Chinese Internet company Qihoo 360 acknowledges that Baidu will continue to lead China's Internet search market this year, as it works on increasing its market share through its browser and better user experience.
Speaking to ZDNet Asia, Qihoo 360 co-chief financial officer Alex Xu, acknowledged that Baidu will retain its dominance in the Chinese search market in 2013. "Given Baidu's prominence, it will probably still be the biggest search player in the market," he said.
However, Qihoo is not discouraged. Xu said the company's priority is to grow its market share in the new year.
One of its strategies is to introduce users to its search functionality through the Qihoo 360 Secure Browser as it owns a significant market share in China, he said.
Another way for Qihoo to grow its search volume is to provide a better user experience by "safer, cleaner search results" compared with its peers, he said.
Xu said Qihoo managed to change the Chinese search landscape after it introduced its search engine in August 2012. Previously, Baidu dominated the scene while there were other "marginal players", he said. Qihoo's search managed to become no. 2 in search traffic after a month of its launch, the Qihoo executive said.
Qihoo gains foothold in search business
Following Qihoo 360's rise against Baidu last year, Zhang Xi, analyst at iResearch, said the Internet search market share for China will likely remain the same in 2013. She noted that the market share of search traffic volume has been quite stable a few months after Qihoo entered the scene in August.
Zhang said that at the end of 2012, the top 5 players in Chinese Internet search were Baidu, Qihoo 360, Sogou, Google and Soso. Qihoo, which originally started out in the security space followed by the browser space, entered the Internet search market in August 2012. It managed to grab about 10 percent of the search traffic by leveraging its browser's position.
Zhang said Baidu's search traffic dropped in September after Qihoo entry but bounced back in November and has since been stable at around 80 percent. Still, that is still below the market share of 85.5 percent during the third quarter of 2011.
The analyst believes that the decrease in search volume for Baidu was due to users trying out Qihoo's new search function. Some of these users returned to Baidu after testing it for a while, she said.
Zhang noted that the ranking of search companies by revenue differed from search traffic volume. Baidu, Google and Sogou were the top 3 players in revenue, she said. The analyst noted Qihoo was lower in the list because it introduced its search function and monetization efforts later than the others.
Even though Google's search volume share is lower, its revenue is higher up than other players because of the variety of monetization channels including local keyword search, alliance ads, and advertising by Chinese companies targeting the global market, Zhang said.
Search engine alone not enough in China
According to Zhang, Chinese Internet users have similar search behavior as global users. However, portals play a more important role in China as Internet users use them as their point of origin to head to other Web sites rather than through Internet search, she said.
Major Internet search players have their own portals to complement their search engines, for example Baidu with hao123.com, Qihoo with hao360.cn and Sogou with 123.sogou.com. Even Google has 265.com portal in China although it does not have a similar service elsewhere.
Qihoo's Xu explained portals were important for Internet users in China as it simplifies how they are able to find new information. Typing in the Chinese language is more challenging than typing in English, portals present users with a "nicely laid out" Web page with links to popular Internet site or activities, making it more convenient than "just a pure search box", he said.
Sogou CEO Wang Xiaochuan agreed, saying: "In the Chinese Internet scene, search cannot be a single product but needs to be paired with browsers and portals to form a closed ecosystem."
Wang noted that China's Internet content infrastructure is still behind as it lacks authoritative knowledge and question-and-answer (Q&A) Web sites such as Wikipedia and Quora. Thus Internet search engines play the role of integrating content from community-driven Q&A sites such as Baidu Tieba (Baidu Paste Bar) and Baidu Knows.
According to Xu, as mobile Internet gains importance in China, so will mobile search. Thus most search players in the country will be working on mobile search, he said.