Google Inc (NASDAQ:GOOG) Tumbling From Its Position In China

As per market-watchers, Google Inc(NASDAQ:GOOG) is going down without a trace in China. they are ranking Google at the fourth position in the domestic search market, claiming that the Maps service of the search engine company has toppled to 6^th position after decline of a near double figures fraction.

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The Chocolate Factory had to go through tough times for market share even before its well-publicised post-operation Aurora row with the Chinese officials in the year 2010.

Baidu.com, Inc. (ADR)(NASDAQ:BIDU), a local competitor made the most of the situation when Google had decided to relocate its search services to Hong Kong. The company has been confronted with tough times ever since.

The web giant is now sitting as low as the fourth rank in the Chinese market of search engines in terms of both unique visitors and page hits, with a little more than 4.5%, as per CNZZ’s October reports.

Baidu is way ahead of Google with around 73%, with Chinese web companies like Qihoo and Sogou in between.

It is the rapid rise of Qihoo 360 Technology Co Ltd(NYSE:QIHU) since it burst onto the search scene in the northern summer that has done everything possible to adversely affect Google’s shares. It was a key associate for Google but later it ditched the US search giant from its immensely popular portal site hao.360.cn.

The choice of locating its data centre outside the barriers of China implies Google searches from within the Great Firewall can be unpredictable and inconsistent, with users often experiencing error messages. That is how users have another reason to go local, notwithstanding self-censoring search service providers.

In order to improve the user experience, Google had recently introduced a Communist Part-baiting tool intended to notify users if a search keyword is going to cause censorship and subsequent connection issues.

On the mobile scenario, results from the third quarter as reported by Analysys International, Google Maps dropped from 2^nd to 6^th rank.

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Baidu.com, Inc. (NASDAQ:BIDU) needs to watch out for Qihoo 360 (QIHU)

Baidu.com, Inc. (ADR)(NASDAQ:BIDU), which operates China's largest search engine, will report its third quarter results on Monday.

The general consensus for the results is earnings at $1.28 a share, revenues at $998 million and earnings guidance for the fourth quarter at $1.03 billion.

According to Jiang Zhang writing in Seeking Alpha, investors need to watch out for what recent entrant and competitor Qihoo is doing and mobile monetisation.

U.S.-based Qihoo 360 Technology Co Ltd(NYSE:QIHU) entered the Chinese search engine market in the middle of August and straightaway shook up the market, giving a huge fright to entrenched player, Baidu.

What Qihoo has done to the market can be gauged from the fact in the slightly more than two  months the company has managed to grab a 10 percent share of the search engine market, while the share of Baidu has dipped to 81 percent from 86 percent.

Baidu still remains the market leader and is unlikely to be dethroned any time soon, but there is no doubt that Qihoo is gaining in popularity and Baidu needs to take the threat seriously.

"In my view, Baidu should focus on improving user experience in order to fend off Qihoo," commented Zhang.

Baidu has the first mover advantage of having an advanced search engine and strong user experience. It should build on that lead and ensure that it always stays ahead with more research and innovating on search-related products.

Like Google, Baidu also faces the challenge of improving its ad revenues from mobile ads. At present mobile revenues contribute only about 3 percent of total revenues. It has to use all the methods in its arsenal such as cloud computing, mobile OS, apps and so on to increase mobile monetisation.

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