Appretice:
this is original english version of post i wrote.
Currently competition in search engine market is heating up. Here is the background.
SMS was a gold mine for portals like sina, sohu, netease, tom, china, thanks god, in past a few years revenue from sms really got portals though the period of internet doom.
However, sms market is saturated now. Furthermore, telecommunication giants are pressing hard on the profit made from dirty sms business and moving to the turf which portals are dominating Recently, Sohu, sina both got one year suspension of their multimedia sms service from china telecom, which resulted that their stock price took a dive, that was a wakeup call. Naturally portals are looking for next “big thing” desperately bearing the threat from telcom in sms market, search engine market seems the one.
Baidu used to be backend search providers for portals,
portals outsourced search serivce to baidu and got result from it. Now portals realize that baidu is their serious competitor down the road, strategically all the portals terminated baidu service a year ago to develop their own search strategy or switched search providers,it makes sense that you are not supposed to fund your competitor.
It is the same move played by us players, yahoo dumped google , msn had been in a rush to get their own search engine in place. Moreover,international heavy weight like yahoo, google had made a move into Chinese search engine market, baidu is facing fierce competition
from domestic players along with international ones.
Here is my analysis. In order to survive, baidu has to position themselves as a destination of search instead of a backed search result provider. Following that strategy,
they need enough traffic as portals have. consequently baidu raised another round of funding to implement market expansion strategy. Hao123 is cheap acquisition,
it is only a few million dollars, next step baidu is going to compete with others head to head. Game is on. even it is not going to make it in the future, this deal probably translates to more bucks on its valuation when it gets acquired later on. interestingly, a few million dollar of
PR can generate that much buzz,i would say it was pretty good , baidu got almost 100 million, hey, they got to spent to somewhere, right ,luckily, he owner of hao123 hit the jackpot, I have to say every dog has its day :- )
