* WeChat developing new app ecosystem
* New apps won't require download, installation
* New products could challenge Apple's iOS apps
* Payment systems a key battleground for operating systems
By Sijia Jiang
HONG KONG, May 19 In a cluster of refurbished
Mao-era industrial buildings in Guangzhou, developers at China's
top messaging app, WeChat, are redesigning key parts of its
product to spread its tentacles to just about every aspect of
Around 1,500 developers, mainly twentysomething males, have
been tasked with increasing user engagement through new
'mini-programs' on WeChat that look and operate much like apps
on Apple Inc's iOS and Google's Android
operating systems - but are far less data-intensive.
WeChat, owned by Tencent Holdings, says it's not a
direct challenge to the dominant mobile platforms, but some
analysts and developers say the new business could eat into that
of iOS and Android app ecosystems.
"In the long-term, the relationship between Tencent and
Apple's ecosystems will be co-existence and 'co-opetition' -
intense competition in some areas and time periods, coupled with
some form of cooperation in others," said Su Ning, professor of
Information Systems at Ivey Business School in Canada.
With more than 938 million users, WeChat, known as Weixin in
China, already serves as a one-stop-shop for everything from
reading news and booking taxis to ordering takeaways and making
payments. Half the users spend more than 90 minutes a day on its
chat app, according to WeChat.
WeChat's push on these nimble mini-apps comes as Google this
week launched its own Android Instant Apps, which don't require
downloading and are available on certain Android devices, though
access to Google products in China is heavily restricted.
WeChat says there are about 200,000 third-party developers
for the WeChat platform.
"A very strong trend in China is that demand for iOS and
Android apps is waning, while that for program developing based
on WeChat is rising," said Leon Du, co-founder of
Guangzhou-based Beansmile, a digital consultancy that develops
apps and websites.
Helped by WeChat-based advertising and payment-related
services, Tencent this week reported its highest profit growth
in three years for the first quarter.
While Tencent doesn't release data on the number of
mini-programs available, Dong Xu, a manager at market data firm
Analysys, says her interviews with businesses suggest the
adoption rate has so far been modest.
"Mini-programs are mainly used for low-frequency, offline
scenarios, such as fee payments, parking, and customer
inquiries," Dong said. "Users' in-depth needs such as
entertainment and e-commerce still take place with apps."
Third-party developers say the mini-programs, built in
WeChat's proprietary programming language, are less data-heavy
and easier to develop than their iOS or Android counterparts.
Users, for example, can tap a program on a restaurant's
official WeChat account to order food, have it delivered to
their table and pay for it, all in one app.
WeChat also last month quietly established a new department
dedicated to online searching, and this week rolled out a beta
search-engine box with enhanced power, revealing its ambition to
take on rival Baidu Inc.
Central to its plans for an expansive and dynamic app
ecosystem is the development of WeChat's own payment
Around 300 developers work for WeChat Pay, which competes
with Alipay, run by Alibaba affiliate Ant Financial,
and to a lesser extent, Apple Pay, which launched in China last
TenPay, which runs WeChat Pay and Tencent's smaller QQ
Wallet, is China's most popular mobile payment provider by
users, with 838 million users dwarfing Alipay's 432 million,
according to Analysys.
At a post-earnings conference call on Wednesday, Tencent
President Martin Lau flagged WeChat Pay's goal to permeate all
aspects of consumer life in China.
For Apple, which wants to deepen its reach in China, the
world's biggest mobile spender, WeChat's large and loyal fan
base and its payment service present a challenge.
China overtook the United States as the biggest contributor
to Apple's iOS app store revenue last year, according to mobile
data analytics firm App Annie. However, Apple's
Greater China revenue dropped 14 percent in the first three
months of the year, as cheaper rivals chipped away at sales.
Apple declined to comment for this article.
Last month, some Chinese WeChat fans threatened to ditch
Apple products after the U.S. firm forced the chat app to
abolish a popular tipping function.
While building user loyalty is a core part of both Apple's
and WeChat's strategies, Zhang Ying, general manager of WeChat
Pay, has downplayed product tensions from the tipping spat.
"Apple is still supportive of the ecosystem. We are
part of the ecosystem," he told a forum in Hong Kong
"It is far from a 'choose-one-or-another' - it's merely some
($1 = 7.7890 Hong Kong dollars)
(Reporting by Sijia Jiang, with additional reporting by Jeremy
Wagstaff in SINGAPORE; Editing by Sam Holmes and and Ian