Sunday, September 10, 2006

Challenges Facing Baidu Search Engine

1. Baidu is moving towards direct sales. It inevitably cause strain relationship with channel partners. At the same time, Google's entering will certainly expand their channel relationship and expand it's sales force. Some channel partners will turn to embrace Google. This is the first major threat that is challenging Baidu. Above that, more and more Chinese firms are looking at the international market. Google's English search in too powerful for Baidu to match. Though Google's pagerank technology make Google's search quality above that of Baidu's, it's Chinese phrasing technology is still far behind Baidu's. So, there is long way to go for Google to dominant Chinese market and it won't shake Baiud's position in some time.

2. The combination of Yahoo.China and Alibaba have not shown any impact to the Chinese search market. Many of us don't think Yahoo.China will become a threat to Baidu. However, it is unpredictable wheather storms are brewing under the quiet surface. The tight contrl of small enterprises in China by Alibaba, the future trend of e-commerce, Jack Ma's envision of commerce search, as well as the left over influence from 3721 could all combined to form formidable challenge to Baidu. The bottom line is businesses want to see the effect of their advertising spending. The e-commerce portals are perhaps closer to their targeted customers. We'll have to see whether these factors will turn to Alibaba's advantages. It was just known that
Jack Ma intended not to develop further the business of 3721. In yesterday's interview with First Business Daily, Ma admitted for the first time, there was basically no growth after "Ya/Ba" merger. Due to exodus of talents of 3721, Yahoo.China has been very weak or even barely surviving. Ma indicated he would make decison soon on 3721's domain business. So, Yahoo.China will probably not going to pose threat to Baidu in a short term.

3. Sogou's fierce competition is also threatening Baidu. Sogou is trying to boost R&D, and increase index size to surpass that of Baidu. A sudden change in users' taste could give Sogou a chance to surpass Baidu. Sougou is also trying to take advantage of Baidu's poor PR in handling recent layoff of ERP software division. Comparing with Google, Sougou knows more about China. The recent innovative Chinese input system is a perfect showing of Sohu's ambition to be the king of China's search market. However, the new method still requires lots of polishment. Any misstep in small details could ruin their empire. The hardest thing might be how Sougou can achieve the task of changing users' search habit.

4. MSN, supported by Microsoft's operating system, could easily be bundled just like the Internet Explorer. It is clearly a threat to Baidu. Remember 3721 started by software bundling deals. MSN could integrate search with operating system to make it ease and convenient and pose challenges to Baidu.

5. Finally, let's see which one pose the biggest threat to Baidu. In my opinion, none of the above. The biggest threat is actually the not so celebrated SOSO from Tencent. Because Tencent controls the largest group of Chinese internet users, they must be able to figure out a way to make them used to search SOSO. Unfortunately, Tencent's SOSO does not have their own core technology. Their current search results are using Google's. The situation may have been caused by Tencent's neglegiance of search market from the begining. The major reason is that Tencent does not focus on search but Baidu does. Even SOSO has the biggest potential challenging force, from strategic point of view, it is unlikely to shake Baidu's superpower in the Chinese search market.

by Wang Yifei from


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