Here’s Why Baidu Is Strengthening Its Cloud Computing Offering

Baidu (NASDAQ:BIDU) is increasing its focus on its cloud computing services, as its core search advertising business adjusts to the new Chinese regulations. The company is introducing new artificial intelligence (AI) and big data offerings for business customers who use Baidu Open Cloud in China. Baidu recently announced three new platforms which will offer users big data services, video and image processing services (such as live streaming and video on demand), and smart IoT (Internet of Things) services for users in industries such as energy, retail and logistics. The cloud computing market in China is at a nascent stage but is expected to grow at a CAGR (compounded annual growth rate) of 40% from around $ 1.5 billion in 2013 to nearly $ 20 billion by 2020.  We believe this focus on the cloud computing segment can enable Baidu to diversify its revenue stream and build a strong competitive edge as global players look at ways to enter this highly regulated market.

See our complete analysis of Baidu here

Building A Competitive Edge

Chinese regulations prohibit the entry of global players in its cloud computing market, making Alibaba, Tencent and Baidu the three main competitors in this space. With its latest enhancements, Baidu is positioning its expertise in artificial intelligence as the key differentiator in its big data offerings. Its latest smart big data platform provides several built in solutions targeting verticals such as healthcare, marketing and finance.  The IoT platform enables clients to build IoT applications and run their business platforms in a one-stop and cost effective way. These additional features bring Baidu’s open cloud platform in line with global cloud providers such as Amazon Web Services and Microsoft Azure.

While cloud computing is just taking off in China, companies need to ensure that their offerings are attractive to build a strong user base. Global players are looking at several ways to enter the highly regulated, high growth Chinese market. Dell launched a local start-up to sell cloud services to small and medium businesses in China, while committing to invest $125 billion in China over the next five years.  Amazon and Google are also reportedly looking at partners to enter the Chinese cloud market. While competition is likely to get tough in this space in the long term, with several players looking to grab a slice in this growing pie, Baidu’s focus on its cloud computing segment can make its position strong. Providing features in line with global players will allow the company to capture a higher market share in the region and give it a competitive edge over other players.

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