Baidu isn't worth the love…

Ever since Google threatened to pull out of the China market back in January, Baidu’s stock price has risen by a lot. As I’m writing this post now, it’s trading over $600 a share. There are even some idiots in the media getting excited over its share price being more than Google’s (and totally forgetting that it’s the market capitalization that determines which is a more valuable company, not the price of a single share).

Give me a break here… When all the fuss over Google’s “exit” from China subsides, Baidu’s share price will go back to normal, too. The current hype over Baidu is non-sense and that really ought to be clear to you.

1. Nothing really changed with Google “leaving.” People can still do their internet search on Google.com. — People in China have been able to access Google.com even after Google officially entered the market and created Google.cn 4 years ago. And even though you still can’t conduct uncensored search (now the GFW is doing the censoring on the Google HK site), it’s not as if Google’s loyal users in China would have to run to Baidu’s site.

The real game changer, of course, is if the Chinese government decided to block access to all of Google’s sites, which it certainly can. If that happens, that’s when Baidu can really grab some of Goog’e's market share in China. But even then Baidu may not have that much to gain…

2. Baidu’s growth potential is fairly limited. — Baidu is already the clear leader in China. No doubt. But it also doesn’t have much of a global business. That means its China business is all it’s got! But outside of China Google is the clear leader (except in certain markets like South Korea, but Baidu would stand no chance in those markets, too). What can Baidu do then? It’s expanded into e-commerce but Taobao is the clear leader in that space. BSP? Sina is the learder. SNS? QQ got that market already. Social games? Again, that’s QQ’s specialty. Yeah… if stock prices are a reflection of people’s expectations on future performance, then people’s expectations on Baidu are definitely misguided by the not-so-real opportunity created by Google’s “exit” from China.

And please, people… Do not see Baidu vs. Google and automatically think China vs. US. Baidu, as you should know, got off the ground in 2000 with American funding. And it is now listed in NASDAQ which means its drawing more capital from non-Chinese investors. So in that regard, Baidu is hardly a Chinese owned company.

Apple vs. Google and my thoughts

There was a very good article in the New York Times about the battle between Apple and Google as the two companies compete in the mobile platform business. It is fierce and it’s said that things are getting personal. Oh, such drama!!!

As everyone knows… Apple is setting industry standards ever since it introduced the iPhone back in 2007. iPhone is enormously popular as people use it to go online and download apps. Before iPhone came into existence, there was not a ecosystem of mobile app developers. Now it’s a big business. Google on the other hand is pushing hard into the market with its Android OS which is licensed to various manufacturing partners, like HTC and Motorola.

Apple’s iPhone (and the upcoming iPad) is all about control! Apple makes the software and hardware and operates iTunes to sell media and apps all by himself. Google on the other hand is all about openness as different companies can take Android and put it on different phones and even tablet computers.

Both companies’ philosophies and strategies go all the way to what they are at the core. Apple is a software company that is quickly moving into the media distribution business. Google is in the advertising business. Apple wants to keep people buying its software and hardware and wants people to consume media through them. Google wants to make sure people continue to use its search engine and a long list of Internet services so it can continue to serve up ads.

Make perfect sense, right?

Except that the two companies wanna achieve their business goals with very very different philosophies on mobile computing. For Apple to succeed, it needs to encourage people to keep downloading songs, videos and apps to their hardware, whether it’s the iPhone, iPad or whatever future products there may be.

Google want to make sure Apple doesn’t further dominate the smartphone business and possibly prevent people from using Google’s services in the cloud.

So there, two very very different visions of the mobile computing future.

I have an iPhone and I love it. Despite its price I think it’s been a good purchase – very much worth the money I paid! But still… if I had to pick side and say which company’s vision I’d agree with more. I’d go with Google’s. As an Internet entrepreneur myself, if I needed to develop a mobile product or service… I’d make a site fitted for a smartphone’s screen and would not wanna bother with making different native apps for different platforms (iPhone OS, Android, Windows Mobile 7 and older, Nokia’s S60 or even Palm’s WebOS).

In fact, someone I know is looking into making a mobile version of his web application. I suggested to him to consider making a mobile site instead of building the apps. He’d only need to do it once and it’d cost a lot less because the site is already there. He’d only need a separate UI for the phones.

Anyway… it’s still early to see what will happen. Apple’s strategies could still evolve if Android eventually eats into its market share. In the meantimes, here are some things to closely monitor:

1, the continuing evolution of the hardware — My main complaint about the mobile web is that the screen is small and inputting data is still not easy enough. But more tablet computers and MIDs are coming out and soon maybe there’s something that could give us a user experience on a mobile device that could rival the one we’re used to on the desktop.

2, the continuing evolution of the Internet browser on these mobile devices — Not only Flash is not supported on neither Android or iPhone OS, when you use your phone to browse the web today, there are still many limitations. These limitations give native apps the advantage as a native app can potentially deliver a better user experience and more functionality. However, if I could run complicated and powerful web apps on my mobile browser, then obviously the need to download native apps is diminished. To this point, you have to wonder if Apple has incentives to continue making the Safari browser better and better.

3, the success of app stores other than iTunes — They are many other mobile app stores out there. It seems everyone runs one these days… Apple, Google, Microsoft, Palm, Samsung, Nokia, etc. etc. Even China Mobile, for crying out load. So far no one can match Apple’s success in selling apps. If other companies can have better success in selling apps, more developers’ resources will be put into making apps. In that sense, it will validate Apple’s vision for a world full of native mobile apps. On the other hand, if no one other than Apple can sell enough apps, then people will have incentives to stand behind Google’s vision. We’ll see…

Soon people will access the web more on their mobile devices. One way or another, this is going to be interesting — expect to see a lot more innovations!

Google vs. China and my thoughts on this matter…

I’m closely following the Google vs. China drama as it’s unfolding in front of our eyes. I’m still trying to digest what all of this will mean to me going forward. Here are a few things I’d like to say about this matter so far:

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People are too quick to judge…

Many factors probably drove Google to make the decision to stop uncensoring their Google.cn website even if it means closing down their Chinese operation. It’s a fair question to ask if Google would as easily make this choice if they were a clear no. 1 in the China market in search. I guess we’ll never know.

And from a business stand point, is this a bad decision to leave a huge market that’s full of opportunities and potential? I’d think so! Even if Google itself called its China revenue “immaterial,” I’d say a lot of companies come to China not for how much it can earn now but for what future growth China can bring. Google executives have no choice to play it down to avoid a huge drop in Google’s share price and to avoid potential shareholder lawsuits. But for sure Google is giving up a lot by leaving.

Anyway, what I know is this… There haven’t been enough facts out in the open. Most of us are on the outside and few people have all the details regarding the hacker attack and what Google has had to deal with in the last 4 years operating in China. That’s why I find it irritating that some people are quick to attack Google’s position that it decided to pull out of China in large part because it didn’t want to censor its search results anymore.

Stop talking like you know what’s going on. You don’t. And let’s wait a little bit before you make up your mind about this one way or another.

Everyone is a loser in this…

Clearly China’s reputation is taking a hit around the world. China’s censorship isn’t new but Google forced the issue into the spotlight. If it can, the Chinese government should hire a large PR firm to generate some good will fast.

And for Google, even with all the people it’s winning over, it is giving up a huge market with huge upside, as I’ve mentioned. It has to be considered a loser, too.

As for Baidu… well, it is probably enjoying the fact that its sales people can start calling Google customers and successfully ask them to switch to Baidu’s ad platform. But overall, a lack of competition is not good for anyone. Baidu may find itself lacking motivation to innovate and actually lose more relevance in the market. After all, this is a company known for its tainted search results.

The biggest losers of all this though are the Chinese Internet users – especially those without the resources or know-how to “climb over” the Great Firewall. They will probably lose not only Google.cn but also Google.com; not to mention all the other Google products and services, like Gmail.

I’m really concerned about the general direction Internet in China is heading…

People have started joking about that Internet in China is fast becoming a national Intranet… It’s becoming harder for people to run Internet-based businesses and the government is placing more limits on what content is allowed. There seems to be all kinds of licenses one would need to get just to get a web site/product/service up online. It’s all very frustrating.

Google said it would have to re-evaluate the feasibility of its China operation. I have to wonder about the same for my own Internet ventures…

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I wonder what will eventually happen. Will either side actually backdown? Will some kind of compromise be reached and both sides can keep face? If not, how fast will Google pull out and how fast will we lose access to all things Google in China?

I guess I will continue to monitor closely.