Baidu Hikes "Hiers" Happier

According to a ccidNet report(in Chinese), Baidu announced that the capacity of personal album in it's blog service, hi.baidu(also called baidu kongjian or baidu space), to 1GB from 100MB.

The move makes hi.baidu one of the largest personal album service on the web. To make the users (whom are called "hiers") even happier, Baidu also lift up the size limit of single photo upload to 3MB from 500K without need of file compression.

According to Baidu, the number of photos uploaded on to the hi.baidu blog servers are quadrupling of number of posts uploaded. The upgrade is to "better meet users demand".

Since hi.baidu went to live one year ago, the service has undergone 121 upgrades. Many personalized and interactive features were added. Such as kongjian search, people search, newest visitors, and friends online. Baidu also added WAP version to make wireless access much easier.

Earlier this year, Baidu has placed the hi.baidu service on the prominent position on it's home page right underneath the search window. The unusual focus on the blogging service means Baidu intended to make it one of the core services that bounds the communities together around the search engine. The three horses of hi.baidu, post.baidu, and zhidao.baidu services form a solid foundation for Baidu to further explore new models of commercialization.

iResearch Report on Baidu

iResearch analyst Tian Xing today released a research report (in Chinese) on Baidu's strong second quarter result, titled: "Three factors contributed to Baidu's wonderful second quarter result".

According to Baidu's second quarter earning report, revenue totaled 401.3 million yuan ($52.7 million). Year over year growth rate was 109.4% and quarter over qaurter growth rate was 46%. Net income was $18.6 million, an increase of 142.7% over the same period of last year.

Noticeably, there are large increases in two categories: One is the number of active customers jumped to 128,000, an quarter over quarter increase of 14.3%. The other is the average spending(AURP) reached $407.3, an increase of 24.0% quarter over quarter.




iResearch thinks Baidu's seond quarter result benefited from three major factors:

First, the good economic development environment surrounding the Chinese internet

China's special large number of over 30 million small and medium enterprises forms the huge fundamental power base for the commercial application of search engines. More and more businesses are realizing the effectiveness of using Baidu as a marketing platform. Combining with the maturing of the marketing skills of the search engines themselves, the overall environment is promoting the rapid development of search marketing.

Second, successful localized search products increased the traffic

The data from iReseach's iUserTracker indicates, Baidu's traffic increased significantly both from home and office online users. Monthly total visits reached 1.85 billion times, a big increase from first quarter's 1.6 billion. At the same time, time spend per visit also increased to 37 min from first quarter's 30 min. Especially, the two-year old Baidu Zhidao(answers service) is gradually becoming a very sticky online community. During second quarter, visits to Baidu Zhidao reached 400 million, with average visiting time of 13 min, and contribute significantly to the overall traffic.

Third, the beefing up of direct sales force is helping convert potential customers

Baidu continues it's expanding of sales force in several important districts in the last few qaurters. To meet the ever growing demand, the development of sales and customer service teams is helping Baidu winning potential cusotmers. The number of active customers during the second quarter increased to 128,000, 14.3% higher than last quarter.

Overall, iResearch thinks that, besides the good economic environment surrounding the Chinese internet, the major factors mainly coming from the further improvement inside Baidu. Baidu has better localized strategy for China. Whether on gradually releasing products that fits Chinese users' appetite or on further improve it's sales strategy and sales channel that fits the small and medium Chinese cities, Baidu is well focused.

Perfect World Continue to Surge

Perfect World continues it's journey to the west. After jumped 27.5% on it's first day, the stock gained another 25.5% today on Nasdaq stock market.



The educational software maker turned online interactive game creator and operator has faired nicely on two big down days in the US markets.


Additionally, the company's revenue started to ramp up just in the last six months. It was $1.7 million in the Sept. quarter last year, then $6.1 million in the Dec. quarter.

During the March quarter, this year, revenue totaled just over $11 million and was profitable for the first time with about 11 cents per American deposit share. All figures are in US dollars.

Near Perfect World

Perfect World(PWRD) finally made it to Nasdaq today.

Here are our previous coverage of Perfect World.

The IPO of Perfect World did not do nearly as good as Baidu in a major down market. Nonetheless, it still surged 27.5%.

Revisit The Numbers

Back in Sept. 2005, we made a comparison between Baidu and baby Yahoo: Put Numbers in Perspective

Now let's make a new comparison:

As a public company, Yahoo announced it's 10th quarterly financial report on July 8, 1998.

Reveune totaled $41.2 million.

Net Income was $8.1 million.

Baidu has been public for 9 quaters now.

As reported today, Baidu's second quarter results shows:

Revenue totaled $52.7 million.

Net Income was $18.6 million.

Yahoo's market cap reached $15.5 billion at that time before bubbling to almost $180 billion.

Let's see how Baidu's stock will perform.

Preview Baidu's Earnings

Baidu will report second quarter earnings tomorrow. Here is the webcast link.

Baidu estimated revenue for this quarter will be 378 to 388 million yuan.

Yesterday, Analysys International just announced their market data for the second quarter.

Previously, they estimated that Baidu's first quarter was 281 million yuan. Baidu reported actual revenue at 275 million yuan.

As indicated in their analysis, Baidu's second quarter revenue should come in around 382 million yuan. If their analysis will be as accurate as last time, Baidu's should report revenue just above the low end of their estimate, or about 370-380 million yuan.

The only thing might help Baidu out for this quarter could be branding advertisements.

Due to the popularity of zhidao(answers), post(bulletin board), and MP3 services and visibly increased display ads on these service pages, the branding ads could bring significant revenue this quarter. As indicated by Charles Zhang, CEO of Sohu, the money for the 2008 Beijing Olympic Games are coming in super strong.

Hopefully, Robin Li will give us a hint on how valuable the Baidu properties are for the coming 2008 Beijing Olympic Games.

On the latest service release, data.baidu went to live today. The service is similar to Google trend combing with analytics. On top of the list of many rankings, the banks are in dominate position, perhaps indicate it's importance on Baidu's future strategies.

Analysys Data On Second Quarter Search Market

Analysys International published research report on second quarter search market in China.

During second quarter, 2007，total revenue from search engine providers reached 657.5 million yuan. Quater over quarter growth rate increased dramatically to 33.4% comparing with 3.4% recorded in the first quarter.

Market shares were further concentrated into the top players. Baidu's share increased from 57% to 58.1%, gaining 1.1% market share over last quater. At the same time, Google.China continued it's upward move. Google's market share reached 22.8% from 18.7%, a gain of 4.1% in only three months' time.

Olympic Money Are Pouring In, Claims Charles Zhang

Charles Zhang, CEO of Sohu, claimed that Olympic money are pouring in for Sohu.

Sohu spent 100 million yuan to buy the exclusive online rights of 2008 Olympic from the organizer of the games. He said any advertiser who has web advertising products with Olympic theme must go through Sohu and that is why he's seeing the big money are coming to Sohu.

Zhang revealed the trend at a news conference when he annouced the blog focused third generation of portal Sohu 3.0.

Separately, he dismissed the threats from the Olypmic alliance formed recently by almost all the other major portals in China. The alliance is trying to challenge the exclusiveness from the deal between the 2008 Beijing Olympic Organization and Sohu.

China Central Bank Increased Interest Rate

Chinese Central Bank increased interest rate on one-year deposit from 3.06% to 3.33%. At the same, it also cut tax rate on dividend of bank deposits from 20% to 5%.

By the noon time, Shanghai stock market index SSE is up by more than 2.5%.

Annual BaiduWorld Coming Up

Annual Baidu World Conference will be held Aug, 9 in Beijing. The "2007 Baidu World" will be the second time for such conference. Baidu is the largest Chinese search engine. With the largest coverage and influence over the Chinese population, Baidu is changing the way people obtain information through powerful new media, and the change the living style of the population.

Robin Li will deliver a keynote speech. Special guest includes top business leaders from KMG, Nasdaq, Intel, Ericsson, Nokia, as well as world famous economist, and domestic top consultants and analysts.

Chinese Internet Population Reaches 162 Million

July, 18 Beijing

Chinese Internet Network Information Center (CNNIC) released the 20th survey of Chinese internet development. By the end of June, 2007, total internet population in China reached 162 million. Every minute, there are 100 new users joins the internet mass. The total number covers about 12.3% of all Chinese. Broadband access reached 122 million people. There are 44.3 million people accessed internet through mobile phones. The total number of .cn domains passed 6 million and surpassed .com domains for the first time.

Currently, there are 67.1 million PCs connected with internet, an increase of 7.7 million in the last six months. With the lowering of wireless internet access fees, mobile internet access has become a fashion and reached 27.3% in total access. Access through internet cafes reached 37.2% and higher than the number of people who go online at work.

The report also revealed the online usages of Chinese internet users:

News and search - 76.3%
Instant messages - 69.8%
Email - 55.4%
Online music - 68.5%
Online games - 47.0%

However, the usages of living assistance is relatively low. Only 15% of net users search jobs online. 25.5% make online purchases. There are merely 3.9% make online travel reservations. One notable number is that there are almost 20% of internet users trade stocks online following the increased activities in the domestic financial markets.

Student users are reaching 60 million.

5fad.com sued Baidu the 4th time

According to Sina.com report, the online music company 5fad.com again sued Baidu for copyright infringement in Beijing's high court.

5fad.com accused that Baidu had ignored repeated requests from them to take down unauthorized links to songs that 5fad.com owns the copyrights and asked 100 million yuan for damages.

Previously 5fad.com filed lawsuits against Baidu's MP3 service three times and have lost each time.

EMI Music had also filed lawsuits against Baidu before but recently had turned around and agreed to work together with Baidu.

Baidu Joins Netsun to Launch "Business Advertisement s Union"

Netsun, which operates the largest specialty industrial network, chemnet as well as texnet, and pharmnet in China, joined with Baidu to launch the "business advertisements Union".

The combination between one of the largest e-commerce network in China and the largest Chinese search engine is well received by industrial analysts in China.

It is also a cooperation between the largest domestic listed internet company and the biggest Nasdaq listed Chinese internet company.

Shanda courts inventors with Mercedes ride

The fifth China Digital Entertainment Forum currently held in Shanghai. According to a report from Hexun's Wei Zhongkai, in the front gate of the exhibition, there are five brand new luxury Mercedes with doors wide open. Any entrepreneurs with ideas are welcomed to take a ride on the Mercedes to see executives at Shanda.

Shanda's CEO, Mr. Chen promised that any entertainment games with certain number of users and quality that meet Shanda's standard will be awarded 100 million yuan investment from Shanda. Yesterday, there were about 40 people took the rides but no final deals announced yet.

To attract talents, Shanda is also promoting it's "20% plan". The plan will award the core developer team 20% of profit from any new online games.

DCCI: Web Advertising to Reach 7.6 Billion Yuan in 2007

July 9, Beijing

Under the guidance of Internet Society of China, DCCI (Data Center of the Chinese Internet) published market data of Chinese internet for the first half of 2007.

Major findings:

1. Internet market is prospering. During the first half, average monthly personal consumption reached 186 yuan and will be as high as 196 yuan at end of the year. Annual consumption will average 3,641 yuan. With increasing of about 20 million users annually, the yearly total consumption will double that of 2005. First half total consumption came in at 162 billion yuan. Second half total consumption expected to reach 202 billion yuan, more than the total amount recorded in the whole year of 2005.

2. Web advertising performed better than expected. Whole year advertising revenue will reach 7.6 billion yuan. The figure dose not include search advertising. First half online advertising revenue reached 3.27 billion yuan, similar to the total amount of 2005. Year over year growth expected to be about 53%. Previous expectation had been about 50%.

3. Search marketing grew rapidly with huge potential. First half revenue grew almost 73%. Total search market was 1.15 billion yuan and already higher than that of whole year of 2005. Second half revenue expected to take another jump of 35.6% over the first half. Network search advertising estimate to grow 45.8% over the first half and higher than the growth rate of keyword advertising.

4. Online video surpassed TV by 17% and becoming major source of video. The new DCCI data revealed that 77.95% users downloaded video from the internet comparing with 60.59% viewed them on TV.

5. Online video faces fierce competition with unsettled market position. The data surprisingly found that over 70% viewers willing to accept advertising as long as it does not interferes with viewing the videos. The most tolerable length is about 10 second-clips.

6. More challenge than growth is the changing landscape of online advertising. Video ads is already taking off due to innovations from key market players. Second half growth will be as high as 90.5%.

Baidu's Japanese Search Is Taking Off

Only four months ago, 60% of Baidu's Japanese search engine users were actually from China and about one third of them were from Japan.

Today, that ratio has seen a dramatic turnaround. As eNet.com.cn reported, there are over 70% of the Baidu Japanese search engine users coming from Japan with less than 20% coming from China. However, traffic to the site is still only ranked about 517 in Japan.

The most welcome service is Baidu's image search with about 80% visitors which is far greater than the percentages from either Yahoo Japan, or Google Japan.

Yahoo Japan is still the far dominant search engine in Japan with 65% market share and Google Japan has roughly 25% market share.