Saturday, October 22, 2005

Sohu Search's Bleak Future

Time is running out for Charles Zhang.

Less than two months ago, Charles Zhang claimed that "It takes only one year" for Sogou(Sohu's search engine) to surpass Baidu. He has put his money in where his mouth is by bought his own company's shares worth $4 million dollars.

He might be making a big wrong bet.

Two months passed, we have not seen any significant increase in Sougou's traffic or erosion in Baidu's traffic. With Sohu's shares sits near all time low, Zhang's only brilliant strategy is to hold a "Sogou Web Supergirl" contest. Having spent one million yuan to buy the right to hold the web part of the contest, he might hope to rejuvenate his falling stock. Instead, it may not do much at all to his company's long term business.

Sohu has claimed that in the last few days, the interests in the contest has been dramatically increased. Many have criticized Sohu for slow to release instructions of the contest on the web. With the Supergirls still super hot in China, this web contest looks like a disaster waiting to happen due to it's poor organization as well as too close to the Supergirl event.

Let's look at what happened in the US. A few months back, media was having a fanfare talking about how the much improved MSN search engine and Yahoo search engine were going to post major threats to Google. After a few months, what we saw was that Google had added more shares to it's already market commanding shares.

The conclusion is that, for a search engine, internet users demand nothing less than the best. Second best(in Sohu's case, Sogou may be the third or fourth best, though Charles strongly disagrees) is just NOT going to make it.

Unless Baidu, who has followed(or copied, here Robin Li would not agree since he had worked on search and has patent on search well before Googler started) almost exactly paths of Google(such as clean and simple front page, Adwords, Adsense, desktop search) with matched products and services which have comparable quality or even better in some cases.

While Charles Zhang seems does not get it. He is still using the old styled "Overture model" which was easily defeated by Google's Adwords model. And his Sogou isn't providing anything superior that would pull away customers from Baidu. What even worse, the name Sogou is causing confusions with the good brand of Sohu. Conveniently, many Chinese call it "skinny dog" instead of "search dog"(sound alike in Chinese).

The flamboyant(or confident) Charles rumored to have married a teenager who bearly passed legal age three weeks ago though he vaguely denied later. It was also rumored that he had spent millions to buy flowers from South America for his wedding. Not to invade into Charles's private life too much, but it certainly does not look like he is super- focusd on his company's business.

Besides the search engine Sogou, what else can save his sinking ship?

After researched on possible investing in Sohu, We decided to pass.



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