Sina sells smartphones to for profitability

Move seen as an attempt to turn micro-blogging service profitable

Sina Weibo, China's answer to Twitter, said on Thursday it will sell smartphones made by Xiaomi Corp, a company that plans to become the Chinese version of Apple Inc.

The move was interpreted as Sina Corp's latest attempt to turn Weibo profitable and fight off the increasing threat from WeChat, a popular voice-messaging application developed by Tencent Holdings Ltd.

Bookings for the phones have been taken, and Sina will start delivering them on Friday.

Sina and Xiaomi are preparing to sell 50,000 units of the Mi-Two smartphones to Weibo account owners. Buyers will be asked to pay through a third-party application developed by Sina.

Although Sina admitted that the payment service is still awaiting approval from the People's Bank of China, the banking regulator, the company decided to put it into commercial use earlier this year.

After years of accumulating user numbers, Sina is "speeding up the pace", said Dong Xu, an analyst with Beijing-based research company Analysys International.

Sina claims Weibo has more than 400 million users globally, and about half of its traffic comes from mobile users.

However, Sina Weibo is facing intense challenges from WeChat, better known as Weixin.

Downloads of WeChat on Android smartphones hit 146 million as of Nov 20, while there were 91 million downloads of Sina Weibo, data from Analysys International showed.

Given the fact that more than 90 percent of the nation's smartphones run the Android system, WeChat is the most popular social networking app in China.

"Sina Weibo is under increasing pressure from WeChat because users are heavily overlapped," said Dong.

On Dec 11, Sina Weibo signed a cooperation deal with AutoNavi Holdings Ltd, China's No 1 navigation provider by market share, to enhance Weibo's strength in the mobile sector. The company pledged to bring more location-based services to mobile users in the coming year.

"We will try more services on Weibo before it can generate profits," Wang Gaofei, vice-president of Sina and general manager of Sina Mobile, told China Daily last week.

Yet directors of Sina are busy answering another question: When will the nation's top micro-blogging platform stop losing money?

Weibo's advertising revenues doubled in the third quarter, compared to the second quarter, said Charles Chao, CEO and chairman of Sina, in a bid to placate investors' impatience.

But Chao did not specify the exact amount of the revenue.

"Sina Weibo is doing fairly well in the advertising and online gaming sectors, but it should look for other profit models," said Dong.

She also suggested that selling smartphones with Xiaomi could be an option for Sina Weibo to boost earnings only if the company is willing to join hands with larger e-commerce websites.

It will be difficult for Sina to operate a self-owned e-commerce platform because it requires heavy investment and long-term market cultivation. A better approach for Sina to choose is teaming up with existing e-commerce providers, Dong said.