Sunday, April 29, 2007

It's the input, stupid!

Google.China announced their newest update on their pinyin Chinese input system today. The version makes input of Chinese characters into the search window even faster and easier.

It is the fourth update in just 25 days.

The controversy between Sohu and Google on Google's using part of Sogou's library is gradually dying down. The new input method is very well received with many users perceived it as better than Sogou's system.

As both hardware and software of computer systems improving rapidly in recent years, the lacking of a convenient Chinese input system has remained probably the biggest time limiting factor for internet users in China.

Baidu continues to stay away from adopting a new input system. But how much longer before it's too late?

We know the fortune of Google is due in large to the user's preference of searching a simple keyword rather than typing in a long url. Google's success is not just based on how relevant their results are but also on how quick the results come out since they take literally no time( a fraction of one second, almost every time).

Baidu must realize this dramatic change in user behavior and act fast.

Q1 Continues To See Search Marketing Surge

Analysys International released Q1, 2007 search marketing data in the Chinese search engine market. Total marketing revenue reached 492 million yuan, up from 476 million yuan from Q4, last year.

Baidu continue to dominant the market with 57% market share and 4% quarter over quarter growth. (last quarter was 58%)

Google also saw rapid growth with 13% quarter over quarter growth and increased it's market share to 18.7% and further distanced itself from third place Yahoo which came in at 13.6%.

Thursday, April 26, 2007

Badiu reported a so so quarter, stock jump after hours

Baidu reported a so so quarter, though earning was more than doubled.

Here is revenue growth table for the last six quarters:

Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07

14.2 16.9 24 30.3 34.8 35.7 49.98
Y/Y 172% 197% 175% 169% 136% 103% Est
Q/Q 29% 18% 41% 25% 15% 2.60%

In the after hours trade, Baidu's stock jumped by about 20% from closing price.

The revenue growth nearly stopped in the latest quarter. Sequential customer addtion was a miserable 3.7% comparing with 5.9% increase from previous quarter.

Brain drains continues after CTO and PR chief, both credited with the Baidu's rise to dominance in Chinese internet market, left the company, COO David Zhu announced decision to leave.

Google is sweeping up the largest Chinese carriers.

Baidu's Japanese operation is nearly grounded at start.

With many cracks appearing in Baidu's fundamentals, why the stock jumped in the after hour trade?

Clearly, investors were heartened by the last item in the table, the projected 40% revenue jump quarter over quarter.

Why Baidu is so confidently projecting such a huge jump in sequential growth? The answer is likely one word: Olympic

In the last month, there are dramatically increased display ads on almost all Baidu properties. The most promised land is now the Baidu News. Though no statistics available in these areas, it is likely that Baidu News is the dominant destination for Chinses internet users. Unlike the ads free Google News, Baidu News shows both display and contextual ads.

My guess is that several Baidu top properties are already overbooked for display ads that came from many large multinationals who are ready for the 2008 Olympic in Beijing. Many travel related businesses are probably ready to tip in too.

A recent quote from a Google rep indicated that Google's China revenue is in tripling pace. The super hot Chinese economy is what really helping Baidu. As a Chinese saying: Rising water lifts the boats.

If Robin Li's team work more deligently and more focused on the Chinese market, with a domestic IPO to raise necessary capital for expansion, the Olympic games in 2008 could make Baidu a real star in the huge Chinese internet market.

Wednesday, April 25, 2007

Google's Carrier Deals Post Challenge to Baidu

After signing up China Mobile, China Netcom, Google struck another deal with China Telecom.

Both the largest mobile and the largest landline carries are now partnering with Google, the threats it poses to Baidu is looming large. A quarter or two later, the market share data could be tipping in Google's favor.

Rather than focusing on dealing with the challenge of Google, Baidu seems to be claiming victory by invading the highly competitive Japanese market.

It looks like a very long road ahead of Robin Li and his team less CTO Liu and PR boss Liang.

Sunday, April 08, 2007

Sohu scored a big coup, Google the winner

Last week, Google released it's Chinese pingying input application which speeds up Chinese entry using standard western English keyboards.

A big controversy erupted immediately with some internet users pointed out the similarity between Google's input system and Sogou's innovative input system. Sogou is Sohu's Chinese search engine.

Some internet post indicated one of Sogou's earlier version had a bug that Sogou later corrected but reappeared in Google's input system. Some also claimed Sogou engineers have intentionally left digital "finger print" in their dictionary and that unlikely coincidence proved Google has in fact copied Sohu's dictionary.

Initially, Google China remained silent for a few days. Sohu must felt a golden opportunity might have slipped away. It can no longer keep quiet. Sohu formally asked Google to stop using it's input system with a threat to sue Google.

Today, Google formally apologized and updated it's input system to rid of the similar mistakes that have appeared in Sogou's input system.

More than two years, Charles Zhang, CEO of Sohu claimed it only took one year for Sogou to overtake Baidu to become the leading Chinese search engine. Time has gone fast and Sogou is working hard to stay even relevant. Sogou's fate has been in quite a parallel like that of the Live Search after Bill Gates and Steve Ballmer vowed to kill Google in six month, or perhaps in a year.

It's easy to see the controversy was no doubt started with the help of Sogou if not somebody directly from Sogou due to the mention of the digital "finger print".

Now Sogou scored a major coup. From now on, there are only two search engines have easy Chinese pingying input system. Sogou the pioneer, and Google the follower. Especially Sogou is leading the fight against Google, not Baidu.

However, the real winner will be Google.

The reasons are: First, this whole controversy is better than anything as a major breaking news that attracts Chinese users to try the Google input system. A Google announcement cannot even imagine to achive this level of publicity.

Secondly, Google did a first, that is to apoligize to a competitor in China. There has been so many dirty fights among Chinese internet players in the last few years. Charles Zhang has been upfront throwing punches onto almost everyone else. Google has not only updated dictionary in two days but also improved it's public image instead.

Now, let's look back at the whole issue. Was Google guilty?

Perhaps Google engineers were lazy, perhaps they were rushing out their system so they copies part of Sogou's dictionary.

Let's look more carefully at the evident "bug" that was in Sogou's dictionary and widely reported as true proof.

"Fenggong" is a famous comedian in China. Sogou's system initially spelled it as "Pinggong" but later corrected it. The initial release of Google's sytem still spelled it as "Pinggong", so Google was caught.

Let's not judge whether Chinese dictionary should be proprietary to a company or not, what we know is that both Sogou's system and Google's system are based statistically on frequencies of word appearances in internet data that they indexed independently and both are likely extensions of "Google Suggest".

The strong evidence of the "bug" seems quite strong to the whole world. However, it's somehow laughable to many Chinese since the comedian's Chinese name can be spelled either as Feng or Ping known as "equivacal word" in English. Perhaps there are many Chinese misspelled his name as "Pinggong" and that misspelling was indexed by both Sogou and Google's crawlers. Can Sogou prove here that the "misspelling" is proprietary to a Sohu engineer?

While since Google admitted to have used other people's dictionary source in its apology to Chinese users and Sohu, no need to defend Google here.

But, Google perhaps has done a great public relationship stunt here. With more people trying out the new input system, they will addict to it and by word of mouth again, Google might just found out a break through point to gain ground on Baidu significantly.

Baidu, beware!

Friday, April 06, 2007

Baidu's migration from Yahoo to Google

Zhang Xianbao published an interesting article on Baidu's success story on his iResearch column. In his article, there are interesting images on Baidu's home page evolution:

Here is Baidu in 2001, pretty much like a home page to an average tech company:

Here in 2002, Baidu is becoming China's Yahoo:

By 2003, Baidu changed it's look and probably it's mind too. Baidu wanted to become China's Google:

By 2005, Baidu found out, to become China's Google, you gotta be looking exactly like the one!

Good Job, Baidu!

Thanks to Xianbao.