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CEO of Qihoo 360: “We’re the Catfish of China’s Internet Market”

Last week, while the Worldwide Developer Conference and Apple’s exclusive products have caught the whole world’s attention, Qihoo 360, a Chinese Internet company listed on the New York Stock Exchange (NYSE), unveiled its ambitious strategy on building a cross-value-chain Open Platform, as an opening for the first year of “China Open Internet Conference”.

Qihoo 360, is the third largest Internet company and the No. 1 provider of Internet and mobile security solutions in China, both as measured by active user base. As of February 2011, the Company had 339 million monthly active Internet users representing a user penetration rate of 85.8% in China.

Qihoo 360 painted its vision of the 360 Open Platform as a four-step strategy:
1) Providing free, standardized API access and promotions for partners;
2) Committing to offer a 50-50 revenue share method, which is the highest revenue-sharing rate in the industry.
3) Establishing an Incentive Fund, maximum RMB 100 million for individual developers.
4) Establishing an Application Innovation fund of RMB 1 billion to invest in new startups.

In line with an earlier interview, Hongyi Zhou, Founder of Qihoo, emphasized that the company will fully dedicate itself to an “open” strategy, pledging not to develop any further applications itself, but rather relying upon third party developers.

At the same conference, Qihoo 360 also released the full version of the core product of its open platform—“360 Desktop”, which is considered as a move follows after the recent launch of a desktop application launcher— “Q+” by one of its biggest competitors, Tencent.

In the interview with Sina Tech News, Hongyi Zhou explains 360 Open Platform not as a change on business direction, but an attempt to improve their business model. He described Qihoo 360’s business model as “Freemium”, Free (free) + Premium (value). Qihoo 360 does three things on their own: free security solutions as its core capability, browser and desktop products as the access to the platform, and everything else is for the maximum of open collaboration. The Company monetizes its massive user base primarily through online advertising on its web assets and through Internet value-added services on the open platforms.

Zhou describes Qihoo 360 as “the catfish of China Internet Market”, referring to the “catfish effect”1, where a strong competitor entering the market and causing everyone else to actively make changes to their current, comfortable status quo.

Based on my own “Chinese” user experience, I believe that Qihoo 360 has been practicing a quite different philosophy than its competitors; and it has already brought tremendous impact onto the Chinese Internet market. From a Chinese user’s perspective, I do hope that Qihoo 360 could bring more of these positive changes to the ways companies practice business in China. After all, it is as Hongyi Zhou has stated previously, the China Internet market has produced numerous extremely profitable companies; however, if it stays the way it is now, the kind of companies as google and facebook, who became world-class-leaders just within a short period of time, will never be possible in China.

1. In Norway, live sardines are a few times more expensive than frozen ones. But sardines are very fragile and will die soon while they are being shipped to the dock. A solution found by the fishermen was to put catfishes, the natural enemies of sardines in the trough. Catfishes feed on other fishes. When catfishes were put among the sardines, in order to survive, the sardines would thrash ceaselessly and always stay vigorous. Therefore, when they were shipped to the dock, they were alive and active.

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