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SHANGHAI—Google Inc. expects mobile-phone services will
help it overtake Baidu.com Inc. to become China’s
biggest Internet search company as more people in the
nation surf the Web on their handsets instead of
personal computers.
The
number of Chinese consumers searching for information on
their mobile phones may surpass those visiting web sites
on computers by 2009, Google China president Lee Kai-Fu
said in an interview in
Shanghai.
He declined to predict when Google will be bigger than
Baidu in China.
Google
offers search services for subscribers of China Mobile
Ltd., the world’s largest wireless carrier by users, and
growth may increase once a mobile technology that allows
for faster downloads is unveiled. China is expected to
issue licenses for high-speed, or so-called
third-generation, networks before the Beijing Olympics
next August.
“Working
with China Mobile is an advantage’’ for Google, said
Steve Weinstein, an analyst at Pacific Crest Securities
in Portland. “For a company with the resources and money
that Google has, the game is never over.’’
LEE KAI-FU, president of
Google Inc.’s China operations, speaks during an
interview in the Google offices in Shanghai, China, on
Wednesday, August 15, 2007. Google Inc. expects
mobile-phone services will help it overtake Baidu.com
Inc. to become China’s biggest Internet search company
as more people in the nation surf the Web on their
handsets instead of personal computers. -- BLOOMBERG
He rates
shares of both Mountain View, California-based Google
and Baidu “outperform.’’
Beijing-based Baidu, which sells more than twice as many
search-linked Web advertisements in China as Google,
doesn’t have a local mobile partnership. China, the
world’s biggest mobile market, had 501.7 million
mobile-phone users at the end of June, exceeding the
combined population of the European Union, according to
the Ministry of Information Industry. The Asian nation
has four times more mobile subscribers than Internet
users.
China
Mobile and rival China Unicom Ltd. have added a total of
more than 6 million subscribers every month this year,
according to government figures.
Google
introduced services such as online maps and Internet
spreadsheets to attract users. The company plans to
start social-networking services in China similar to
News Corp.’s MySpace web site and Facebook Inc., Lee
said. Google may form partnerships or buy local
companies to reach that goal, he said.
In the
second quarter, Google’s share of the Chinese search
market rose to 23 percent from 19 percent in the first
quarter, while Baidu’s climbed to 58 percent from 57
percent, according to Beijing-based researcher Analysys
International.
China’s
introduction of 3G mobile services will prompt more
users to locate restaurants and stores on their
handsets, Lee said. The country has said it will
introduce 3G services in time for the 2008 Beijing
Olympics, without giving more details.
Although
Baidu doesn’t have a partnership with China Mobile or
China Unicom, the nation’s two largest wireless
carriers, the company in April 2006 agreed with Intel
Corp. to jointly develop search technologies for
handsets.
At the
end of June, China Mobile had 332.4 million subscribers,
greater than the population of the
US.
Sales of
search-linked Web ads in China may surge more than
fourfold to $895 million in 2009 from 2006, according to
Credit Suisse Group estimates. China had 162 million Web
users at the end of June, second only to the US,
according to the government-backed China Network
Information Center. Usage of Google services in China
rose more than 60 percent at the end of June from the
start of January, Lee said.
“China
is among the faster growing markets for Google by
sales,’’ he said, without giving figures. Google on July
19 said second-quarter net sales for the company as a
whole rose 63 percent to $2.72 billion.
By
comparison, Baidu last month posted second-quarter sales
that more than doubled to 401.3 million yuan ($53
million). The company’s forecast for third-quarter
revenue beat analysts’ estimates.
“If
Baidu is going to lose any ground in China, I think more
likely it will be because of something they do instead
of something Google does,’’ said Paul Keung, an analyst
at CIBC World Markets Corp. who rates Google stock
“sector outperform’’ and Baidu “sector perform.’’
Lee
joined Google in July 2005 from Microsoft Corp., where
he led efforts to develop search functions in the
software maker’s Vista operating system. Microsoft sued
Google on claims that hiring Lee broke a noncompete
clause in his contract. A settlement was reached in
December 2005.
To speed
up the introduction of new services, Google aims to add
about 100 engineers annually at its development centers
in Beijing, Shanghai, and Taipei, Lee said. Its
development team in the Greater China region, which
includes the center in Taipei, now has almost 200
engineers and is the company’s biggest outside the US,
he said.
Google
in January 2006 introduced a China site that excludes
information censored by the Chinese government,
including material about the 1989 protests in Tiananmen
Square. That decision was criticized by Amnesty
International and US lawmakers.
“We had
two very distinct choices; either offer more information
and give users a not-so-good experience or offer a
little less information but give users a great
experience,’’ said Lee. “I think the second choice
better satisfies Google’s goal to make information
available to people.’’ |
