A couple of weeks back, leading Chinese search engine, Baidu, unveiled its Foxconn-made smartphone which is powered by its proprietary OS called Cloud. Priced at just $160 – about five times less than the cost of an iPhone in China – it surely will be interesting to follow how Chinese consumers are going to receive the product.
Past years’ astonishing internet growth rates overall seem to have reached a plateau in China, and as a consequence, the continuous growth of Baidu within the borders of its home country now largely depends on expanding its product/service portfolio to engage with Chinese consumers on multiple platforms.
Baidu’s launch of its own smartphone is a direct response to this, yet its entry into the Chinese smartphone market poses several questions with the most prevalent being: Will it succeed?
Here are a few pros and cons:
- Baidu nearly monopolises the Chinese desktop search market with an 85 percent market share and will continue its dominance for the foreseeable future. Having its own products built-in as default apps, i.e. Baidu search, maps etc., might very well prove a key differentiator likely to appeal to many Chinese consumers, as they are already familiar with these products.
- In continuation, using a cloud platform will give Baidu smartphone owners instant access to already existing desktop projects and allow for easy sharing across devices. Furthermore, Google Drive’s and iCloud’s 5GB of storage are severely dwarfed by Baidu’s massive 100GB. Down the road, this could potentially prove vital in retaining customers as the hurdles of switching to other smartphone brands become too significant.
- Combining Baidu’s strong reputation in China with its aggressive low-priced market penetration strategy will likely give the company an edge on its competitors in the lower-end market.
- As a newcomer to the ever evolving smartphone industry, Baidu is short on experience compared to its competitors. The Chinese search giant simply does not have the knowhow that already well-established smartphone brands have.
- Along the same lines, Emerging Money argues that research and development, which is one of the most important factors for developing smartphones, will remain the biggest challenge to overcome for Baidu. To support this statement, EM notes that Baidu’s R&D expenses amounted to $69 million in Q1 2012, as compared to Google’s and Apple’s whopping $1.44 billion and $841 million, respectively.
Whether Baidu will succeed in the competitive Chinese smartphone market remains to be seen – what is your take?
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