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Has Baidu spread itself too thin?
31-Oct-08, 11:00
Baidu's recent unveiling of new offerings including gaming, instant messaging and video sharing begs the question: is the search engine giant ready for such diversification?
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LONNIE HODGE
CEO,
CulturalFish Media
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ADAM SCHOKORA
Manager of China
Edelman Digital |
NING LIU
Senior analyst
BDA |
NO
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MAYBE
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YES
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"In each analysis I’ve read, Baidu has been compared to the industry leader for the service discussed: can Baidu compete against Goliaths in chat like Tencent (QQ) or masters of B2B and C2C services like Alibaba? That critics and competitors even question Baidu’s ability to dominate in these markets only gives credence to Baidu’s strength and potential for any new online service.
That some industry rivals recently blocked Baidu’s ability to index pages on their sites clearly states that rivals consider Baidu’s ventures a threat.
Is Baidu spread too thin? No. The company has a corporate obligation to stockholders to grow, innovate and reward investors with profits. Accordingly it has devoted a sizeable part of its budget to R&D, marketing and the launch of new user services. Any new offering will capture some market share. And for any online advertising platform, an appreciable increase in page views equals more revenues.
Baidu can’t lose, even if it fails to capture top rankings for a product or service."
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"In some ways Baidu is already spread quite thin. Baidu’s product diversification over the past 18 months has introduced everything from IM and personal spaces to mini portal-style pages, foreign market expansion (Japan), and now online TV (UiTV), video (Ku6) and c2c e-commerce. These initiatives seem to have distracted Baidu’s focus from its core product/business: Chinese language search. What the Chinese-language internet still needs is a truly superior search engine. Baidu is best positioned to become that search engine but will only do so if it maintains a certain amount of focus on continuing to improve what it does best.
Google’s diversification mostly came after achieved had a finely tuned core product. Baidu would be better suited to follow a similar strategy with its growth. Ultimately though, I do think making moves into the online TV video space are necessary for Baidu, but are a bit premature at this point. However, c2c ecommerce is too dramatic a departure and will be a mammoth challenge for the company whether it pursues it now or at any time in the future." |
"Baidu’s core business is paid search, but online TV and e-commerce have little relation with it. In the online video sector, Baidu will compete with dozens of dedicated sites in China. Baidu also has to cope with the government’s tightening of this industry. Although Baidu could insert advertisements in video, this business model is still in too early a stage to be accepted by a wider group. No online video site in China, or even in the world, has yet to break even.
Regarding to the new e-commerce platform, I think it is even more difficult for Baidu to get a quick breakthrough. Credibility and user loyalty is very important for an e-commerce site, and Alibaba’s Taobao has spent five years building these. Baidu also lacks a third-party payment tool with a high penetration rate to support the transaction. Baidu could utilise its search engine to lead customers, but how to make them trust and trade on the site is a key issue. As such, Baidu has to devote resources to fight in non-search service sectors that could potentially distract the company and affect the market share of its core search engine product."
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