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Why is Qihoo in Search?

A lot of attention has been paid to the fact that Qihoo, a company originally known in China for its security software, has been challenging companies in the  Internet field one by one this past year. No press is bad press, but the company continues to look rather silly with the hostile and arrogant behavior it continues to display towards companies such as Xiaomi, Tencent, and Baidu.

The most heated battle of course has been with Baidu. Since August, Qihoo has challenged Baidu in the search engine market with their own proprietary engine. Still, very little attention has been given to investigating the product itself or the quality of its search results…

Short story: Qihoo’s search engine does not compare to Baidu. Honestly, one example would suffice in this case, but I’ll give several. In fact, Qihoo’s engine does not do what any normal search engine SHOULD do: produce relevant results.

While it is easy to look at the marketshare numbers and say that Qihoo is making some headway in China’s search engine market, a comparison of the two products themselves should be made.

For instance, a simple search of the Summer Palace (颐和园), a popular tourist destination in Beijing, produces much less relevant results on Qihoo 360 compared with Baidu, as displayed below (click to view).

Baidu produces information that most people would be looking for, including a description, pictures, and the location of the Summer Palace. Qihoo’s search engine instead produces message board posts and blogs that reference the Summer Palace.

And this is repeatable in several other ways. If I ask the question, “Where is Sanlitun?” the Baidu engine brings up a map and several results explaining the location of Beijing’s famous shopping district, yet Qihoo again brings up nothing but service companies (that, strangely enough, appear to be escort services) in the area that turn up broken links.

If I search the Chinese term for cancer (癌症) Baidu brings up an encyclopedia page and news results right below. On Qihoo, it brings up a blog post on Sina and a post on Tencent’s QZone entitled ‘Why I have cancer?” shown below.

There honestly is no comparison at the moment. This is a reality that investors need to take into account.

While Qihoo has done well in its quarterly financials, the company consistently appears confused about its branding and direction. Clearly they are not satisfied with their browser and security software market positions alone, indicating that there may be some issues monetizing on that end. Qihoo has been questioned for fraud in the past, and somehow this year they have miraculously been able to stay financially stable.

Now that they are branching out to search engines, travel portalsand mobile phones (with models such as the “AK-47” and “Battleship”) it appears that there is no end to the markets that Qihoo’s CEO Zhou Hongyi wants to enter. But are they spreading themselves out thinly? Is this quantity before quality? You tell me.

There is something suspicious about them and the way they attempt to enter every Internet market. Founder of ChinaRAI and regular contributor at TradingFloor.com Fredrik Oqvist gave the following estimation:

“Qihoo appears to be a company that is overreaching and persistently failing to execute. This combination is not something I normally invest in, which is why I’m staying away from the stock. I suspect there may also be some short play possibilities around the time of big announcements etc. from the company, as I believe the market is overestimating the growth potential for the company in the new business areas.” – Fredrik Oqvist

Full disclosure: GWC is loosely affiliated with Xiaomi, which was challenged by Qihoo earlier this year; however, we have no direct connection to Baidu. The views expressed herein are our own.

Source: TradingFloor

 

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