China's Baidu looks to the cloud to tap mobile Internet as rivals rise

Baidu is investing to build a new US$1.6 billion cloud computing center in the country

Chinese search giant Baidu on Monday said it would invest more than US$1.6 billion to build a new cloud computing center, as the company declared the mobile Internet as a major focus of its next phase of growth.

"In our next step, we must flex our muscle in mobile Internet," said Baidu CEO Robin Li in a speech on Monday.

While Baidu declined to reveal further details of its cloud computing investment plans, the company unveiled a set of updated products at its annual Baidu World conference, including a new version of its mobile browser, as well as additional features for its online maps and photo album services, giving demos of them using mobile handsets.

Baidu, although long the undisputed leader in China's PC-based Internet search, can't say the same for the country's mobile Internet space, where growth is booming, but rivals are cementing their own presence.

The company has an 80 percent share of China's PC-based Internet search, but has yet to translate that dominance to mobile search in the country, where its share at the end of last year was 35 percent, according to Beijing-based research firm Analysys International.

At the same time, the company's share of the market for third-party mobile browsers is below one percent. Rival Chinese firms Tencent, and UCWeb, instead control the market with both their shares at around 40 percent.

To compete, Baidu has worked to pre-install its search box on nearly all Android smartphones in China, while also partnering with Apple to put its search as an option on iPhones and iPads sold in the country. The company has also gone as far to develop smartphones installed with Baidu's mobile platform known as Baidu Yi. The company's newest phone, built by Chinese electronics vendor TCL, comes out on Sept. 10.

But despite the efforts, Baidu has come late to China's mobile Internet market, said Sun Peilin, an analyst with Analysys. "They kept focusing on PC-based search, because it was moving so fast. But there was less pressure to focus on mobile," he said. The result of this has left Baidu without a mobile product truly dominate in the Chinese market, Sun said.

Baidu, however, is positioning itself to become a destination for mobile products. On Monday, the company unveiled a set of free tools to developers as a way to encourage them to build apps using Baidu's cloud computing services. Users can now visit Baidu's cloud platform, to access free personal cloud storage or download third-party apps.

Baidu wants their cloud platform to act as entry way for uses to connect with its services, Sun said. "Baidu hopes that people will come to them to search for apps," he added. "Their search is where their advantage is."

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