Demonstrating a smartphone GPS app at an event. (Photo/Xinhua)
China's top internet companies including Baidu and Tencent are actively developing online map services, seeing huge potential in the sector in the sprawling China market.
Some of these market leaders in China are now considered by industry analysts to rank alongside international titans like Apple, Google, Microsoft and Nokia that have all indentified the business potential for mapping and navigation services.
At least in their home market, Chinese map service providers enjoy the advantages of familiarity with the country's huge and diverse geography and the continuously increasing number of internet users, as well as the various languages and dialects spoken in China.
The country's leading online map service providers cover mostly mainland China, Hong Kong and Macau while some also cover Taiwan and a few have expanded areas outside Greater China.
Analysts interviewed by the Chinese-language Global Entrepreneur magazine agree with the rosy evaluation of the potential for the map and navigation market in China.
The establishment of the location-based service (LBS) division by Baidu marks the accelerated efforts of the country's top internet search service provider to explore new money-making opportunities for mobile mapping services.
The total market value of online navigation and map services is projected to increase from 70 billion yuan (US$11 billion) in 2011 to more than 400 billion yuan (US$63.5 billion) by 2020.
NO MONETIZATION SOON
But many analysts also said that the commercialization of the mobile map sector does not mean the operators will be able to really achieve monetization of the new services soon.
The inception of mobile internet online services has added a new market dimension by integrating offline business with online map services via the rising number of smartphones and tablet PCs in the country because they generate vital information about where their users are.
Based on the information of the users' geographical locations, new services related to their daily consumption behaviors including living, eating, dwelling, transport and more can now be attached to the resulting maps on sophisticated smartphones.
This is why major international players have all boosted investment in mobile online map services, including acquiring and merging smaller firms with innovative services. Their competition has also extended to the acquisition of geographical map data providers, the buildup of their own data and forming alliances with partners in different lines of business for faster growth.
Microsoft made the earliest start in mapping services and it struck a deal with Nokia that used to dominate the global mobile phone market. But the two missed the opportunity to maintain their leadership in the global map service market.
The former reduced its investment in the sector after making a decision to rely mainly on the geographical data provided by Naveteq, which was acquired by Nokia. However, the map service became neglected when Nokia puts its focus on salvaging its shrinking handset market share.
At the same time, Google increased its investment in Google Maps and Apple ceased its cooperation with the search engine to develop its own mapping system, which so far has received largely negative reports from users.
As of early this year, up to 74% of smartphone users retrieved their LBS information in the United States, according to data compiled by the Pew Research Center, which monitors major trends shaping the world.
Nokia has more recently renewed its push for new positioning services by adding City Lens functions to its new Lumia smartphone models and forming new partnerships with Amazon, Federal Express, Groupon and Oracle to beef up B2C services.
Tencent reported that its customers tapped into its LBS services with 700 million map visits in September, soaring from just 50 million in May. The leading Chinese internet service portal projects the total visits to its map services will more than double to 1.5 billion by the end of December, prompting the group to expand to cloud computing to meet the huge demand.
The group is also working on a plan to cooperate with a major public transport group to provide users with mobile online information about traffic in larger Chinese cities.
Baidu, Sogou and Tencent have all opened map API interface services free of cost.
But the mobile map services in China still have to face tighter administrative restrictions on using map data, which remains highly sensitive in the country, and the slower pace in the official updating of geographical information compared with developed nations.
In order to generate profits, the operators should speed up the expansion to B2C and O2O formats from just map and navigation services because user need many more services in the consumer areas of locating restaurants, making purchases, booking transport tickets, business opportunities and social networking services around the clock.
The companies need to spend time and money to develop profitable business models, nurture the market, educate users and keep close contact with customers in order to create business opportunities and attract advertising.
Those that pass the test will be able to grow into new giants in the mobile map field with annual revenue projected to surpass 400 billion yuan (US$63.5 billion) within eight years, said the analysts.
Zhou Jiping is general manager of PetroChina, the listed arm of the state-run China National Petroleum Corporation (CNPC) and is recognized as a senior engineer with over thirty years experience in ...