Today there are two potential game changing events for NTES. Interestingly, NTES's stock price hardly moved (on light volume) even though NASDAQ is doing very well today. Wall Street can be so inefficient!
I will talk about the first significant event here. My last post on the war between China's 3 Telecoms (CHL, CHU, and CHA) and Tencents can be found here:
Today, it is all over China's news web site that there is a rumor that China Telecom (CHA) will cooperate with Netease (NTES) to coming out with a WeChat like product to counter Tencents. See the following article:
This is a great great news for NTES. NTES has no presence in WeChat like area. It could potentially be truly game changing for NTES.
China's 3 Telecoms are not just traditional monopoly. Think of them as Standard Oil with Department of Commerce combined. However, there are competition between the 3 telecoms.
They are state own industry. Even though there are competition between the 3 telecoms. But since they are all originally from monopoly, they still behave like one. They also produce inferior products.
I guess CHA realized its limitation and is going to invite NTES to form a 3rd party company to develop a product call "翼信" (Wing Letter?).
At this point, it is a rumor. But from all the web sites, it seems to be a highly reliable rumor. If this rumor is true, this can do so much for NTES. Through monopolistic behavior, it could eat into Tencent's WeChat. It give NTES's other products a direct way to mobile users (whether mobile users choose it or not). It also allow NTES access to 162.77 Millions China Telecom's home phone users.
At this point, NTES's presence is largely gaming. It has a very popular internet news portal that it is not really monetizing. If this become real, NTES will instantly become major player in two other areas: social media and mobile internet. It is truly game changing development for NTES.
When this rumor becomes real, I will provide a more detailed write up on this.