Instead, it needs to turn itself into an unrivalled platform for mobile phone apps. However, being an effective search engine won't make Baidu a natural gateway to the Internet for mobile phone users. Our survey of mobile browsing behaviour in China showed that Baidu has 85% of mobile search penetration in China, and 65% of users would switch their mobile search engine to Baidu,' Citi Research says in a report.

'In our view, Baidu does not lack mobile traffic, but it is unable to monetise it. Jennifer Li, chief financial officer of Baidu, said during the company's recent earnings call that 'mobile offers new opportunities… we may leverage M&A to complement our organic investment… in a timely manner'.Ĭiti Research warns that a 'shopping spree' by Baidu, supported by a recent US$1.2 billion bond issue, might not solve its problems. Analysts also fear that the company, which has 79% of China's online search advertising market and is still hugely profitable, may embark on a string of wasteful acquisitions. Notably, Baidu's local rival Qihoo 360 Technology launched its own search engine in August and had captured 10% of PC traffic by September. Now, some analysts have been comparing Baidu to Yahoo!, which pioneered online search but then lost the field to Google. Mobile phone makers like Nokia and Research in Motion, for instance, have been left in the dust by the likes of Apple and Samsung in a matter of a few years. The technology sector is, of course, notoriously changeable, creating massive companies that are swept away almost as quickly as they appeared. Li himself seemed to admit that Baidu is beset with problems in a leaked memo to the company's 16,000-plus employees, exhorting them to revive the 12-year-old search engine's pioneering 'wolf spirit' or risk extinction. And, some analysts fear there could be more selling to come. Shares in the Chinese search engine have tumbled some 40% from their July 2011 highs amid growing concerns about its ability to dominate the emerging mobile Internet market and cope with competition from new players. IT has been a rough few months for Robin Li, the co-founder and CEO of Baidu.

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