China Mobile to pour $100m into mobile IM

18 Apr 2013
Daily News

China Mobile is revamping its mobile IM service in a bid to challenge WeChat, the popular OTT service operated by Tencent.

The mobile giant will re-tender the operation of Fetion (Feixin), when the current outsourcing contract to Beijing Ultrapower Software expires in June.

China Mobile's Guangdong branch last Friday launched a tender for four subsidiary projects related to the operation and service development of Fetion.

According to an announcement Beijing Ultrapower posted on its website, China Mobile will invest over 638 million yuan ($103 million) in the service in the year following the tender.

China Mobile launched the Fetion service in May 2007 and outsourced its operation to Beijing Ultrapower. The service had once enjoyed great popularity and attracted hundreds of millions of users. But Fetion lost its shine due to strong competition from internet-based IM services like QQ, provided by Tencent and Sina.

Industry watchers suggest the move is a strategic step by China Mobile to take on WeChat, which already has more than 300 million registered users and a reportedly monthly active user base of over 100 million since it launched in 2011.

Thanks to the sweeping success of WeChat, China’s three mobile carriers, China Mobile in particular, have been hit with a sharp decline in mobile users using traditional voice and SMS services

At the same time, the operators have been complaining that the WeChat service is straining their networks but has returned few benefits.

The three Chinese mobile carriers are reportedly urging the regulator to intervene and demanding compensation for the high strain the service places on network resources.

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