What does Jego do?
Jego, available on Apple Inc. (NASDAQ:AAPL)’s iOS and Google Inc (NASDAQ:GOOG)’s Android platforms, can allow customers to bind their China Mobile Ltd. (NYSE:CHL)numbers as well as to subscribe to Hong Kong online numbers, whereas customers’ call numbers can be displayed and seen by the receivers. Jego also provides instant messaging functions, as well as video calling and multimedia-sharing functions
Jego is a small step for big trends
Although most of the functions are already provided by other mobile instant messaging software, such as Tencent‘s WeChat (former known as Weixin), LINE, and WhatsApp, Jego is an important step for China Mobile Ltd. (NYSE:CHL) to counter the trend shifting toward mobile instant messaging. However, Jego’s real competitor is Skype, offering VoIP services.
Jego’s rate is competitive as compared to Skype. Whereas Jego will cost $0.022 per minute while Skype’s pay-as-you-go costs $0.023 per minute (excluding tax) plus a $0.049 connection fee. Although Jego is priced competitively, it still needs to show it can beat Skype’s value offerings, enabling clear and reliable VoIP communication functions with strong integration capabilities. In essence, with Jego, China Mobile Ltd. (NYSE:CHL) is trying to create its own presence in the mobile instant messaging and VoIP market instead of being consumed for its own traditional carrier services.
What now?
While telecom operators worldwide have been negatively impacted by growing challenges from instant messaging and VoIP services, carriers are finding ways to counter and capitalize these trends. Jego is a small yet important step for China Mobile Ltd. (NYSE:CHL) to explore and adjust itself from the traditional telecom market. Skype, on the other hand, was acquired by Microsoft Corporation (NASDAQ:MSFT) to expand its enterprise collaboration market and to increase the competitive offerings of Windows Phone. Microsoft needs to stay competitive against Google Inc (NASDAQ:GOOG)’s Voice and Apple Inc. (NASDAQ:AAPL)’s Facetime. Microsoft Corporation (NASDAQ:MSFT) continues to integrate Skype into its platform and offerings, including Outlook.com (formerly known as Hotmail), as Skype’s revenue continues to grow.
Tencent, as one of China’s largest Internet service providers, remains competitive in the mobile instant messaging market with its WeChat. Tencent continues to leverage its high traffic and strong content to boost its presence in the mobile end. Tecent’s success with its QQ, which provides a total solution for Internet-based instant messaging, is further expanded with its WeChat offering.
WeChat has grown rapidly since its launch in January 2011, reaching more than 300 million users. WeChat is viewed as a gateway to mobile Internet, creating various opportunities for third parties, as said by Guan Peng, the CEO of China35.com.
With WeChat’s success, mobile operators, such as China Mobile Ltd. (NYSE:CHL), China Telecom Corporation Limited (NYSE:CHA), and China Unicom (Hong Kong) Limited (NYSE:CHU) are arguing that WeChat uses a lot of network resources and affects the quality of other services. WeChat is also eating into the revenue of text messaging and traditional voice services offered by telecom operators. It is easy to see why China Mobile is launching Jego to counter all these trends.
Bottom line
Jego may not have much financial impact on China Mobile Ltd. (NYSE:CHL) yet, however, it is a sign that telecom operators are fighting back with fast growing VoIP and mobile instant messaging market. While China Mobile is investing heavily into 4G infrastructure, it is also crucial for this telecom operator to find ways to counter or adapt to these growing mobile communication trends. Jego is a good sign that China Mobile is waking up.
The article A Small Yet Critical Step for This Giant Telco originally appeared on Fool.com and is written by Nick Chiu.
Nick Chiu has a long position in China Mobile Ltd. (NYSE:CHL). The Motley Fool owns shares of China Mobile and Microsoft Corporation (NASDAQ:MSFT). Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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