Muddy Waters’s survey-based market research estimates that NQ’s actual
share of the China
security app market is 1.4%, versus NQ’s purported approximate share of
approximately 55%.
Based on our research, we estimate that NQ has fewer than 250,000 paying
customers in China,
versus its claim of six million. (This yields revenue of approximately $2.5
million, versus the
$32.2 million NQ purports to generate.) NQ, its competitor QIHU, and some
market research
firms have cited various market share studies that have very different
results. NQ’s latest claims
are that its share of the China security app market is approximately 55%. On
the other hand,
QIHU claims that its market share is 70%.43 We came across research by
iiMedia that shows
NQ’s market share is only 7.2%.44 We set out to settle the question of
which research (if any) is
likely to be accurate by conducting surveys of smart phone owners.
Our research shows that NQ’s China market share claims of approximately 55%
are ludicrous, as
are its claims of having approximately six million paying users. Our surveys
of over 800
respondents from five cities show that NQ’s share of the China mobile
security app market is
only 1.4%. In contrast, Qihoo 360 Technology Co. Ltd. (NASDAQ: QIHU) has 73.
5% market
share in our survey, followed by Tencent Holding Ltd. (HK: 700) at 15.7%,
Kingsoft Corp. Ltd.
(HK: 3888) at 4.9%, and “other” at 3.8%.