Baidu’s Mobile OS “Yi” Will Have to Battle Android for China Market Share

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Baidu (NASDAQ:BIDU) is the “Google of China” given the 75% market share dominance it has over the Chinese search market. [1] Now, with the launch of its mobile OS Yi drawing close, Baidu is looking to mirror the success of Google’s (NASDAQ:GOOG) Android platform. However, while Google has tiny amount of search market share in China, it does have a stronghold over the mobile OS market with +40% market share . [2]

See our full analysis for Baidu

Baidu’s USP: Price Penetration and High Relevance to Chinese Users

According to recent reports, the Biadu-enabled phone (powered by Dell) would be available at around 3,000 RmB, which is a competitive price compared to other high-end smartphone players in China. This could place Baidu as the connecting link between expensive/branded smartphones and cheaper/local smartphone models. [3]

Source: Seeking Alpha

The other advantage of the Yi lies in its deep connect with Chinese mobile usage trends. While the Yi interface is modeled on top of  Android, switching to the Yi is not expected to be that difficult for users. Additionally, Baidu hopes to leverage its popularity with the Chinese user base, who might not get language-specific search results on other platforms effectively. The mobile OS could also act as a better platform for China-based content developers, including apps, music and books.

This essentially means that all of Baidu’s China-specific products will be more easily available on the Yi, such as the music service “Ting” and the Baidu Encyclopedia. [4]

We have a revised price estimate of around $140 for Baidu’s stock, which is in line with the current market price.

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Notes:
  1. Wall Street Journal: Google’s China market Share Down in 2Q, Baidu’s Up []
  2. Techrice: The Staggering Stats of China’s Mobile Sector []
  3. Seeking Alpha: Baidu Yi Heats Up China’s Mobile OS Market []
  4. Baidu to Launch Ting: a legal music streaming and download service in China []