Sina admits rival WeChat will continue to cut into Weibo usage, but says it has critical mass

Sina admits rival WeChat will continue to cut into Weibo usage, but says it has critical mass

Sina, the company behind China’s popular Sina Weibo microblogging platform, has again admitted that time spent on its service from users has dipped due to competition with Tencent-owned messaging service WeChat. However, the company has defended its position, saying that the service already has a mainstream following.

Speaking on a conference call following the announcement of the company’s fourth quarter financial results, Chairman and CEO Charles Chao said the growth of WeChat will continue to affect Weibo, with further drops in average user session times “inevitable”. He argued, however, that with more than 400 million users, Weibo has already hit critical mass.

The comments come just one day after former Google China head Kai Fu Lee praised the service for bringing a new level of freedom to China’s Internet space. That’s despite the fact that Lee — who has more than 30 million Weibo followers — being handed a three-day suspension for discussing rumors of government investments in a minority player search engine.

The Sina management team has been particularly open discussing the effect that two-year-old WeChat — which passed 300 million registered users in January — is having on its microblogging business. Further reflection of Sina’s relative comfort with the competition came earlier this month when, as Marbridge Daily noted, it introduced the option to share content to WeChat on its Android app.

The WeChat share option is set to roll out to more clients, including the iOS app, and Chao shared the thinking behind that strategy:

There’s competition in the market and we want to provide the best service [to our users]. We said from the beginning that we want to share and be an open platform…and we believe that a lot of services should be connected. Many Weibo users are WeChat users, and vice versa, so if we open this sharing [option] up then it will improve the user experience.

Chao fielded a number of questions about the growth of Sina Weibo’s mobile business and its latest corporate restructure, which sees COO Hong Du also become Co-President and ex-Cisco VP Jack Xu hired as Chief Technology Officer and Co-President. Explaining the moves, Chao said that the new personnel would provide more focus to the sales team and its initiatives.

The call also revealed that Sina now has 300,000 Weibo enterprise customers, up from 230,000 in the previous quarter, while it is gearing up to introduce Twitter-like promoted trends, which Chao says will “be for bigger customers”.

Chao and Sina CFO Herman Yu also discussed mobile commerce — which saw the firm partner with Xiaomi to sell smartphones — and the duo noted that Sina will “continue to experiment” in the space, both with retailers and third-parties that can handle transactions.

Sina posted beat the street and posted profits during Q4 2012, which included revenue of $139.1 million, and earnings per share of $0.03. The market has responded strongly and, though Sina’s share price slumped 4.50 percent during the US business day, after hours trading saw it rally to increase by 6.39 percent.

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