Morningstar | Transformation to Industrial Internet Will Take Patience for Tencent to Yield Results
We think Tencent has put more focus on cloud and advertising businesses following Tencent’s reorganization. Cloud and Smart Industries Group has been created as a standalone segment for its cloud business and enterprise-facing services such as smart retail. The advertising and sales department under Online Media Group and the social and performance advertising department under Corporate and Development Group (CDG) were merged to form Advertising and Marketing Services within CDG. AMS can provide advertisers integrated advertising solutions and more unified insights of users across Tencent’s social and media products. The Platform and Content Group is a new group to connect traffic from platforms such as QQ, YingYongBao to content services such as Tencent News and Video. Tencent is transforming from consumer Internet to industrial Internet. Tencent’s CEO Pony Ma believes the future of the Internet is utilizing artificial intelligence to process big data in the cloud, this will allow industries to aggregate their data and unlock value in data. Tencent aims to help different industries to connect to consumers through its platforms such as Wechat, which has over 1 billion users. Mini-programs, Official Accounts, and Weixin Pay can facilitate communications between consumers and industries and transactions. For example, in the smart healthcare vertical, patients can find the right medical professionals, register for appointments, conduct video appointments with specialists through Wechat, and patients can settle medical fees using Wechat pay. Tencent can provide AI diagnostic capabilities and Tencent AIMIS applies AI to help doctors in screening and diagnosing polyps. Tencent’s cloud, security and AI capabilities can help hospitals to manage their businesses more efficiently. Tencent has a strong position in social networking, entertainment such as gaming, online video, online music, and is advancing into finance, government, smart retail, and industrial verticals. This transformation will take time, particularly given Tencent has been more of a consumer-facing company in the past.
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