When Baidu first unveiled itself to the US electronic stock exchange association, Nasdaq, one year ago, worldwide investors were drawn to it with immense anticipation for its role in China's rapidly growing, 120-million user Internet industry. And they certainly weren't lead astray - shares rose from $27 to $122.54 on just day-one of trading, eventually hitting a $150-plus price per share last August. Baidu has proven to be one of the top players in Chinese Net stocks on Nasdaq, with a current market capitalization of about $3 billion - and again, that's after just one year.
But it seems that Baidu will have to guard its territory with a keen sense of 'Net-envy'. In June, Google revealed plans to sell off its 2.6% stake in Baidu, an agreement secured long before the Chinese search engine's appearance on Nasdaq. It's not hard to believe, considering that Google, which brought in twenty-five times the takings of China's paid search industry this year, holds a market share of 13% while Baidu holds a whopping 44%. So while Baidu goes on to thrive in this game which is the second largest internet market outside the US, Yahoo! And Google are left playing catch-up.
As you might recall through a recent bigmouthmedia article, Microsoft has just announced plans to promote competition by giving manufacturers and users the ability to set their own software defaults rather than using Microsoft software as standard. The act carries immense implications for the future of the IT industry, and gives each search engine a chance to 'play the field' by competing for default standing among a range of other search engines. This not only widens the industry in a number of ways, but it levels out implications of an unfair internet market-space. It's clear to see how Baidu's tactical deal with Hewlett-Packard stands as a pioneering example of how such aspirations will be fulfilled.
In the meantime, Baidu believes it has more than enough room to heighten margins on paid search, and has even strengthened its standing vastly through alliances with IBM, Intel, and Nokia. So with everything Baidu has in its favour - from the support network and immense following, to the expected 50% annual growth rate over the next three years, it's plain to see that the Chinese search engine is destined to grow out in all directions - and with more than enough room to do so.
