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Businesses China Software The Almighty Buck

Chinese CEO Says "Free" Is the Right Price For Mobile Software 133

Posted by timothy from the sounds-like-a-plan dept.
hackingbear writes Sheng Fu, CEO of Cheetah Mobile, a public Chinese mobile software company you probably haven't heard of, but whose products are among the top downloaded products in Android markets around the world, said that the intense competition of the Chinese market leads to products that can compete globally. Many recent university graduates are working in tech, all with their startups looking to find their place in the market, he said. Chinese companies saw the impact that piracy played in the PC software era, and China's mobile companies grew up knowing they would need to make money without getting consumers to open their wallets. "Chinese companies are so good at making free but high-quality products," he said. Sounds like we have a good race to the bottom.
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Chinese CEO Says "Free" Is the Right Price For Mobile Software More

Chinese CEO Says "Free" Is the Right Price For Mobile Software

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  • Nutshell (Score:4, Funny)

    by binarylarry ( 1338699 ) on Thursday December 04, 2014 @09:52AM (#48522003)

    You must defeat Sheng Fu to stand a chance!

  • Profit? (Score:5, Interesting)

    by link-error ( 143838 ) on Thursday December 04, 2014 @09:53AM (#48522017)
    That only seems to work when the government is paying you to install spyware.

    • Re:Profit? (Score:5, Insightful)

      by Rosyna ( 80334 ) on Thursday December 04, 2014 @10:10AM (#48522121) Homepage

      How are they earning a profit? If the apps are free, where do they get the money? If it's from ads, then that doesn't count as free.

      • Re: (Score:3, Insightful)

        by thaylin ( 555395 )

        How does it not count as free? You can have ads that dont target you, or get any of your information. It could also be micro transactions. Both allow the app to be free while making money on the other side.

        • Re: (Score:3)

          by Rosyna ( 80334 )

          If they have micro transactions (in-app purchases), then it's definitely not free. What kind of in-app purchases would products called, Clean Master, Battery Doctor [cmcm.com], and Photo Grid have, anyways?

          • Re:Profit? (Score:4, Insightful)

            by thaylin ( 555395 ) on Thursday December 04, 2014 @10:28AM (#48522259)

            how does transactions for extras make the base app not free?

            • Precisely!!! People nowadays have a totally wacked out idea of what 'free' is. Particularly in a society where the entitlement mentality exists
              • What exactly is entitlement mentality to you?
                • The idea that people are owed something for nothing. Like people who expect everything in the app store to be free, w/ no paid add-ins, no ads, nothing. In other words, how the provider of those 'free' services would pay their bills is totally inconsequential, and if Android/iOS/Blackberry/WP8/_____ can't provide that, there is something evil about them!

                  • Re: (Score:2)

                    by tibit ( 1762298 )

                    Nope. I merely want a free app to be, well, free. If it has paid-for content, then it's not free, duh. Let's not devalue the word.

                • Why exactly should grandparent owe you an answer?

            • Because usually the app is crippled without those "extras", requiring you to continuously buy more "extras" just to keep enjoying the experience. Compare it to giving someone a "free" car that can only run on massively overpriced gas sold by the manufacturer. That's nice and all, I guess, but means that actually using the car is anything but free.

              • Plants Vs Zombies 2 is free. I haven't paid a dime for it, and yet, I have no issue continuing to play. THere have been many successful games that are free without being "pay to win"

      • Re:Profit? (Score:5, Informative)

        by SourceFrog ( 627014 ) on Thursday December 04, 2014 @11:00AM (#48522481)
        Google pays Android OEMs a percentage of the huge 30% cut it takes from their app store for apps. So by generating intense competition amongst app developers, what Google and the mobile companies (and their OEM partners) are effectively doing is forcing app developers to subsidize the operating system and mobile phone development - most app developers have been driven to such low margins that many are losing money (Google and the OEMs etc. get the lion's share of profits that used to go to software developers, by establishing app stores as effectively a software distribution (middleman) cartel based business model). Sheng Fu seems proud of the fact they've done this - actually it's nothing to be proud of, as it's doing a lot of harm to software developers.

        • Re: (Score:2)

          by maitas ( 98290 )

          Actually if this is as you stated, Google taking the lions share, free apps with advertise is the best way to get money without Google in the middle.

      • Re: (Score:2)

        by dkman ( 863999 )
        Not free as in "without ANY cost", you're being too idealistic.

        The realist definition (if I can say that) is "free to download and use". That allows for ads.
        In-app purchases are certainly not free, but are add-ons or unlock functionality not in the free version.

        However I do sort of agree, when I hear or see that an app is free I always check to see if it has in-app purchases before I bother to download it. Because I don't have an unlimited data plan I also check screenshots for ads, because data isn'

        • I only browse things when I'm near a WiFi hotspot, or doing things offline. For most apps, I've disabled the cellular connection, only a few very essential services get to use my cellular data. Since I pay my ISP a flat rate, the data is very much 'free' in the sense that I'd be paying no less if I didn't access it.

          Otherwise, if I'm at a place where I don't have a WiFi connection, I either use apps offline, or don't use it at all.

          • Re: (Score:2)

            by dkman ( 863999 )
            What phone OS and what do you use to police which apps get to use cellular data?
            • I have 2 phones - an iPhone and a Lumia. On the iPhone, I go into Settings ->Cellular, and then under the applications list, I turn off all the apps I don't wanna use w/o a WiFi. Only ones I have enabled are App Store, Calendar, Civ War, Compass, Vonage Extensions, Maps, Settings and Weather. On Windows Phone, it doesn't have such a fine grained control on each app's access to cellular, so there, I just disable cellular by default, enable it in case I need to if I'm near no WiFi hotspots and must have
      • "Free" as in, you don't pay for the app when you download it. Like how Facebook is "free". They probably have several other revenue streams once the app is downloaded, whether it's advertising or microtransactions.

      • Re: (Score:2)

        by tibit ( 1762298 )

        The way it seems to work is this: The executable is free. The content is billed in $0.99 increments :)

      • 1) Write app
        2) ?
        3) PROFIT!

        Duh,

    • Re:Profit? (Score:5, Insightful)

      by donscarletti ( 569232 ) on Thursday December 04, 2014 @12:19PM (#48523175)

      I'm the CTO in a Chinese technology company. The government has never paid us to install spyware or anything else for that matter. In fact, the government just cares about 1) blood not being too red, 2) gambling not being too overt 3) users not being able to use words equivalent to "fuck" or "cunt" in English, names of prominent politicians or particular terms in reference to disagreements with neighboring countries, 4) characters being in simplified and not traditional script. 5) under 18 not playing video games for more than 4 hours per day.

      Beyond that, they don't give a shit.

      Westerners often revere the Chinese government as being some all knowing all powerful being with a profound understanding of technology and deeply nuanced plans that span decades, roughly in the same way they view their own government. Fact is, the Chinese government is interested in keeping its people more-or-less satisfied with the status quo, just like your own government is. Chinese old people with too much free time to cause trouble get their panties in a knot about sex drugs and violence and "young people these days", so that's what the Chinese authorities crack down on. They simply do not have the time or inclination to be bothered with who you are and what you are doing.

      Think about the last time you interacted with your own government. Did they know who you are? Did they know what your life circumstances were? I'll wager they didn't know shit about who you are and why you were there, nor did they care, they just wanted you to either shut up and go away or pay your tax and go away. Now imagine that level of caring, divide that by 1000, that's how much foreign governments gives a shit about you. Your own government couldn't even be bothered installing spyware on your computer, why would the Chinese government?

      • Re: (Score:3, Interesting)

        by Em Adespoton ( 792954 )

        I'm the CTO in a Chinese technology company. The government has never paid us to install spyware or anything else for that matter. ... Your own government couldn't even be bothered installing spyware on your computer, why would the Chinese government?

        While you make some good points, I've repeatedly had to clean the same state-sponsored spyware off of laptops coming out of China. Now this is probably just done to computers that go through customs "screening" as they could be transporting "something" in and out of the country, but I've also had to deal with situations where foreign companies operating inside China have been required to install state-sponsored spyware on their computer systems.

        You're right -- they don't care about individuals, just like t

    • Re: (Score:2)

      by orasio ( 188021 )

      Why would the Chinese government pay for something western governments get for free?

  • I've been saying that the gold rush for mobile development is ended, but that's been met with derision and unbelief. Cost is always an important factor.

    Beta tapes cost more than VHS: VHS, though inferior, won.
    Early Apple computers cost more than early PCs. PCs won.

    There are plenty more examples where people will settle for cheap over expensive. Apps are just another one - once people are in the habit of not paying for an app, you'd better be in the top 0.1% of apps to justify getting paid.

    • Beta tapes cost more than VHS: VHS, though inferior, won.

      I thought VHS won because of recording time [wikipedia.org]?

      • Re:When you're right, you're right. (Score:4, Insightful)

        by thaylin ( 555395 ) on Thursday December 04, 2014 @10:16AM (#48522167)

        It won because of p0rn

        • [VHS] won because of p0rn

          This is oft-quoted as fact, but I've seen it disputed often enough that I wouldn't take it at face value. From as early as 1996, this thread [google.com] commented that:-

          Um, my family was the first on the block, getting a Sony Betamax in September, 1977, and porn films were readily available as quickly in Beta as in VHS (faster actually, because at the start of sales/rental of pre-recorded video, there were far more Beta titles available than VHS). Trust me. I was a horny little 12 year old at just about the time they became available. I know.

          Even if Sony prohibited porn from being copied in their own commercial duplications facilities (which, I assume, would have had much- if not most- of the capacity in the early days), this doesn't mean the lack of commercial porn would have been the reason for Beta's failure.

          Maybe Betamax *did* fail because of a lack of porn. But I suspect the shorter

    • Re: (Score:1)

      by aliquis ( 678370 )

      Beta tapes cost more than VHS: VHS, though inferior, won.
      Early Apple computers cost more than early PCs. PCs won.

      Now your claim is only that price is important.

      But one point one could make is that:
      * IBM sold it's desktop and server business.
      * Apple has grown a lot.

      It's also visible in the smartphone market where Apple is successful in actually making money from it.

      Also there's examples there the statement isn't true.

      For instance HD-DVD was cheaper than Blu-ray. It didn't win.

      And price is like you say important but doesn't tell what will win in the end.
      For instance TN displays have been waaay more popular than IPS but

      • I am going to nitpick a bit, but the IBM is off point. IBM did not sell off its server line. It sold off it low end commodity server line. It kept the high end line. It about a high end company being in the commodity busses, not about if that line is economically viable – which was the main point.

      • Context. When a VHS recorder originally cost $1,500, there was no way people, given a choice, would pay more than $2,000 for a Betamax.

        Back in those days, a blank tape was ~$35. But as the tape prices came down, people started buying more blank tapes and squirreling them away "to watch later."

        The PS3 came able to play blu-ray included, for less than a stand-alone HD-DVD player; again, price won the war there.

        And todays flatscreen tvs are cheaper than equivalent tube tvs ever were. Again, price wins.

    • It is more complex then that.
      Beta had a shorter recording time and a tight control on what can and cannot be recorded on it.
      PC (At the time they were the IBM and the IBM Compatibles) Offered a larger choice of vendors to choose from, IBM, Compaq, Amstrad, Packard Bell, HP, Gateway. You you could make your own white box. A lot of people actually spent more to make their PC to match the specs of the Apple Products.

      Usually the issue is that the High-Quality product comes with extra bells and whistles that pe

    • I think the market will end up bifurcated.

      For my part, I try to avoid products that are priced free. I've looked at a lot of mobile software, and so much of it that's free is low quality or has a punitive pricing model. Free games with pay-to-play mechanics, for instance, tend to be designed so heavily around monetizing the fun parts of the game that the game isn't fun no matter what you do. These fundamental decisions corrupt the process. By trying to keep fun behind a wall, even the fun parts aren't as go

    • There are plenty more examples where people will settle for cheap over expensive. Apps are just another one - once people are in the habit of not paying for an app, you'd better be in the top 0.1% of apps to justify getting paid.

      And yet I bring to your attention http://apple.slashdot.org/stor... [slashdot.org] -- it seems that there are still enough people willing to pay that an app that does nothing but pretends to be a popular *free* app will still convince people to pay for it.

  • Can somebody direct me to some examples? (Score:5, Insightful)

    by bogaboga ( 793279 ) on Thursday December 04, 2014 @09:58AM (#48522047)

    "Chinese companies are so good at making free but high-quality products," ...

    If these companies are so good, where are some of their "high-quality" products?

  • Android is really NOT free.

    Plain vanilla (and useless) Android is free.

    If you have the Google Play services including the Store and Music, then you are charged to use those.

    In comparison and somewhat ironically, Windows is completely free for devices under 8", including all the services and store. And with new OEMs now pushing that as well (since they made it so Windows can run on exact same Android hardware), perhaps we will see some competition to Android on the OEM side. Or not. Either way, the point is

    • Hmm, interesting. Are all the Windows Store apps free for devices under 8"?

    • In comparison and somewhat ironically, Windows is completely free for devices under 8"

      It's not ironic. Windows has always been very good at giving away copies of Windows in markets it did not think people would pay for them. It just used to be accomplished by simply not caring about, say a billion units of piracy in China.

      Heck, startups still get free copies of most Microsoft software.

    • I haven't paid a cent for Google Play services. I have downloaded dozens of apps, but all were free and I've never given Google any credit card information.

  • Because businesses don't need to make money and development teams don't need to be paid.

    I can't see how his logic works.

  • Free Chinese stuff? (Score:5, Funny)

    by JeffOwl ( 2858633 ) on Thursday December 04, 2014 @11:16AM (#48522611)
    I don't know about spyware, but with apps at least you don't have to worry about lead or melamine.
  • I don't know, but their AntiVirus software looks reliable and trustworthy... http://www.cmcm.com/en-us/cm-s... [cmcm.com]
  • Free mobile apps make money from ads and from freemium sales. These are commercial products and are not open source. Claiming the apps are "free" is good marketing.
  • Nothing is free. I'd rather be upfront, and pay at the front end, instead of having to pay bits later, which usually costs more than the whole.

  • Chinese CEO?

    How'd you like it if a headline said: "American CEO says ..." rather than state which CEO and of which company?

    It's like a headline that says "African man says ..."

    (Yes, yes, I know the summary has the information).

    • It is referencing a man that lives in china, and it is about how mobile app development is viewed there. The geographic region is important as that is what the article is about.

      If the article started off about an African man, and went on to talk about his experience as it relates to being from Africa, then the headline is correct.

  • Or as the rest of us like to say, stolen apps.

  • I don't have enough time to really dig into this, but a couple of different things might be going on here.

    1) They may offer reduced functionality apps for free and you can pay to get more features. Nothing unusual there.
    2) They have a business product line and I'm guessing that none of that is free, so it may be that individuals use their stuff for free and businesses pay.

    It could also be that they are insanely managed and they're giving the store away to just get customers using them, but they
    • Advertising and microtransactions are what rule the mobile world. You download soething free, and you are going to see some type of advertising, or be offered some type of premium item while you play.

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