INTERNET: UCWeb Ties With Facebook, Qihoo With Microsoft
Bottom line: UCWeb’s new India tie-up with Facebook looks like a good step that will help its global expansion, while Qihoo’s new Microsoft alliance looks mostly like inconsequential hype.
A couple of new corporate tie-ups are in the headlines today, led by word of a potentially major new alliance between Alibaba-owned (NYSE: BABA) web browser UCWeb and global social networking giant Facebook (Nasdaq: FB). The other tie-up, which looks far less interesting but still potentially significant, and will see security software specialist Qihoo 360 (NYSE: QIHU) work with Microsoft (Nasdaq: MSFT) in advertising services. This second alliance is just the latest in a long recent string for Qihoo, and seems aimed at breathing life into its struggling stock that is being rapidly abandoned by impatient and disappointed investors.
We’ll begin with UCWeb, which has developed a strong reputation as developer of a web browser that many believe can compete in the global arena. The company was repeatedly courted by many of China’s largest Internet companies, and finally settled on a partner when it sold itself to e-commerce leader Alibaba last year. (previous post)
Reports at the time implied a value for UCWeb of more than $1 billion, though the company’s chief said the real figure was much higher. I personally began using UCWeb’s browser late last year, mostly for technical reasons, and can say that the product is quite well designed and easy to use. From a design perspective, it is easily competitive with leading products now in the market like Internet Explorer, Firefox and Chrome.
UCWeb wants to take itself global, and has launched international editions, one of which is at the center of the new tie-up with Facebook. The alliance is relatively limited, involving UCWeb’s browser now being promoted in India. Under the tie-up, Indian Internet users can get real-time Facebook notifications when they surf the web using their UCWeb browsers. (Chinese article) The reports say the tie-up is a first-of-its-kind for Facebook with any web browser.
The move is certainly consistent with Facebook’s recent China blitz, which is being driven by co-founder Mark Zuckerberg’s intense desire to enter the Chinese market. Media reported earlier this week that Facebook previously discussed a potential investment in Chinese smartphone sensation Xiaomi, and the SNS giant also held previous tie-up talks with local search leader Baidu (Nasdaq: BIDU).
This particular tie-up looks good for everyone in a number of ways. I like the choice of India for the experiment, since it’s a less mature market with many similarities to China. If the pairing goes well, UCWeb could also use the partnership to boost its presence in more competitive markets. The tie-up could also help to build ties between Alibaba and Facebook for future collaborations.
Next let’s look at the Qihoo-Microsoft tie-up, which looks mostly like a minor marketing partnership. Description of the alliance is a bit vague, but it appears to involve advertising services provided by both companies. (Chinese article) Such services are the main revenue source for Baidu and global search leader Google (Nasdsaq: GOOG), and both Qihoo and Microsoft are trying to develop similar services to earn money from their own newer search services.
Qihoo is trying desperately to monetize its search service, recently rebranded to Haosou.com from a previous So.com, which has gained about a third of the Chinese market less than 3 years after its launch. Qihoo’s US-listed stock soared last year on high hopes for the search service, with its shares quadrupling at one point from 2013 levels. But the stock has lost more than half of its value since peaking last March, as investors grow impatient over lack of progress in monetizing the business. Microsoft has had similar difficulties with its older Bing search service, and I really don’t see this new tie-up between 2 search aspirants yielding very much result for either.
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