Baidu invests in two public transport Wi-Fi operators
Baidu, Alibaba and Tencent are eager for a slice of the Wi-Fi market as a POE, a source of users and customer behavior data and rich app showplace.
Public transport Wi-Fi app 16WiFi announced it received a funding to the tune of 100 million yuan in its A Series financing, with Baidu as the lead investor.
Baidu was also the lead investor in a previously announced RMB70 million A Series financing of another major public transport Wi-Fi provider VisionChina Connected, a subsidiary of VisionChina Media.
A Baidu spokesperson said Wi-Fi is yet another major entry point for mobile internet, along with hardware, operating systems, search, distribution and location-based service. Although Baidu has plenty of mobile apps, it lacks sufficient offline point-of-entry (POE) to support traffic, and Wi-Fi services can help it to achieve a complete mobile and O2O cycle.
Baidu’s strategic investment
16WiFI was set up by parent company Colourful Group in Beijing 2014. 16WIFI’s CMO Hui Liu said it has formed scalable operations in cities like Beijing, Shanghai, Nanjing and Foshan and has 150,000 vehicles signed up to operate its Wi-Fi service, with 30,000 vehicles already operational.
This latest funding will be used to continue to install and operate its public transport Wi-Fi across China and speed up the company’s development.
He said Baidu’s strategic investment extends beyond capital and includes support in such areas as technology, branding and distribution channels.
Currently 16WIFI generates cash from various avenues like advertising, traffic direction, app distribution, network games and ecommerce platforms.
Mr. Liu said that all funding to install and operate Wi-Fi on public transportation comes solely from Wi-Fi providers with basically no intervention from authorities or public transportation companies.
The value of Wi-Fi as an entry point
China had 649 million internet users in 2014, 557 million of them are smartphone internet users, representing a penetration of 85.8%, according to China Internet Network Information Center data.
iResearch’s 2015 China Commercail Wi-Fi Industry Report notes that 75.6% of China’s mobile internet users use a combination of personal wireless and Wi-Fi connection. These users will form the consumer base for the development of Wi-Fi.
Previously, Tencent and Alibaba have also invested in commercial Wi-Fi – Alibaba investing in Treebear and Tencent investing in IDianjia. China’s three top IT corporations Baidu, Alibaba and Tencent are eager for a slice of the Wi-Fi market because of its value as a POE, a source of users and customer behavior data and rich app showplace.
One observer thinks that the entry of big players into the Wi-Fi sector is a step towards establishing smart cities and the advertisements of Wi-Fi operators now appearing on public transportation will help the tech giants to tighten the net on the entire market.(Translation by David)