About this Blog

The purpose of this blog is for my personal use. It serves as my personal diary as I investigate Chinese internet/gaming companies for investment purpose. If you have any comments or disagreement, please give me feedbacks.

Saturday, January 24, 2009

China’s search market survey and BIDU’s 4Q estimate

My previous article on the state of China』s search market can be found here:


The following is a survey for 2008 China』s search market. It is from Analysys International. What is interesting is this is published before any companies published their 4th quarter revenue. Therefore, we can calculate BIDU's revenue estimate based on this survey. One can find the survey in the following:


The following graph list the revenue and year over year growth rate for China』s search market:

From the above graph, the total revenue for 4Q2008 is 1.52577 billions rmb. It had a YoY growth rate of 62.2%.

The next plot has the market share data for all the search engines in China

I will list the data below:

BIDU: 62.2% (was 59.3% in 2007)

Google: 27.8% (was 23.4% in 2007)

Yahoo: 5.8% (was 11% in 2007)

Sogou: 0.9%

Zhongsou: 0.9%

Sina: 0.4%

Ntes: 0.4%

Soso: 0.6%

Others: 1.0%

Now, we are able to calculate the Bidu 4Q2008 revenue.

The total search revenue for 4Q2008 is 1.52577 billion. We have an exchange rate of 6.842 as of today. Bidu's market share is 62.6%. Thus, Bidu's 4Q2008 revenue is 1.52577*0.626/6.842 = 0.13871 = 138.71 millions in US dollars. This is the search revenue. Bidu typically adds 0.2 millions for others. Therefore, the total revenue is 138.73 million for 4Q2008.

The 4Q2007 revenue was 78.3 millions. Therefore, the 4Q2008 revenue of 138.7 millions represents a 77.1% YoY increase.

Yahoo finance site's analysts' estimate for the 4Q2008 is 132.48M. See the following:


Therefore, from this calculation derived from Analysys International's survey, we shall see a nice revenue surprise.

Now, in terms of overall search market, Bidu is doing very well. So is Google. Yahoo is losing ground badly. Everybody is basically at a noise level.

At this point, it is a race between 2 horses. I think the race is almost over. Others are just too far behind to catch up unless there are other factors at work. But I do think that 「other factors」 are going to be online soon.

I think there are two dark horses. One is Tencent's Soso search engine. At this point, soso uses google search. Therefore, Tencent is not pushing this service hard. But Tencent is developing its search engine. Once it is developed, it will be pushed by Tencent's powerful QQ IM service.

Another dark horse is the Sohu's sogou search engine. Sohu didn't push its Sogou search engine during the Olympics because it has a much more powerful weapon at its disposal. That weapon is called Sogou Chinese Input Pinyin method. That weapon is ready now and the battle is starting. I will spend some time talk about this exciting new development.

But other than these two dark horses, I think the search war in China is basically over.


Anonymous said...

Thanks Henri for posting again! Your insights are great. I like Baidu at these levels. I bought Sohu recently and love the browser angle. I guess Sogou search could get a nice boost if their browser is a hit. Baidu is bound to have a browser soon. Also, do you like eLong? Their stock buyback is allowing Expedia to quietly build a larger percentage holding in LONG. New management is executing. Seems to me like eLong gets better overall rankings in the search engines than Ctrip of Qunar.

HenryC said...

Thanks for your kind words. But I don't know much about LONG.


A test for now