Baidu (BIDU) may not be a known name to internet surfers in other parts of the world, but it is actually a torch-bearer when it comes to the global stock market. Of course, it has also been a top contributor to China's market, particularly in the search engine market and online industry.
Baidu provides search engine solutions for China. Having been launched later than Google (GOOG), it is easy to notice that Baidu has several search engine products similar to Google. Examples of similar added services are image search, video search, map search, and others, apart from the usual web search page.
As of October 2011, Baidu has beaten Google's market share in China by a large margin. During that time, Baidu's market share was around 77%, in comparison to Google's 18% share. In my opinion, this continuous growth market is due to different factors that contribute to its market share success.
More people using Baidu in China
Looking at population alone is enough to indicate that China has high population of potential internet surfers throughout the world. On a report posted at Technode, China Internet Network Information Center or CNNIC presented a statistical report of internet-user population in 2011. The study indicates that around 490 million people use the internet in the country through online searching, blogs, online music, and others.
In my opinion, Baidu has served internet users better in terms of their online search needs. If you will look closely at services provided by Baidu, it's noticeable how they have searches for patent and other personal searches like searching for seniors. I think this is a good way of leveraging the company's competitiveness in the online market. Many people look for websites, particularly search engines, that they can personalize based on what they actually need.
Entertainment is also another factor that makes it more successful and thus getting this market share in the industry. Apart from being able to download music online, it also created the application open platform, which makes applications simpler to use for many users particularly those who would like to check them immediately.
By looking at how Baidu provided services to people, I agree with how Baidu and Google services have diverged to meet different market needs. However, I found Baidu services to be useful for more people and thus increasing the number of users within the country.
Future partnerships with other companies
Future partnerships or investments are vital for companies. In my opinion, having future investments with other companies especially if they are among the top names in the industry provides two benefits. One is the fact that they will get more market value and gain the trust of its clients and investors. The other factor is the fact that it can provide better services to regular consumers.
Perhaps the most recent, notable rumored project that involves Baidu is the possibility of working with Apple (AAPL). The iPhone has been released in China and is gaining good reception as more people purchase it for their mobile phone needs. Since this phone is sold in China, Apple is thinking of making Baidu the primary search engine page on the mobile phone. Currently, the default search page placed on this mobile phone is Google.
In my opinion, having Baidu search engine on iPhone sold in China is something beneficial for Apple. Many Chinese will find this move more helpful for them in doing mobile searches. Some individuals are more comfortable searching online using their native language and it's possible by using Baidu on mobile phones like iPhone. There's a high chance of increasing Apple's sales on mobile phones as well as its tablet solutions, attracting buyers to get products utilizing search engines using their own language.
Although this news is just a rumor revolving around the business industry, I am positive in terms of the benefits it may bring to Baidu. However, the next question is whether which company will benefit more from doing so. Both companies will benefit, yes, but who will get the best advantage this partnership would bring.
On a report posted at Seeking Alpha, it indicated that Baidu would get more benefit in doing this partnership. I am in agreement with this opinion as it would increase iPhone users in China who will use Baidu instead of the default Google page. It is true that Apple may have increased sales, but compare it to the number of people who purchased iPhones before who will just switch to Baidu, bringing more traffic for the website. This will definitely increase on its usage, which will result to income and market value growth.
A reliable name in the market
A company's reliability is important when it comes to dealing with investors. Being a known company with stable stock market growth in the industry, it is undoubtedly possible that it will get more positive reception from top investors. In fact, Ken Fisher, founder of Fisher Investments, indicated that Baidu is the top company on his investment list. I understand why it has been on top of his list because of Baidu's market competitiveness in a stable manner. By looking at the charts and market competition, I should say that it is a very good company to invest in.
Of course, it does not mean that Google and Baidu are the only search engine providers in China. Yahoo! (YHOO) and Sogou.com, a search engine service owned by SOHU (SOHU), are also known within the country. They have plays in the market, but Baidu still presents an unrivaled name when it comes to this service.
Looking at the statistics and the potential partnership with iPhone, I believe the developments will fetch Baidu a higher market value - and will provide more gains for its investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.