Baidu’s 2016 prognosis would have been good, prior to the world recession finally catching up on China’s momentum. Impressive double-digit growth was the order of the day in the Chinese Silicon Valley. Baidu responded by proliferating a variety of side-shoots such as Baidu Map, Baidu Post Bar, and Baidu Yun Cloud Storage. However, despite its best efforts the search engine is still largely that, notwithstanding a generously optimistic assessment of its stock value by Trefis.
Could Baidu’s 2016 Search Revenue Grow to $19 Billion by 2018?
Trefis certainly seems to think it’s possible, although it does see Baidu’s market share continuing to show slippage, with a sharp fall from 80.4% in 2012 to just 54.0% in 2014. Competitors Qihoo 360 and Sogou largely took up the slack, and have aggressive plans to expand their mobile footprint and monetization from it. Trefis’ optimistic forecast sees Baidu’s 2016 search revenues growing to $19 billion by 2018
However the Trefis low road for Baidu sees little in the way of successful countermeasures against market erosion taking place in 2016. It bases this on a perfect storm in which:
- Qihoo and Sogou continue to expand into the mobile market
- Sogou and Qihoo add to the pressure with aggressive cost-cutting
- The decline in the economy drives smaller businesses to cheaper channels
Trefis Sees Dark Clouds Looming Post Baidu’s 2016
While it is tempting to blame Baidu’s 2016 low road prognosis – and its recent performance – on the shrinkage of the Chinese economy, Qihoo and Sogou appear to be doing better at present. Trefis concludes its assessment by predicting a further slide in Baidu stock value as the economic slowdown contributes to political uncertainty, and hammers consumer confidence down in the shadow of the debt overhang.
In terms of the second infographic, Baidu’s 2016 future and beyond that point is likely to be neither good nor bad, but uncertain, as annual search engine-growth slides from 29% to 20% causing an inevitable squeeze on its core activity.