QQ and the iPhone 3G & 3GS – the penguins are aligned

Today, a day after MMS was finally released for the iPhone in the US (I like the quote “now you can do what you did with your Razr in 2003!”), I was just using the Yahoo Instant Messenger iPhone app (yes, I still have some friends and relatives that hangout there so I go on once and a while begrudgingly), and it got me to thinking about what the iPhone means for IM-focused companies in China.

Although Windows Live Messenger has a strong presence in China, especially for business, QQ is by far the market leader. Let me just qualify what being the leader in China means. At the beginning of the year, QQ had 376 million active registered users (out of a staggering 891M accounts) – or 76 million more users than what Facebook has right now. Out of that, about 150 million updated their profiles on QZone (the QQ social network) and QQ itself had as many as 50 million concurrent IM users (which they claim – quite rightly I’m sure – to be an Internet record). Also, everyday – EVERYDAY – QQ users spend 710 million hours on the service and send 4.2 BILLION messages – and all that time spend is just on PCs, that’s not even counting mobile phones. All of these stats come from Tencent’s (which is the company behind QQ) 2008 year-end report and are certainly higher now.

That rascally be-scarfed QQ penquin

Impressive right? Well, this is only half of the story and the second half of the story is really where I can see the iPhone making an impact. QQ is also a massive gaming network and has nearly perfected virtual currency, something that US gaming companies are salivating to get a piece of. The content and interactivity of games that QQ will be able to build through iPhone apps I think is going to be amazing (note, they already have a QQ IM app for the non-3G iPhone, but 3G speeds allow for much more opportunities).

Oh, yeah, and btw, China has way more mobile phone users than anywhere on the planet. And even though there are tons of smartphones in China (i.e. way more variety than here in the US) that fact remains that the iPhone 3G & 3GS are simply superior to anything out there. Newer Google Android phones may figure into this eventually, esp as Android bundled with some HTC phones which are popular in China, but still, right now, the iPhone rules the day.

So, we’ve got the largest and most used IM platform + the most cell phone users + a highly developed gaming network with virtual currency + the iPhone, which simply dominates and changes markets when it enters = some pretty amazing opportunities for Tencent.

Of course, the iPhone should be a boon to other companies as well, but QQ has quite a lot of advantages that seem just right to go with the iPhone. IM may be dying in the US (thank you Facebook and Twitter) but I can see ways for IM to gain even more traction in China, especially once Apple gets it right and allows for apps to run in the background/always on.

Just one last thing on the iPhone 3G/3GS with MMS – I haven’t even mentioned SMS/MMS usage in China in this post – it has been through the roof for a decade. This is another enormous advantage that the China market has over the US, and I can see a number of iPhone app integrations with SMS/MMS that companies such as QQ can create.

Buy that Tencent stock.