Sohu’s Sogou and Shanda’s Groupon: Barking Up the Wrong Trees

So, now we hear that Sogou, Sohu’s (Nasdaq: SOHU) search engine wannabe, is losing money hand over fist, while Shanda Interactive (Nasdaq: SNDA), which can’t decide exactly what it wants to be, may be mulling a foray into online group buying similar to U.S. phenomenon Groupon. First Sogou, whose Chinese name, which translates to “search dog”, may be closer to the truth than it realizes. Sohu has been trumpeting this venture for five years now, and yet after all that time it has yet to take a significant bite out of the search market, still dominated by Baidu (Nasdaq: BIDU) and lost $27 million last year, even more than its $20 million loss the year before (English article). Meantime, other media reports are saying Shanda has purchased a Web address that translates to “group discount”, leading many to speculate the  comany may be preparing to enter this business. (English article) Come on, guys. Sohu may have made a good move into online games a few years back with Changyou (Nasdaq: CYOU), but it needs to read the writing on the wall with Sogou, which has morphed into a money eating machine. Likewise with Shanda, group buying sites have become the flavor of the day in China, and there’s no indication whatsoever that Shanda has what it takes to compete with Groupon or any other big guns that have launched China group buying sites.