Tencent has no future? Maybe it’s because it’s missing out on the $7 trillion autonomous driving industry!

Since hitting its highest point in January this year, Tencent's stock price has now fallen by 25%, and the company's market value has evaporated by about HK$1.1 trillion. Analysts said that the decline in Tencent's stock price is due to the downward trend of the market and the fact that Tencent has not made much profit from investment in recent years. For Tencent, which relies heavily on investment growth, the decline in stock price reflects the market's pessimism about Tencent's future.

What is the future of Tencent, which relies on gaming and investment businesses to seek growth? Judging from Tencent's layout in the intelligent transportation and autonomous driving industries, which represent future prospects, Tencent's future may not be as unstoppable as its gaming industry.

The automotive industry is currently in a period of industrial transformation towards intelligence, networking, electrification and sharing. Naturally, giants such as BAT have stepped up their efforts. Last year, Fiaz Mohamed, general manager of Intel's global artificial intelligence strategy planning, predicted that "110 million cars with autonomous driving technology are expected to be sold worldwide in 2025, and the market size will reach 7 trillion US dollars."

The future is already within reach, but compared with the concentration and focus of Alibaba and Baidu, Tencent's series of actions in the automotive industry seem somewhat disorganized.

Short-term benefits first

Tencent has a keen interest in the automotive industry and has a broad layout, with presence in almost all areas, including electric vehicle manufacturing, autonomous driving technology, vehicle hardware, Internet of Vehicles, Internet travel, used car trading, P2P car rental, and automotive aftermarket O2O.

It can be said that Tencent's investment in the automotive industry is the broadest among BAT. Tencent calls this layout "full industry chain investment."

This scatter-net investment approach is very different from the focused style of Baidu and Alibaba.

In the automotive field, Baidu focuses its main efforts on the autonomous driving platform Apollo, Xiaodu OS and related AI technologies; Alibaba focuses on in-vehicle OS, Internet of Vehicles and high-precision maps.

Compared with Baidu and Alibaba, which specialize in certain areas of the automotive industry, Tencent's wide-ranging investment makes it difficult to see the key points.

Since Tencent has placed its eggs in different baskets, it will not invest too much in each specific field. Most of Tencent's investments in the automotive industry are equity investments rather than Alibaba-style acquisitions and controlling stakes.

From this perspective, Tencent is more like an investment company that focuses on defense in the automotive field and has no intention of personally taking part in leading the industry's progress.

Tencent has invested in many unicorn companies, including in the automotive industry. There will always be companies that make Tencent a lot of money. So, from a purely investment perspective, wouldn’t it be great if Tencent became China’s Berkshire Hathaway and Ma Huateng became China’s Buffett?

What is worrying is not Tencent's profitability, but Tencent's stock price and positioning. Berkshire Hathaway has been an investment company since the beginning, while Tencent is an Internet company with social networking and gaming as its core.

The market has completely different evaluation criteria for investment companies and technology companies. Berkshire Hathaway's price-to-earnings ratio is only about 10 times, while technology companies and Internet companies have price-to-earnings ratios of 40 to 50 times, which is also common.

It is dangerous for a technology company or Internet company to be obsessed with profit and give up the pursuit of technology.

One year after Lu Qi announced his All in AI plan, Baidu's market value rose from $61 billion to $91 billion, and his resignation caused a sharp drop in Baidu's stock price. Fortunately, Baidu did not relax its investment in AI and autonomous driving after Lu Qi's resignation, and its stock price returned to the level before Lu Qi's resignation.

Profit is the ultimate goal pursued by an enterprise, but short-sighted investment behavior will limit the company's future development space and affect long-term profits.

Tencent has no moat

Baidu currently holds a leading position in the field of autonomous driving in the country.

Baidu's driverless car project started in 2013. Baidu has achieved certain results in the field of driverless cars and has gradually built its own industrial chain. During the same period, few startups that entered this field have really produced results. In fact, most startups engaged in driverless cars have already joined Baidu's Apollo platform.

Alibaba and Tencent entered the field of autonomous driving relatively late, and their current level of development is not as good as Baidu.

In the second half of 2016, Tencent began recruiting talents in the fields of autonomous driving algorithms, high-precision maps, and security, and subsequently established an autonomous driving laboratory in Beijing. Alibaba only announced its entry into autonomous driving this year.

In-vehicle OS is Alibaba’s strong point.

In 2015, Alibaba and SAIC established a joint venture company, Banma Network. Banma Zhixing mainly produces in-vehicle systems and initially focused on applying Alibaba's YunOS operating system to cars produced by SAIC.

During the rise of smartphones, BAT once competed on mobile OS. Baidu Cloud OS and Tencent OS stopped services in 2015 and 2017 respectively. Alibaba's YunOS also failed to gain much advantage.

The reason is that hardware companies only use third-party OS as bargaining chips. Once the hardware companies themselves develop well, third-party OS will be abandoned. However, Alibaba did not stop the development of operating systems. Alibaba YunOS was renamed AliOS in 2017, and the car was used as the main application platform.

This continuity in research and development has given Alibaba the foundation to establish its own business in the field of in-vehicle OS. Baidu's Xiaodu in-vehicle system is more of an extension of the autonomous driving platform strategy rather than an underlying operating system.

Both Baidu's autonomous driving and Alibaba's in-vehicle OS have very high barriers to entry, and it is difficult for other competitors to shake Baidu and Alibaba's position in their respective fields.

In terms of commercial implementation of automotive industry projects, Tencent lags behind Baidu and Alibaba.

In April 2016, SAIC launched the first "Internet car" equipped with Alibaba YunOS operating system - Roewe RX5. At present, the overall sales volume of SAIC Internet cars has exceeded 700,000 units, and the Zebra network solution based on AliOS has completed four upgrades.

Alibaba and SAIC jointly formulated relevant agreements on data security, which not only ensured the smooth progress of cooperation, but also kept the data of Alibaba and SAIC confidential. This model attracted car companies such as Dongfeng Peugeot Citroen Group and Ford Motor to join the Zebra platform, and the cooperative models will also be launched this year.

On July 4 this year, at the Baidu AI Developer Conference, Robin Li announced that the world's first L4-level mass-produced autonomous driving bus "Apollo", a collaboration between Baidu and King Long Bus, has officially rolled off the production line.

At the same time, Baidu also proposed four mass production plans for Apollo, including Xiaodu in-vehicle OS, autonomous parking solutions, unmanned operating vehicles and unmanned shuttle buses.

Alibaba's AutoNavi Maps has taken the first step in commercializing high-precision maps. AutoNavi's high-definition maps have been applied to GM's new car, the Cadillac CT6.

Alibaba's investment style is not to buy shares, but to control and acquire. This makes Alibaba more capable of integrating and coordinating resources, and can complement the advantages of different companies in technology research and development. Although Tencent has a similar layout, its control over the invested companies is far inferior to Alibaba.

Alibaba's Alibaba Cloud, AutoNavi Maps, and Qixun Location, which was jointly invested by Alibaba and the China North Industries Group Corporation, all provide good industrial support for Alibaba's automotive industry layout.

Currently, Tencent’s flagship product in the automotive industry is its “AI in Car” system.

On November 8, 2017, Tencent announced the launch of this system at the Tencent Global Partner Conference. Tencent announced the full opening of AI-based connectivity capabilities and ecological resources: intelligent voice services, scenario-based services, content services, social services, and operational value-added services. Currently, Tencent has reached cooperation with GAC, Changan and other automakers.

Even so, compared with Baidu and Alibaba, Tencent's "AI in Car" remains more at the application level, and to a large extent it wants to directly transplant Tencent's advantages in mobile terminals into the car.

Although Tencent's positioning and application in the smart car industry can minimize the concerns of car companies and win more partners, the depth of cooperation will be limited.

Tencent's layout in the automotive industry remains at the level of investment and application, rather than technology research and development. Although this is easy to operate and can guarantee profits, its moat is in a state of being incomplete in the long run and is extremely easy to be impacted or even replaced. Moreover, Tencent's success in the mobile terminal cannot necessarily be replicated in the automotive intelligent platform.

For Internet giants, in-car OS can directly open up the entrance to their respective service ecosystems. This kind of basic infrastructure is very difficult, but it is very critical. If Alibaba can promote its own AliOS, it will gain a huge advantage in the future competition in the automotive industry.

Although the Internet industry advocates openness, the final result of its development is bound to be monopoly. In a certain field of Internet enterprises, only one or two enterprises will survive. Services and operations must be based on technology after all, and it is difficult to form long-term combat effectiveness by relying on the advantages gained by investment.

Perhaps, the upcoming autonomous driving will become a watershed for BAT to compete again. Who is faster and who is slower will be revealed at the next node.

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.