Sina Prioritizes Its Mobile Platform To Tap Future Growth
February 28th, 2013 by Trefis :
Sina (NASDAQ:SINA), an online Chinese media company, has prioritized mobile Internet as one of its key future growth areas. The Internet market in China is in the midst of a transitional phase with a rising number of users shifting from personal computers to mobile devices to access the web. As a result, the share of mobile devices in overall Chinese Internet advertising market is estimated to have increased from 4.5% in 2011 to 11.5% by the end of 2015, according to iResearch.  In line with this trend, Sina is witnessing increased usage of Weibo and the Sina portal through mobile devices, and the company expects the share of mobile in Weibo advertising revenues to cross 30% in Q1 2013.
Sina is focusing on the mobile platform to tap this growing market and will invest heavily in its development over the next few years. It recently reorganized its business and prioritized mobile platform for new product development. We feel this strategy will not only fuel Sina’s growth but will also help the company address growing competition from other mobile applications such as WeChat – a mobile messaging application by Tencent. However, we feel this strategy will also present challenges as monetization is tougher on mobile compared to PC on account of a smaller screen.
Shift In The Chinese Internet Market
Chinese consumers are increasingly accessing Internet via mobile. In 2012, 74.5% of total Internet users in China utilized mobile to access the web compared to 69.3% in the previous year.  The rising adoption of smartphones has contributed to this trend. Currently, penetration of 3G smartphones stands at 22% in China, representing a significant opportunity for growth.  As a result, the share of mobile advertising spending in overall Internet advertising in China is estimated to grow from 4.5% in 2011 to 11.5% by the end of 2015. 
In line with the same trend, Sina has witnessed greater access of Weibo and the Sina portal through mobile devices. In December 2012, around 75% of active users utilized a mobile device to access Weibo compared to 69% in June. This has resulted in the growing share of mobile in Weibo’s advertising revenues. While the mobile platform accounted for 15-20% of Weibo advertising revenues in Q3 2012, the share is expected to surpass 30% in Q1 2013. 
Sina Will Focus On Mobile To Drive Its Future Growth
To leverage the growth potential offered by increased mobile Internet usage, Sina plans to focus on mobile platform development over the next few years. Sina recently reorganized its business structure into two segments – Portal and Weibo. Each division includes both mobile and PC product lines, further enhancing the focus on mobile Internet. Sina has also adopted a mobile first strategy wherein it has prioritized mobile platform for any new product development.
We feel these measures will help Sina address growing competition from other mobile applications such as WeChat which recently led to a slowdown in Weibo’s active user base growth from 16% in Q3 2012 to 9% in Q4 2012. Moreover, increased competition also contributed to a slight decline in average time spent by active users on Weibo in Q4.