Here’s Why Baidu Is Acquiring Raven Technologies

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As it focuses on artificial intelligence (AI) as a pillar for growth, Baidu (NASDAQ:BIDU) is strengthening its offerings in the space. The company recently acquired Raven Technologies, a startup from the Microsoft Ventures Accelerator program. Raven Tech is developing a voice-assisted hardware device (Raven H-1) designed for homes, and this technology fits well with Baidu’s strategy of expanding into the “family robots” segment. At CES (Consumer Electronics Show) in Las Vegas earlier this year, the company unveiled its voice-controlled family robot called “Xiaoyu Zaijia,” or “Little Fish”. (Read Here’s How Baidu Could Benefit From Its Foray Into Family Robots). Raven’s voice assistant is comparable to Amazon’s Alexa and supports plugins that allow it to work with other web services. The company already has a mobile voice assistant app called Flow though it has not seen much success in the Chinese market. With voice-based applications becoming the norm, we believe Baidu’s investment in this technology can further its AI initiatives, diversify its revenue streams and drive growth for the company in the long term.

Focusing On Digital Assistants And Smart Speakers

Building a voice-based virtual assistant is challenging in China, given the number of dialects and accents associated with the Mandarin language. However, Baidu is looking to address this challenge and develop a competitive edge in the segment through its investment in AI, including the current acquisition of Raven Technologies. The company’s Deep Speech 2 has superior voice recognition abilities, which should give it an edge in the personal assistant space. While products similar to Amazon’s Echo are now being introduced in China, the aforementioned challenges make it difficult for a foreign player or a local player with limited capabilities to launch an intelligent product. 2017 is being touted as the year of personalization and conversational computing, and Baidu is building capabilities to establish a foothold in the space. While its search services business is the main driver of revenues, Baidu is looking to diversify its revenue sources given the heavy regulation around paid searches in China. Voice-based assistants can not only help the company’s search business but also open up other avenues of revenue generation, given the ubiquity of voice assistants. As this technology takes center stage, Baidu’s recent acquisition should give it an edge in this segment, driving revenues in the long term.

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