Baidu’s Li Puts Personal Bets on Mobile 李彦宏亲自挂帅百度移动部门
Less than 2 months after Baidu’s (Nasdaq: BIDU) founder Robin Li called on his employees to rekindle their “wolf spirit” that made his company great, media are reporting that Li has personally stepped in to take charge of Baidu’s mobile division in a bid to reverse its sinking fortunes. Baidu was once the envy of China’s Internet world, defeating global giant Google (Nasdaq: GOOG) to take the crown as the dominant player in China’s online search market. While it still controls the big majority of China’s online search market, many observers believe the company has become complacent in the last year due to its near-monopoly status in the market.
That complacency would be dangerous even in normal times, but it makes the company look even more vulnerable as it faces strong challenges from smaller rivals like Sohu’s (Nasdaq: SOHU) Sogou search engine and an even more aggressive rival, so.com, launched over the summer by Qihoo 360 (NYSE: QIHU).
As Baidu’s situation looks more tenuous, investors and analysts that once couldn’t get enough of the company’s stock have suddenly started selling their shares and lowering their outlook for the firm. Baidu shares lost more than 50 percent of their value in the second half of last year, though they have staged a small rally in the last few weeks to regain some of that ground.
Still, the combined threats of complacency, new competition and a rapidly softening advertising market were clearly a potent combination that led Li to make his call for the rekindling of Baidu’s “wolf spirit” last year (previous post); now this latest move by Li to personally take charge of his company’s mobile division looks like an extension of his earlier “wolf spirit” mantra.
According to the media reports, Li is personally taking the helm of Baidu’s mobile division with a goal of building up a mobile platform that will eventually create an ecosystem for other companies to develop mobile applications. (Chinese article) Li’s latest comments, which he made at an industry event, don’t really come as much of a surprise, since he has been talking for several years now about the growing importance of the mobile Internet.
Like many of China’s other Internet companies, Baidu has previously developed and launched its own mobile phones, though most of those models have met with limited success What’s more, Baidu’s dominance in search is based on traditional desktop PC searching, and it doesn’t enjoy the same dominance in the mobile area where the field is a bit more balanced and competitive.
Not just Li but just about everyone in China’s Internet recognizes the importance of a strong mobile strategy to their future survival, as growing numbers of Chinese increasingly surf the web from their mobile phones rather than their desktop computers. According to the latest government data, China now has nearly 550 million Internet users, and nearly three quarters of those access the web over mobile devices such as smartphones and tablet PCs.
Against that backdrop, Li’s decision to take direct control of his company’s mobile Internet strategy hardly seems surprising, because the mobile Internet could very well become Baidu’s main business in the next 5-10 years, quickly supplanting its traditional desktop search business. From my perspective, this looks like a smart and necessary move by Li, as Baidu really does need to solidify its presence in the mobile space if it wants to assure its continued domination in China’s online search market.
As to whether this move is coming too late, only the future will tell. I seriously doubt that Baidu will just disappear overnight, and instead the company will probably emerge as one of the dominant players in China’s mobile search market, though perhaps with less than 50 percent market share. Still, its success in the space is far from guaranteed, and Li, drawing on his new “wolf spirit”, needs to stay firmly focused on the area if his company hopes to succeed there.
Bottom line: Robin Li’s decision to personally take charge of Baidu’s mobile search business is a necessary step for the company to compete as Internet use shifts to mobile devices.
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