Is it really enough for Tencent to position itself as an assistant in the smart car industry?

At the Tencent 2018 Global Partner Conference held not long ago, a key word Tencent kept mentioning was - assistant.

In his speech, Tencent Senior Executive Vice President Tang Daosheng said that in terms of industrial Internet, Tencent will go deep into the seven fields of smart retail, medical care, education, travel, manufacturing, government affairs, and finance, and play the role of a digital assistant. In other words, after the game suffered a setback and the stock price fell by 30%, Tencent still wanted to rely on the power of social networking to "connect everything," rather than really leading a certain direction.

Specifically, in the field of autonomous driving in the travel sector, Tencent focuses more on providing technical solutions to car companies to help them complete testing and implementation, rather than being an autonomous driving operation service provider. In other words, Tencent's position in the field of autonomous driving is more of a participant and enabler.

The reason why we can be an assistant in the field of travel is that there are no platform-level products

Why is it positioned as an assistant? Because Tencent does not have a platform-level product with obvious advantages in the field of travel.

On the contrary, Baidu and Alibaba both have something relatively impressive.

Baidu has a first-mover advantage in autonomous driving, and its progress in autonomous driving is also the fastest in China. This year, Baidu launched the mass-produced Apollo autonomous driving bus, which has been tested by 10,000 people and has maintained a record of 10,000 kilometers of operation with zero accidents. The unmanned sanitation vehicles and logistics vehicles developed by Baidu have also been put into use.

Alibaba has a deep accumulation in vehicle operating systems. Alibaba has been independently developing the vehicle operating system AliOS. Based on the AliOS system, Banma Intelligent Behavior has provided support for a series of Internet cars such as Roewe, Maxus, Ford, MG, and Dongfeng Citroen.

Autonomous driving and in-vehicle operating systems are both platform-level products in the smart car industry.

Although Tencent Auto has reached strategic cooperation with 15 automobile companies including BMW, GAC, Changan, FAW, Geely, Dongfeng, etc., it is generally more inclined to the service side and lacks the support of the underlying platform.

Compared with Baidu and Alibaba, Tencent's implementation model in the automotive industry is lighter and has stronger 2C attributes.

However, the light model also has its advantages, that is, it can be implemented quickly.

Last November, Tencent announced the launch of its AI in Car system. After just one year, Tencent Auto has cooperated with 15 automakers on 45 models. In addition, Tencent Auto also has more than 300 ecological partners.

Tencent is also good at 2C. Tencent's positioning itself as an "assistant" to car companies is a competitive strategy that leverages its strengths and avoids its weaknesses.

Automakers naturally hope to have more say and influence in the smart car industry chain. Tencent's role as an assistant is more likely to be accepted by automakers and is more in line with Tencent's existing capabilities.

Investment cannot solve the fact that Tencent is absent in the field of autonomous driving

Among BAT, Alibaba and Tencent are closer in size.

The two are the two major financial backers of China's Internet economy and have invested in many companies. However, Alibaba's investment style tends to be acquisition and integration, while Tencent's investment style is to invest in symbiosis.

This difference in investment style extends to the automotive industry. Alibaba's layout in the automotive field emphasizes control and industrial support. From Alibaba Cloud, high-precision maps, high-precision positioning, in-vehicle operating systems, to autonomous driving, Alibaba has actually formed a relatively complete industrial chain, and there is strong synergy between the various parts.

Tencent's layout in the automotive field is very broad, covering almost all fields such as electric vehicle manufacturing, autonomous driving technology, vehicle-mounted hardware, vehicle networking, Internet travel, used car transactions, P2P car rental, and automotive aftermarket O2O, and its main model is equity investment.

Why is Tencent keen on investing?

Because Tencent's investments are really successful. Tencent President Martin Lau once revealed: "In the past few years, Tencent has invested in more than 600 companies, and the value added by these companies has exceeded the market value of Tencent itself."

There is a saying that goes like this: from the perspective of revenue, Tencent is a gaming company; from the perspective of user scale, Tencent is a social company; from the perspective of income, Tencent is an investment company. Last year, Tencent's investment income accounted for 40%.

For Tencent, investment is indeed very profitable, but the resulting problem is that it is distracted and lacks integration capabilities. For example, although Tencent's investment in Tesla has made huge profits, Tencent is unable to integrate Tesla's resources.

If Tencent continues to transform itself into an investment bank, it will have a big impact on its stock price.

Tencent is an Internet company with social networking as its core. The market has completely different evaluation criteria for investment companies and Internet companies. The price-to-earnings ratio of Berkshire Hathaway, a well-known investment company, is only about 10 times, while it is common for technology companies and Internet companies to have a price-to-earnings ratio of 40 to 50 times.

If Tencent still mainly invests in the automotive field through equity investment, it will be difficult for Tencent to form its own moat and the future growth of the company will be affected.

2B to 2C conversion

In 2017, Tencent's stock price rose by 114% and hit a record high of HK$476.6 in January this year. However, Tencent's stock price has been falling this year and is now less than HK$300.

The sharp drop in Tencent’s stock price is related to the overall economic situation, but the difficulties of its traditional core business have made Tencent’s situation worse.

A large part of Tencent's revenue comes from games. However, the game business is heavily dependent on blockbuster products and is greatly affected by policies. Tencent's core business, social networking, is also facing the problem of a ceiling in user growth.

BAT actually faces similar problems. China's Internet economy has gradually changed from an incremental market to a stock market. The traffic dividend brought by the popularization of PCs and smartphones has been almost divided up. The market needs to develop new traffic entrances.

Smart cars will be the new smart platform after PCs and smartphones. The development of smart cars will enrich the functions of cars and change the way people use cars, which will also generate many business opportunities. For Internet giants, whether they can seize the new smart platform of cars has become particularly critical.

BAT and others are all focusing on smart cars, which shows that this industry is heading in the right direction. Not only BAT, but also auto giants and foreign technology companies are making plans in related fields.

The smart car industry is not dispensable for Tencent. Whether from the perspective of proactive attack or passive defense, Tencent must increase investment.

The crisis is also driving Tencent's transformation.

On September 30 this year, Tencent announced that it would reorganize its original seven business groups into six new business groups, and at the same time added cloud services and smart industry departments with strong 2B attributes.

Recently, Ma Huateng appeared on Zhihu late at night and asked: "Which basic disciplines will have an impact on the Internet technology industry in the next ten years? What changes will the integration and innovation of industrial Internet and consumer Internet bring?"

This year's Tencent Global Partner Conference is different from last year's. The first Tencent executive to take the stage this year was not COO Ren Yuxin, but Senior Executive Vice President and President of the Cloud and Smart Industries Business Group Tang Daosheng.

These phenomena all reveal that Tencent is gradually shifting its focus to the 2B field.

Tencent needs to build its own moat in the era of smart cars. Social networking and entertainment are Tencent's advantages in the smart car industry, but they are not enough to form a competitive barrier, and 2C services often require 2B platforms for support.

The field of smart cars is still in its infancy. Whether it is autonomous driving, in-vehicle operating systems, or even new energy vehicles, they are not yet mature and cannot bring much profit in the short term. Tencent should be prepared for long-term investment and take on some tough tasks instead of relying too much on investment for short-term gains.

The smart car industry as a whole is still in its infancy. For a giant like Tencent, it is not too late to enter the market now.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.