Baidu's Focus On Mobile Will Keep Revenue Up And Qihoo At Bay

| About: Baidu, Inc. (BIDU)

While known to tech junkies and global investors, Baidu (BIDU) is still a bit under the radar to the average Western internet user. However, since the company first came on the radar of American investors in 2007 (as the first Chinese company to get listed on the NASDAQ-100) it's continued to make waves and happy investors in the wake. The innovations have continued as well, with more and more taking notice. For instance, Baidu released its own smartphone a few months ago and now the latest news that has people talking is the release of Baidu Explorer, a mobile browser for Android phones. Besides the fact that the browser should create a large stream of new revenue for Baidu within the Chinese market, the fact that it plans to expand outside Chinese borders should be welcome news to investors, new and old. Baidu has also recently been investing quite bit in cloud computing, a sign that the Chinese tech giant has its eye on the future. It's early, but there could be big things in Baidu's future, and investors would be wise to take notice.

First off, the browser. Dubbed Baidu Explorer, it represents the company's first venture into mobile browsing, an area relatively new itself. Baidu executives claim the browser is 20 percent faster than its competitors - which is only the first of its dynamic selling points. The browser comes with the Baidu search engine already built in, similar to the way Google set up its browser, Chrome. As CNet points out, it's hard to envision the browser not becoming wildly successful in China, especially because more Chinese use the Internet on their phones than on traditional PCs. According to Baidu executive Kaiser Kuo, the new search engine could be a game-changer for Baidu.

"[It is] a very powerful mobile browser, equipped with a state-of-the-art engine that makes it possible to load pages quickly, stream high-definition video and play graphically demanding games," Kuo told the BBC. "We believe that users are very discerning, and they want the best available technologies. We're confident that it will attract many users."

Now obviously a Baidu executive is going to talk up his company's product. It is his job after all. But given the fact that fellow Chinese search engine Qihoo (QIHU) could be hot on its heels, Baidu has been looking for a game-changer like this. It has had enjoyed a relative monopoly over search engines in China, but the arrival of Qihoo means that monopoly could be over. As such, Baidu is going to have to innovate to remain ahead, and one way of doing so is this integration of its engine with its browser. If it catches on like the company thinks it will, it should provide some cushion against encroaching Qihoo, which already has its own browser.

In addition to the mobile browser, Baidu has recently spent a lot of time and money investing in cloud computing. As well as unveiling the new browser, Baidu announced plans to build a billion-dollar cloud computing facility. This, too, represents a focus on mobile, as Baidu plans to provide cloud data storage, as well as cloud-based access to software using its maps services. While details on the cloud computing facility are scarce, including where and when it will be built, the cloud storage is already up and running. Called WangPan (Mandarin for "web disk"), Baidu offers a hefty 15 GB of free storage to its users. If you've followed the American companies string of cloud computing offers, you'll know this number is no small feat - it represents a very significant selling point for Chinese users and, more importantly, large-scale businesses. This big investment into cloud computing should be a welcome sign to investors that Baidu isn't sitting back on its heels and is willing to do what it needs to innovate going forward. Again, though details about the cloud facility are sparse, the fact that the company claims to be sinking $1.6 billion into the project suggests it should be quite significant.

As mentioned earlier, Baidu has the distinction of being the first Chinese company to get on NASDAQ. While it has so far focused on catering to its Chinese audience, investors should look at the mobile browser as a sign that the company is starting to look to expand overseas. A deal with an Egyptian telecommunications company is already in place, and Baidu also has its eyes on Southeast Asia and Brazil in the near future. By early accounts, the new browser is indeed quite impressive, and that combined with the investment into cloud computing suggests good things on the horizon for Baidu and its investors.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: This article was written by a team member of Freedonia Freelance/Freedonia University.