How Mobile is Now Part of Baidu’s Revenue Equation

Baidu's CEO and co-founder, Robin Li, at the recent Baidu World

Baidu (NASDAQ:BIDU) has announced many things over the past two days. For China’s biggest search engine, it’s now all about mobile. And it’s not hard to see why — because eyeballs are shifting from PCs to smartphones in China. Baidu’s main revenue source is advertising, inserted at the top and side of its PC-based search results page.

But with PC internet consumption showing decreasing growth, it is fair to assume that this would also affect Baidu’s revenue. So Baidu’s strong move into mobile is a logical one, following the general trend.

The newly-revamped Baidu mobile browser allows only Baidu search. It is also very supportive of web apps. That is, I think, partly because of the company’s box computing search results which show specially-formatted answers for certain common queries. For example, search for a flight number and you get the flight details laid out in a widget – no need to go off clicking any other links. As an observer, I believe Baidu wants users to be on the web, PC or mobile, for as long as possible – though preferably on Baidu’s own properties. As long as you’re on the web, Baidu has a chance to show you ads and thus generate more revenue.

Besides Baidu’s very useful search engine, maps, music service, online encyclopedia, etc., it now hopes to use web apps to keep users stuck on the web. And native desktop apps clearly can’t play that role.

Baidu can’t be building all these apps by itself. So creating a developer-friendly ecosystem becomes essential. And that is also why Baidu released a whole suite of APIs and services to help developers build their mobile apps. These may or may not be web apps. But at least there’s a fair chance that developers would build web apps to leverage on Baidu’s reach in search and also its mobile browser, if it does become popular.

Here at TechInAsia, we think the mobile strategy looks logical and promising. But we’re somewhat surprised that it took Baidu so long to figure out its mobile strategy. The mobile browser space is packed with competitors locally and internationally. iOS and Android have also somewhat dominated the native app space. Baidu clearly lags in the mobile arena, and I believe it probably has little actual data to monetize mobile users. The re-introduction of mobile browsers and a suite of tools (server solutions especially) for developers will provide Baidu with data on mobile users. And with such data, Baidu will be in a better position to better monetize its mobile platforms.

Some folks may question why Baidu’s mobile browser isn’t on iOS, yet. It could be because China has more Android users. But the main reason, I believe, is that Apple wouldn’t easily allow Baidu’s mobile browser to be listed on its App Store as it tries to steal away users’ time on native apps and gives a chance for Baidu to build its own app store on the mobile web. All in all, the revenue equation for Baidu can be simplified: More time spent on PC and mobile web = more ad revenue, which is what the recent Baidu World announcement was all about.