(Image via Shutterstock)
(Image via Shutterstock)

First it was smartphones, then it was Internet TV, and now wireless routers have become the latest flavor of the day for Chinese Web firms, as everyone looks to drive traffic to their sites and services in the fast-evolving market. I previously wrote when security software specialist Qihoo 360 entered the router space in June, and now a new report says smartphone maker Xiaomi, search leader Baidu, and game specialist Shanda are preparing to enter the sector as well. Meanwhile, in a separate but related telecoms move, leading telco China Mobile is making a feeble move into the international market with a relaunch of its Jego service that it suspended shortly after an original roll-out earlier this year.
The common theme in these two pieces of news is that the lines are quickly blurring between telecoms network operators like China Mobile, service providers like Baidu and Qihoo, and hardware makers like Xiaomi. That convergence is being manifested at the national level as China prepares to license a new group of virtual network operators (VNOs), who will lease network capacity from China Mobile and the country’s other two major telcos to offer telecoms services under their own brands sometime next year.
Let’s start off this telecoms convergence round-up with a look at a headline that says Baidu, Xiaomi and Shanda are all planning to roll out wireless routers, following word earlier this year that Qihoo was planning a similar launch. This particular series of roll-outs follows similar moves in the smartphone space, and more recently in smart TVs, which have seen Baidu, Xiaomi and Tencent all launch various initiatives by themselves and through tie-ups with other companies.
Baidu has already launched its own smartphones, and in September announced a new smart TV tie-up with TV maker TCL. E-commerce leader Alibaba has made similar moves, including its own recent smart TV tie-up with Skyworth. The companies are making all these moves with an aim of channeling their Internet services onto people’s TVs, PCs, smartphones, and tablet PCs.
Routers are an important part of that equation, since they can contain software that automatically directs computers and other devices to sites and services operated by the router’s developer. Google uses a similar approach with its free Android operating system, which directs smartphone users to its own websites and services. I suspect that all these Chinese companies will sell their new routers quite cheaply, and then use those devices to direct Web surfers to their sites and services as well.
Next, let’s look at China Mobile, which has just announced  the launch of Jego, its Skype-like Internet telephone product aimed at international customers who make frequent calls to China. Company watchers will recall that China Mobile launched Jego in June, but then quickly suspended the service several weeks later. It never gave any official explanation for the move, but media reported that domestic China Mobile subscribers had found a way to make cheap calls in China using Jego, which was meant for customers outside the country.
This kind of misstep is typical for China Mobile, which has shown a lack of ability to expand globally and create innovative new applications to take advantage of its status as the dominant carrier in its highly protected home market. I suppose I should congratulate China Mobile for fixing Jego and relaunching the product, as this shows it won’t just give up each time it runs into problems. But the bumbled original launch shows that China Mobile will continue to struggle to compete with more nimble companies like Tencent and Alibaba, which will ultimately undermine its longer-term outlook.
Doug Young lives in Shanghai and writes opinion pieces about tech investment in China for Techonomy and at www.youngchinabiz.com. He is the author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.