Online Search: More Growth for Qihoo, Sogou 奇虎360和搜狗继续抢占搜索市场份额
Recent gains in online search by Qihoo 360 (NYSE: QIHU) and Sohu’s (Nasdaq: SOHU) Sogou are in the headlines today, highlighting the challenges industry leader Baidu (Nasdaq: BIDU) is facing from a new rival that is quickly gaining momentum and an older rival that also appears to be gaining some traction. At the center of the story is new data for October showing that Qihoo controlled nearly 10 percent of the China search market, just 3 months after the company launched an innovative new search engine. (previous post) Meantime, Sohu’s Sogou search engine, launched nearly a decade ago, also posted a respectable 7.5 percent share, as it reported its search revenue more than doubled in its latest reporting quarter.
I should start off by saying that I’m just slightly skeptical of this new data, as it comes from a web analysis unit of e-commerce leader Alibaba, which seems to consider Baidu a bitter enemy even though the 2 companies operate in completely different areas of the Internet. But let’s assume that the data is relatively reliable, which means that Qihoo and Sohu now collectively control about 15 percent of the China search market. (English article) Baidu continued to dominate the market with 74 percent share, while the only other significant names on the list were Google (Nasdaq: GOOG) at 5 percent and Tencent’s (HKEx: 700) Soso at 3.5 percent.
Let’s take a look at Sohu first, since the company has provided some new data on Sogou’s revenue in its newly-released second quarter results. (company announcement) Sohu said that Sogou’s revenue doubled in the second quarter to $37 million, and was set to grow a bit more to $40 million in the current quarter, accounting for about 14 percent of total revenue.
By comparison, Baidu’s search revenue was on track to approach the $1 billion mark in the third quarter, meaning Sogou is about 4 percent of Baidu’s size in revenue terms. That’s an interesting comparison, since these October market data figures would indicate that Sohu is about 10 percent of Baidu’s size in terms of market share. Part of the difference obviously lies in the fact that Baidu, as the industry leader, can charge higher prices for its advertising. Still, Sogou’s position may be overstated in this latest data, and perhaps its true market share is probably around 5-6 percent.
There’s less new to say about Qihoo, since the company has yet to report its latest quarterly results. But Qihoo has been making non-stop headlines these last 3 months on the rapid rise of its search engine, which includes some innovative functions such as allowing users to conduct integrated searches of multiple engines and also allowing them to rate their search results.
Qihoo’s shares have rallied sharply on all the hype, and are now up around 50 percent since the end of July. I admit that I like Qihoo’s story, since it’s nice to see someone finally challenge Baidu’s years of dominance in search. I won’t say Qihoo’s stock is overpriced just yet, but it will have to show continued growth in the search business — both in market share and revenue — if it wants to keep its exciting new story alive. If it succeeds, the company could perhaps see some of the explosive growth that Baidu saw in its early days that helped to make it China’s second most valuable Internet company.
Bottom line: New data show that Sogou and Qihoo continue to make gains on search leader Baidu, with Qihoo potentially set to make a serious challenge against Baidu’s years of dominance.
Related postings 相关文章:
