Qihoo, Group Buying Set For 2013 Growth 奇虎360、团购网站明年料增长
As we approach the end of 2012, online search and group buying look like 2 spaces on China’s Internet that could see some big changes in the year ahead and provide some interesting investment opportunities. In the online search space, the new year could well shape up as the one when dominant search engine Baidu (Nasdaq: BIDU) finally received some serious competition from Qihoo 360 (NYSE: QIHU), which is quickly adding important features to its up-and-coming search service launched over the summer. Meantime, the new year could also see the revival of some of the nation’s beleaguered group buying sites, which have spent the past year in a bloody retrenchment that has seen many players either close or merge with rivals. In that space, we’re getting word that 55tuan, one of the former top players, has finally managed to turn a profit after altering its business model.
Let’s start off with a look at Qihoo, whose so.com search service has soared to prominence since its launch over the summer. Qihoo has used a number of tactics to boost the service, including driving traffic to the site through its popular and free computer security software and its web browser. But I’ve been most impressed by a number of innovative features that Qihoo has incorporated into the service, including a function that allows users to integrate searches on several top web sites with a single query.
The last few days have seen Qihoo announce a few more new functions for the service, including an image search tool (English article) and an application for searching from mobile phones. (English article) The photo search isn’t really anything new, as such services are already provided by bigger names like Baidu and Google (Nasdaq: GOOG). Likewise, all the big search engines have also developed various apps and interfaces for mobile search, which is likely to be the wave of the future as more and more people access the Internet over their smartphones.
Based on its short track record in search, I suspect we’ll see Qihoo roll out innovative features for its new photo and mobile products, rather than just repeating what Google and Baidu have already done, in its ongoing drive to differentiate itself from competitors. If its strong initial momentum continues, which looks likely, I wouldn’t be surprised to see Qihoo surpass Google as China’s second largest search engine next year, perhaps taking up to 20 percent of the market by the end of 2013.
Meantime, Chinese media are also citing the chief executive of 55tuan saying his company turned profitable in December, as it shifts its business model from a pure group buying site to a hybrid of group buying and more traditional e-commerce shopping. (Chinese article) 55tuan’s CEO Xu Maodong would only say that his company achieved a profit of “several hundred million yuan” in December, without elaborating. I suspect the profit was probably on an operating basis, and that 55tuan will continue to post losses on a net basis for at least another half year.
But that said, the move to profitability on any basis is a good sign not only for 55tuan, but also for the entire group buying industry. I also like this new hybrid model, which looks more like a traditional e-commerce store with good bargains added to the mix rather than just a pure bargain-selling product. If current trends continue, look for the ongoing group buying consolidation to slow and wrap up in 2013, as more group buying sites become profitable using similar hybrid business models.
Bottom line: 2013 is likely to Qihoo pass Google as China’s second largest search engine, and the wrap up of an ongoing consolidation in the group buying space.
Related postings 相关文章:
