Baidu: New Player in the Mobile Market

Since few months, a new trend has emerged across the IT sector within China, more and more companies are developing or are planning to release their own mobile phone on the Chinese market. Chinese search engine Baidu, the online games operator Shanda, Korean electronics manufacturer Samsung are all targeting the low cost smartphone market with a price range from 899 to 1999 RMB.

Smartphone: The New Strategy?

For most of these companies, launching a low-cost smartphone isn’t the only goal but a tool that allow them to reach more customers through their services and packages that come along within the mobile.

For example, Baidu’s own phone Changhong H5018 priced at 899 RMB offers customers access a 100 Gb of free personal storage on Baidu Netdrive. The phone is running under Baidu’s Cloud Smart Terminal Platform and uses Baidu’s web applications. Moreover, this Baidu phone directly integrates the search engine possibilities that Baidu is offering to its desktop computer users such as the voice recognition search.

Wang Jin, Baidu Vice-President, recently said in an interview that:

"The Baidu Cloud smart terminal platform can introduce a high-quality mobile surfing experience to users, and more importantly, it will help cut mobile phone manufacturers' costs."

Many analysts said that the release of the phone is seen as a new step to increase their presence in the internet market and secure their leadership in this field. Baidu is currently leading the search engine market in China with almost an 80% market share while Google is second with around 15%.

Frontiers are Becoming Blurry

As new entrants are coming into the mobile market, we can expect to see some reactions from the biggest players such as Huawei, ZTE and Samsung which are already manufacturing phones for other companies.

Samsung has already started the riposte by releasing two new models the S6102E and S6352 priced at 1158 RMB and 1599 RMB respectively. According to Wang Tong, Samsung China’s senior vice-president:

“There is a strong market trend that prompts us to provide lower-price smartphones in China … and I think it’s time now […] We are sure that about one-third of [a predicted 60 million entry-level phones in the market this year] will be produced by Samsung.”

As the high-end smartphones such as the Samsung Galaxy III and the IPhone have been seen as luxury products in a country with an average household income of US$ 5414 (IMF 2011), it comes with no surprise that a lot of manufacturers, IT companies and internet players are willing to grab a pie of the low-cost mobiles market.