Chinese search engine specialist Baidu
Let's take a closer look at what prompted the country's Internet search leader to foray into relatively uncharted mobile handset territory.
Baidu's smartphone will be sold at roughly $158 (1,000 yuan) and will be manufactured in association with Foxconn. Its Baidu Cloud software will offer 100 GB of storage and incorporate the company's licensed music and map services, among other applications. Baidu expects the smartphone to be the first of a range of handsets manufactured by other brands that'll also offer its very own operating system in what is a clear move to grab a larger share of the booming Chinese smartphone market. But there is another and perhaps more important reason Baidu has entered into a highly competitive mobile handset scenario.
Searching for cash
According to research firm Analysis International, although Baidu currently enjoys the top position in China with a 35% share of mobile-based search, others, like Tencent Holdings, seem to be breathing down its neck with a 23% share of the total traffic. Keeping that in view, the introduction of a smartphone with a customized operating system will probably deter buyers from switching to other search services while surfing the net from their mobiles. But that still brings up the question: Will Baidu's mobile venture make a significant impact on the already crowded low-end Chinese mobile market? Maybe not.
A crowded mobile market
Bringing out an inexpensive smartphone certainly won't help much as we already have Chinese players such as ZTE and Huawei that leveraged their relationships with wireless carriers to gain an edge in the low-end smartphone segment. At the same time, having customized software may not prove to be a major plus point, either. For instance, the recent launch of its own Linux-based operating software by the Alibaba Group hasn't seemed to meet expectations.
And then there are the other big players to contend with, most importantly Samsung, HTC, and Apple
The Foolish takeaway
Having said all that, Baidu still has a lot of work to do, both in terms of persuading more smartphone makers to use its operating system as well as persuading wireless carriers to offer its devices. And the Baidu Cloud is set to face tough competition from Google's
Don't forget to stay up to speed with the latest on Baidu by adding it to your free stock watchlist.
There is no shortage of companies trying to profit from the current smartphone wave. In this special free report brought to you by The Motley Fool, we highlight one underappreciated company looking to capture massive profits from "Next Trillion Dollar Revolution." Also, to stay up to date on the latest smartphone developments, investors need to stay in the know on one of the market leaders -- Apple. Make sure you have all the facts by picking up a copy of our premium Apple research service to ensure you have the best insight, straight from our top technology analysts.
Keki Fatakia does not hold shares in any of the companies mentioned in this article. The Motley Fool owns shares of Google, Baidu, and China Mobile. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Baidu. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.