HONG KONG - Easou.com, a little-known company that helps mobile-phone users
search the Internet, is proving an unexpected winner over search giant Baidu as
increasing numbers of Chinese people take advantage of the introduction of
high-speed 3G connectibility throughout the country.
Baidu, the country's largest Internet search company, outmuscled global search
leader Google in the battle to attract Chinese computer users over the past
decade. It would appear the natural choice of people now trying to find
information on the Internet over their mobile phones. Yet Shenzhen-based Easou
has double Baidu's volume in terms of mobile traffic, according to an internal
report from China Mobile, the country's leading mobile-phone operator.
China Mobile has about 70% of the mobile-phone market, and its
users are more active in using data services, such as messaging (SMS and MMS)
and accessing the Internet, than customers of the other two operators, China
Unicom and China Telecom, according to industry insiders.
The traffic generated by those customers is soaring along with the growing
mobile Internet access. The number of mobile Internet users surged 106% last
year to 233 million in January 2010, the China Internet Network Information
Center (CNNIC) estimates. In the 12 months to February, traffic using Wireless
Application Protocol (WAP) via China Mobile rose almost as fast - by 96%. Most
use of WAP involves accessing the Internet from a mobile phone or from personal
digital assistants (PDA) - or palmtop computers.
The China Mobile survey gauged WAP traffic in five major districts or provinces
- in Guangdong, Jiangsu, Fujian, Shanghai and Henan. Instant messaging - and
big name outfits such as Tencent, the largest Chinese Internet company -
dominated the survey results, with web browser use and data-gobbling video also
to the fore. [1]
But when it came to Internet search, relative newcomer Easou topped the list,
with 2.11% of WAP traffic, ranking it sixth overall, while rival Baidu trailed
in at ninth place overall with 1.17% of WAP traffic.
"We are more successful than Baidu because we are dedicated to mobile search,
and we have been developing the market from early on," said Easou chief
executive Frank Wang, who founded the company in March 2005 after selling his
first venture, WAP data services provider Power Genius Holdings, to a Japanese
company.
Baidu was founded in 1999 as a Chinese-language search engine and dominated the
country's search engine market by 2006, with a 53% share, according to market
research firm Analysys International. Now with more than 6,000 employees, it
was not until last year that it started seriously developing its mobile search
by signing deals with mobile operators China Unicom and China Telecom to be
their mobile search partner.
Easou has 200 staff, with headquarters in Shenzhen, and a research and
development center in Beijing, near the Zhongguancun area that has come to be
known as China's Silicon Valley and is the base for Baidu and other Internet
leaders such as Sina and Sohu.
Compared with the clean interface presented by Baidu, which just shows a search
box, Easou provides more choice for users, with lists of popular search
categories such as weather, train information, and others. "It is much more
difficult to type words with a mobile phone. Therefore, we list out many of the
most popular search topics, so users can just access the information with one
click," said Wang.
Other tricks are deployed to improve the quality of the product. Easou screens
out information on software downloads, online games, and so forth because in
Wang's view this information, while popular among PC Internet users, cannot be
used on a mobile phone - so the company will not list them in the search
results.
"Frank Wang has a good understanding on the preference and the behavior of
Chinese mobile users," said Frank Lu, a partner of iD Techventures, a venture
capital firm with offices in Taiwan and mainland China. Lu backed Wang's early
ventures and also Easou, which so far has raised more than US$17 million. Other
investors include AXA Private Equity.
While Baidu and Google have partnered with mobile operators to promote their
mobile search - Google with China Mobile - Easou mostly relies on word-of-mouth
to spread its use among mobile phone users, said Wang. Even so, the company
also benefits from being one of the providers of mobile search for Sohu,
China's second-largest online portal, and Taobao, the country's largest online
auction market.
Easou, which attracted 40 million unique visitors last year, at present has
about five to six million visitors doing a total of 50-60 million search
queries a day. That is pulling in advertisers, with 5,000 small and
medium-sized companies buying keywords on Easou to reach their customers.
Larger outfits, including Kraft, Samsung, Nokia, Intel and Nissan, have also
tried out its services.
More than half Easou's 100 million yuan (US$14 million) in revenue last year
came from advertisers, said Wang, with the rest from selling value-added
services such as ringtones and mobile games. Total revenue this year could
climb to between 120 million yuan and 150 million yuan, with more than 60% from
advertisers. Even then, it will still be two or more years before for the
mobile search advertising market really takes off, he said.
"Many advertisers are still testing the market. They don't know how to use the
new media yet," said Wang. He forecasts the market will grow rapidly to 2012,
when more people use mobile Internet and increasing numbers of advertisers will
be willing to commit resources to the sector.
Industry insiders believe that at present only half the more than 200 million
people who can access mobile Internet do so on a regular basis, while
advertisers are not yet ready to seriously advertise on mobile phones. "I have
heard some clients are testing. But none of our clients are testing that we
know of," said T R Harrington, CEO of Darwin Marketing, a Shanghai-based search
marketing firm whose clients include HSBC, Nokia, Dell, and eBay. "I believe
that relative to Internet advertising, mobile advertising is quite a small
percentage."
Although Darwin helps its clients promote their products and services by buying
keywords on search engines such as Baidu and Google, it has not yet tried Baidu
or Google's mobile search.
With the potential for mobile search still largely untapped, other companies
are hot on the tail of Easau, Baidu and Google.
Among them, Beijing-based Yicha, founded in 2004 by Liu Bin, a Tsinghua
graduate, and Masahiro Irie, a former venture capitalist. The company, which
also provides mobile search in Japan, provides mobile search for Internet giant
Tencent, which has provided it with financial backing, according to industry
insiders.
Punters looking for the eventual market winner might also care to take note of
mInfo. Although founded as recently as 2005 in Shanghai by Alvin Wang Graylin,
who earlier gained experience with two technology startups in the US, mInfo has
already shown it can run with the best of them - the company was selected as
the official mobile search provider for the 2008 Beijing Olympics.
Note
1. The China Mobile WAP survey found that about 25% of traffic came from Mobile
QQ, a messaging service offered by Tencent. That was followed by UCweb (6%), a
mobile web browser offered by Guangzhou company UC Mobile Ltd, whose video site
also came into the top three, with 4.79% of traffic. China Mobile's own
Internet portal, Monternet, followed with 4.16%.
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