Apple may be headed for ‘serious ramifications’ in China after Tencent’s latest update to WeChat

FAN Editor

A recent update of the WeChat app from Chinese tech juggernaut Tencent could have “serious ramifications” for Apple, according to one analyst.

The WeChat update, which came out this week, involves a redesign in the way mini-programs — apps within the app — are presented. With that change, users now “essentially have a second home screen” on their phones, said Matthew Brennan, co-founder and managing director at consultancy China Channel.

While a change in user interface may not immediately seem like a game changer, experts said it signals a significant shift in the Chinese tech space.

“With WeChat moving towards solidifying the mini-programs position, there could be serious ramifications for Apple’s service business, which it has been focusing on to counter plateauing hardware sales,” TuanAnh Nguyen, an analyst at technology research firm Canalys, said in an email to CNBC.

“The advantage that WeChat mini-program brings is not only concentration of apps into one popular (platform), but it’s very enticing to developers, especially startups and (independent operations) who have limited resources, to focus on 1 single ‘app store,'” Nguyen said.

Apple did not immediately respond to a CNBC request for comment on this story.

Given their ubiquity across both Apple’s iOS and Google’s Android mobile operating systems, “superapps” such as WeChat have “made the Apple ecosystem lock-in much weaker” in China in comparison to other parts of the world, resulting in an erosion of the competitive advantage of the Cupertino-based tech giant’s hardware, he said.

WeChat has more than 1 billion monthly active users, according to Tencent. Known in China as Weixin, the mobile app is also used by many overseas Chinese and foreigners. It has evolved from recorded voice messages to a means of paying for store purchases and utility bills. Users can also access third-party services such as SF Express — a delivery company similar to FedEx — through WeChat mini programs.

“WeChat is your Facebook, your credit card, your Uber, your Amazon altogether.” said Mengmeng Zhang, a Beijing-based analyst at Counterpoint Research. “Some even say China’s operating system is WeChat, not (Google’s) Android or (Apple’s) iOS.”

The latest development comes weeks after Apple CEO Tim Cook warned that the company was facing trouble selling its iPhones in China.

Commenting on the potential financial impact of the design change in WeChat on Apple, Brennan and Nguyen generally agreed that the impact would be more long-term in nature.

“In the near term, high-value segments of contents such as mobile gaming will still stay on the main platforms instead of moving to WeChat’s mini-programs,” said Canalys’ Nguyen.

Echoing that view, Brennan said the mini-programs on WeChat are “not designed to be very big” and are unlikely to compete against the games that feature on Apple’s App Store.

— CNBC’s Evelyn Cheng contributed to this report.

Free America Network Articles

Leave a Reply

Next Post

German business morale declines in Jan as economy suffers downturn: Ifo

FILE PHOTO: A woman passes a sale sign in a shop window in downtown Hamburg, Germany, January 25, 2018. REUTERS/Fabian Bimmer January 25, 2019 BERLIN (Reuters) – German business morale fell for the fifth consecutive month in January, a survey showed on Friday, signaling a downturn in Europe’s largest economy […]