Chinese Developers Eyeing Global Android Launcher Market, But Not in the Way You Think

Go Launcher is considered a successful case as an Android launcher that its parent company filed for IPO recently. As one of the earliest of its kind, it was launched in late 2010. Thanks to the explosion of smartphones, especially Android phones, worldwide, it has become one of the most popular launchers with 239 million users and 42 million monthly active users as of Q3 2013. Go Launcher and other apps of the Go series generate revenues from paid versions apps, in-app purchases for premium services, premium themes.

It is expected the company will make more money through advertising and other paid services. In early this year when Zhang Xiangdong, co-founder of Sungy Mobile, attended our ChinaBang conference, he said he bet gaming could be a nice revenue source.

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A considerable number of Chinese entrepreneurs are obsessed with the Gateway-like services through which users access the Internet services or the Internet itself. With the access to Web content, an entrance controller can charge businesses for reaching users via it or take a share of the commercial benefits businesses gain from users.

Web browser and portal site fall into this category in the PC-based Web. Qihoo is a proven case. Audiences outside China didn’t understand how a company offering free Internet security service and Web browser could make money from ad placements on the startup page of the browser and games offered through its properties. When short-sellers called it a fraud, Chinese businesses acknowledged that the ad links on the startup page did bring them traffic or users. More recently the company began receiving revenues from paid searches by replacing the default search service in the browser with its in-house developed one.

When the mobile Internet use exploded, Chinese developers and tech companies started exploring the new gateways, as it is believed that mobile browsers or old-school portals cannot be so powerful on smaller screens and in ecosystems where the majority of visits are through native apps. Wireless router, Wi-Fi access and Android ROM, Android launcher are considered new chances.

Xiaomi is a representative in Android ROM. The company’s strategy is to have as many users adopt MIUI, a custom Android ROM, as possible, through Xiaomi smartphone pre-installs and direct downloads, and then make money from advertising and paid services within the ROM. Lei Jun, CEO of the company, said at various occasions that the phones would be sold with razor-thin margin and depend on MIUI for long-term income. MIUI has seen revenues from games (accounts for 60% of the total revenues in July 2013), paid apps, browser (paid search + paid links/display ads), themes, reading and cloud service, among others.

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How to do advertising or promote mobile games with an Android launcher? Chinese developers will tell you there are many ways, such as showing ads on lock screen, in themes, or anywhere else. Or including an app store within the launcher or adding a plugin on the lock screen works just the same with a startup page of a Web browser. Then the launchers can sell ad placements in the app store and on the lock screen.

You may ask wouldn’t the users find those added stuff not necessary or annoying? That’s what even some Chinese including me don’t understand but happen in China. It turned out that a majority of Chinese users either enjoy what are provided by above-mentioned players such as Qihoo and Xiaomi or have little knowledge about alternatives.

You may argue users outside China are different. 70% of Sungy’s Go series users are from outside China. So far it’s unknown whether GO Launcher can generate meaningful revenues from advertising or gaming. But Chinese developers are prepared to do so after their launchers manage to take considerable market shares.

Solo Launcher is one of them. The reason that it would start from overseas markets is that, according to the founder Harry Liu, the domestic market will eventually be crowded with big players as Tencent, Baidu and Qihoo have developed Android launchers. The global market, on the other hand, is big enough and doesn’t have so many players.

While other launchers may be focused on developing a tool, Chinese developers take the launcher as a platform. They’d please users so long as they stay — otherwise they cannot make money from advertising or don’t have audiences to push games or other apps to. That’s why Chinese developers would offer premium features or versions with other launchers for free.

Zhou Hongyi, CEO of Qihoo, has a theory those developers must agree on. He concluded that you cannot charge users for basic services and eventually most existing Internet services would become basic services. To have a lasting business, you cannot count on the money you can collect from existing users but should work on obtaining as many users as you can. Revenues will come naturally after you have a huge user base.