Kingsoft Online Disk, Xunlei Express Disk, Netease Cloud Disk, and other similar products stopped services, Baidu Online Disk, launched in February 2012, continues its service with a large storage capacity of 100G and clean interface.

According to 36Kr, in November 2019, the number of MAU (monthly active users) in China’s personal online storage industry was 107 million, with a penetration rate of 22.1% for mobile Internet users nationwide. Baidu Online Disk market share is 82.9%, followed by Tencent Weiyun, about 8% market share.

Questmobile’s data show Baidu Online Disk has a market share of over 85% with 600 registered users and over 100 million MAU. It currently generates revenues from users, advertising, information, mini programs, and etc.

Baidu starts offering Microsoft’s MSN ad inventory on a new ad platform

Baidu announced on 8 July 2020 that it is providing advertisers direct access to Microsoft’s MSN native desktop inventory via Baidu’s MediaGo advertising platform. The agreement enables advertisers around the world to reach consumers in the United States through premium placements on multiple MSN properties.

Rather than requiring advertisers to purchase bulk inventory, as is standard practice for many digital ad companies, this collaboration allows advertisers to secure the placements that fit their goals and budget on MSN’s desktop site.

As part of Baidu’s ongoing effort to bridge the gap between Eastern and Western markets, Baidu works with Microsoft to offer their premium MSN placements to its advertising partners in China, the U.S. and beyond. It will continue to explore meaningful ways to provide mutual growth opportunities to global advertisers and U.S. media.

The cooperation allows advertisers worldwide to access high-visibility, native placements on the MSN homepage, as well as other sister pages throughout the MSN site, via Baidu’s MediaGo ad platform.

With MediaGo, advertisers can upload assets, select placements on top-tier MSN properties and measure campaign success on a single centralized platform. MediaGo also offers 24/7 local language account management services.

“Baidu’s MediaGo platform streamlines the process for global advertisers to purchase high-visibility ad placements on MSN, helping them reach new customers,” said David Carkeek, Principal PM Lead at Microsoft.

Baidu International launched MediaGo overseas advertising platform last year when it had established cooperation with Snapchat, Reddit, Pinterest, etc., which will provide a very good channel for China’s domestic small and medium-sized enterprise owners to promote overseas.

Mobile reach in Q1 2020: Tencent, Alibaba, Baidu, ByteDance

The Index is based on 10 indicators and presents the sum of four individual rankings, comprising:

• enterprise activity
• research proficiency
• infrastructure readiness, and
• government engagement

The Intelligent Cities Index China (ICI-CN) reveals six main clusters of leading cities in AI. The Top 6 Intelligent cities are all located in the East Coast Region. Each of the other three economic regions comprises at least one Top 10 intelligent city.

Beijing is the Intelligent Capital, a leader in research and enterprise activity. The East Coast Challengers Shanghai, Nanjing and Hangzhou are allrounders with strengths across all categories of the ICI.

The Giants of the South Coast, Shenzhen and Guangzhou, are leading centers of government AI engagement and have strong enterprise sectors.

The Rising Centre comprises Wuhan, an up and coming city with strengths in AI research and enabling infrastructure. The Industrial Northeast, Harbin and Shenyang are known for strong AI research.

The Developing West comprises Xi’an and Chengdu, two cities with developing research strengths and favorable policy conditions for attracting AI talent.

The Top 10 Intelligent Cities Ranking presents the aggregate result of the four individual rankings, weighed according to the Intelligent Cities Capabilities Pyramid: Enterprise activity 40%, Research proficiency 30%, Infrastructure readiness 20% and Government engagement 10%.

• 1. Beijing
• 2. Shanghai
• 3. Nanjing
• 4. Guangzhou
• 5. Shenzhen
• 6. Hangzhou
• 7. Wuhan
• 8. Haerbin
• 9. Xi’an
• 10. Chengdu
• 10. Shenyang

The research distinguished Chinese cities into six clusters with distinct profiles and correspond to the major economic regions of China and reflect the historical development of the country. Reflecting the economic profile of the country, three of the six clusters and the Top 6 cities are located in the East Coast region.

CIW Members can download the report here.

Benefiting from the continued expansion in its global smartphone market share, the monthly active users (“MAU”) of MIUI increased to 330.7 million, an increase of 26.7% year-over-year.

As of March 31, 2020, the number of connected IoT devices (excluding smartphones and laptops) on Xiaomi IoT platform reached 252.0 million, an increase of 42.6% year-over-year.

Xiaomi AI assistant Xiao Ai had 70.5 million MAU in March 2020, an increase of 54.9% year-over-year.

Revenue from its internet services segment in Q1 2020 increased by 38.6% year-over-year to RMB5.9 billion, accounting for a record high of 11.9% of its total revenue. Revenue from overseas markets in Q1 2020 totaled RMB24.8 billion, an increase of 47.8% year-over-year, for the first time, accounting for half of its total revenue.

According to Canalys, Xiaomi smartphone shipments in Western Europe increased by 79.3% year-over-year and it attained the largest market share in Spain for the first time.

Xiaomi Smartphone

In Q1 2020, revenue from Xiaomi’s smartphone segment totaled RMB30.3 billion, an increase of 12.3% year-over-year. It shipped 29.2 million units of smartphones in Q1 2020, an increase of 4.7% year-over-year.

According to Canalys, in the first quarter of 2020, Xiaomi ranked 4th globally in terms of smartphone shipments, and Xiaomi’s market share rose to 11.1%. Xiaomi was one of only two of the top five smartphone companies worldwide to maintain year-over-year growth in shipments.

In February 2020, Xiaomi launched Mi 10 and Mi 10 Pro. Shipments of Mi 10 and Mi 10 Pro exceeded 1 million units two months after their launch, enabling the Xiaomi brand to further strengthen its position in the premium smartphone market.

Mi 10 and Mi 10 Pro were launched overseas in late March with prices starting at €799 and €999, respectively. Boosted by Xiaomi’s premium smartphone models, the average selling price (“ASP”) of Xiaomi’s smartphones increased by 7.2% year-over-year in Q1 2020.

The ASP of Xiaomi’s smartphones in mainland China and overseas markets increased by 18.7% and 13.7% year-over-year respectively.

In April 2020, Xiaomi launched Mi 10 Lite Zoom Edition to target the younger consumer segments. With prices starting at RMB2,099, it features a 50x periscope telephoto lens camera and other advanced technologies. Mi 10 Lite 5G was launched in March 2020 in overseas markets, with prices starting at €349.

The Redmi brand continued to introduce highly competitive products at different price points. In March 2020, Redmi launched its flagship K series Redmi K30 Pro and Redmi K30 Pro Zoom Edition, sporting premium features including the Snapdragon 865 processor, LPDDR5, and UFS 3.1, while also featuring a pop-up camera, allowing Xiaomi’s customers to enjoy a full flagship experience at a reasonable price.

On the back of the highly popular Redmi Note 8 series, the second best-selling smartphone model globally in Q1 2020 according to Canalys, Xiaomi launched Redmi Note 9S and Redmi Note 9 Pro in overseas markets, carrying on the ultimate price-performance value proposition of the Redmi brand.

In April 2020, Xiaomi released MIUI 12, the latest version of Xiaomi’s smartphone operating system. Equipped with Xiaomi’s proprietary Mi Light Cone Animation Framework, MIUI 12 offers remarkable animation and a stunning visualized user interface.

In addition, MIUI 12 has introduced a privacy and data protection framework, which enables users to have full visibility of sensitive data retrieval, take control over app permissions, and mask their identity information to remain incognito. MIUI 12 is the world’s first mobile operating system to pass the TÜV Rheinland “Enhanced Privacy Protection for Android Systems” test.

Xiaomi IoT

In Q1 2020, revenue from Xiaomi’s IoT and lifestyle products segment was RMB13.0 billion, increase of 7.8%. Xiaomi’s smart TV business continued to maintain its leading position in both mainland China and overseas markets.

In Q1 2020, despite the overall decline in TV shipments globally due to the pandemic, Xiaomi’s global shipments of smart TVs still increased by 3.0% year-over-year to 2.7 million units.

According to All View Cloud (“AVC”), in Q1 2020, Xiaomi’s TV shipments in mainland China ranked 1st for five consecutive quarters and its global TV shipments ranked among the top five.

In March 2020, Xiaomi launched Redmi Smart TV Max 98”, priced from RMB19,999 (about US$2,815), significantly lower than other ultra-large TVs, bringing high-end TVs to the mass market.

In Q1 2020, Xiaomi continued to expand Xiaomi’s IoT product portfolio and promote the interconnectivity of Xiaomi’s AIoT platform.

In February 2020, Xiaomi introduced Mi AIoT Router AX3600, a WiFi 6 enabled AIoT router, which greatly improves upstream and downstream network speeds, making Xiaomi the first brand in China to support WiFi 6 technology from terminals to routers.

In addition, Xiaomi also launched Mi 65W Fast Charger with GaN Tech, Redmi Smart Display 8” and Mi Bluetooth Speaker with Wireless Charging, all of which enjoyed widespread popularity.

The sales of Xiaomi’s routers increased by 124.0% year-over-year in Q1 2020 and according to AVC, ranked 2nd in mainland China in terms of online router shipments. Sales of Xiaomi’s Xiaomi TWS Earphones, Mi Band, Mi Electric Scooter and Mi Robot Vacuum Cleaner increased by 619.6%, 56.0%, 40.7% and 40.0% year-over-year, respectively.

According to Canalys, Xiaomi ranked 1st in terms of wearable band shipments and 3rd in terms of True Wireless Stereo (“TWS”) earbuds shipments globally in 2019. According to iResearch, Xiaomi also ranked 1st in terms of electric scooter shipments globally in 2019.

Xiaomi Internet Services

In Q1 2020, revenue from Xiaomi’s internet services segment reached RMB5.9 billion, representing an increase of 38.6% year-over-year, accounting for a record high of 11.9% of Xiaomi’s total revenue.

User activity and time spent on Xiaomi’s devices increased in Q1 2020. In March 2020, the MAU of MIUI increased by 26.7% year-over-year to 330.7 million, while the mainland China MAU of MIUI reached 111.5 million.

In Q1 2020, advertising revenue was RMB2.7 billion, an increase of 16.6% year-over-year.

In Q1 2020, online gaming revenue increased by 80.5% year-over-year to RMB1.5 billion, mainly due to the fast-growing online gaming market in mainland China and higher online gaming average revenue per user from Xiaomi’s premium smartphone users.

In Q1 2020, internet services revenue outside of advertising and gaming from mainland China smartphones, including those generated from the Youpin e-commerce platform, fintech business, TV internet services and overseas internet services, increased by 71.5% year-over-year and accounted for 38.1% of Xiaomi’s total internet services revenue.

Xiaomi’s Youpin e-commerce platform continued to broaden its offerings and provide uninterrupted services to customers. The number of new users increased significantly in Q1 2020, laying a strong foundation for further expansion.

In March 2020, MAU of Xiaomi’s smart TVs and Mi Box reached 30.4 million, representing an increase of 46.8% year-over-year. As of March 31, 2020, the number of paid subscribers increased by 53.7% year-over-year to 4.3 million.

In Q1 2020, the MAU of Mi Browser on Xiaomi smartphones in the aggregated overseas market ranked 1st among all browsers. These initiatives increased Xiaomi’s average revenue per user in the overseas market.

Introduction to Xiaomi’s e-commerce platform Youpin

The GSMA MWC series (formally known as Mobile World Congress) is the world’s largest exhibition for the mobile industry and incorporates a thought-leadership conference featuring prominent executives representing global mobile operators, device manufacturers, technology providers, vendors, and content owners.

MWC Barcelona 2020 takes place Monday, 24 February – Thursday, 27 February, 2020. The 2020 event will be held at Fira Gran Via with selected events, including 4YFN, taking place at Fira Montjuïc.

Sort through the event topics in our agenda to find the conference keynotes, track sessions, partner events, tours, and seminars that are most relevant to you. Here is an overview of the topics:

AI

With a market projected to reach $70 billion by 2020, artificial intelligence is poised to have a transformative effect on consumers, enterprises, and governments around the world. AI will explore the real potential of AI, how we must manage such a profound technological revolution and its impact on our professional and personal lives.

Connectivity: The 5G Era – Sponsored by Deloitte

Connectivity: The 5G Era at MWC 2020 aims to highlight how next-generation networks will form the basis of wide-reaching value creation and economic impact. We will take a broad look at the enterprise connectivity ecosystem, from implementation, to use cases, scalable platforms, business models, spectrum, regulation, and investment to the business and cultural challenges of working with new and diverse markets/industries. Realising the full potential of global connectivity is both complex and challenging, but the opportunity is near limitless in its application and impact.

Customer Engagement

Customer engagement has been a key battleground for brands, service providers and governments for decades, but its evolution and importance have accelerated in recent years driven by the internet, mobile and then smartphones. Customer Engagement will look at examples across all industries, to understand how you can set the benchmark for customer engagement, retain and gain customers and grow revenue.

Industry X: IoT – Sponsored by Citi

Using a blend of new technologies like industrial IoT, big data, analytics, AI, robotics, 3D printing, and machine learning, industries can unlock new revenue and engagement models with customers, employees and partners. Industry X: IoT will examine the challenges, opportunities, scalability and limitless potential of Industrial IoT and Digital Transformation.

Media & Entertainment

As the appetite and expectation for AR, VR and other forms of richer immersive content grow, the impact on networks, event venues, and overall consumer engagement will grow, presenting huge challenges to everyone involved in these now intertwined industries. Media & Entertainment examines the challenges, the revenue models, as well as the relationship between consumption growth and network capacity.

Our Planet

The world needs, now more than ever, our sector to be a fundamental contributor to creating a safe, clean and equitable world for all. Our Planet will discuss the connected technology industries’ responsibilities to the environment and underserved people, including the unconnected and accessibility for the disabled, among others.

Security & Privacy

Recent scandals have eroded trust in the digital ecosystem. Coupled with the growing introduction and interest in legislation around privacy and the ethics of data usage as we enter the AI era, we are at a pivotal juncture in the evolution of the Internet. Security & Privacy analyses the growing responsibilities required to create the right balance with consumers, governments, regulators and industries.

Find out more: MWC Barcelona