Google is in the smartphone business, why shouldn't China's leading search engine get in the game? Today it has: Baidu just unveiled its first partnership that gets it into China's booming low-cost mobile market.
Changhong's (长红) H5018 is powered by the Baidu Cloud Smart Terminal platform, offers a 3.5 inch touchscreen, 3G connectivity, and a 3 megapixel camera. The phone will also come with 100 gigabytes of free storage in Baidu's cloud.
The whole thing will cost less than 1,000 yuan ($160). Just what kind of dent is Baidu's low-cost high-feature phone about to make in China and should others (cough—Apple—cough) be worried?
In addition to Baidu, manufacturer Changhong enlisted a couple heavy hitting partners for its handsome, neon H5018. On the service end is China Unicom which is well regarded for its 3G speeds. On the manufacturing end creating the H5018's sturdy unibody, Baidu has Foxconn. Maybe you've heard of them. Not only is Baidu working with Apple's manufacturing expert, Foxconn, but it's also with China Unicom, which was just enlisted by Apple for the rollout of the iPhone 4S in China.
But the buzz is all about Baidu and its operating platform. From Baidu's press release:
"The Baidu Cloud Smart terminal platform is a crucial step in Baidu’s overall Cloud strategy in the mobile Internet sphere. It is not only meant to create a high quality, smart mobile experience for users, but also, more importantly, it will significantly lower manufacturing costs for many mobile manufacturers and cooperating partners. Baidu is joining hands with hardware vendors, terminal manufacturers, developers and others in the industry so that everyone along the whole value chain is a winner.”
The phone will hit the market in "the very near future" and signals that Baidu is doing in China what Google is attempting to do in the US. (The Changhong is not Baidu's first foray into the mobile marketplace; earlier this year, Baidu partnered with Dell to release the Streak Pro D43.) Baidu's cloud-based phone for China comes on the heels of the revelation that the "Great Firewall of China" was blocking Google's similar could-based "drive" functionality.
The question now is, how (if) the H5018 will impact Apple's iPhone when it comes to the voice recognition features. Famously, the iPhone's lauded Siri voice function does not support Mandarin. Baidu's voice search is all Mandarin. For now, Baidu has no plans to add English, or even focus on the US market. Baidu and Changhone's phone will however offer, in additon to Madarin voice, a handwriting input feature, one of the iPhone's great draws.
What Baidu aims to do is offer what Chinese users want in a Chinese user environment. And there is certainly an opening for providing that experience. Writing in the Harvard Business Review recently, Thunderbird School of Global Management assistant professor Nathan Washburn noted that Apple's boomig China market is amazing considering "Chinese users are cobbling together an iPhone experience from a variety of sources, and the overall experience is not very good."
Naturally, Changhong and Baidu aren't the only brands focusing on the low-priced high-feature competitive smartphone market.
On the same day of Baidu's announcement, the top trending term on microblog Weibo was "小米手机青春版" heralding the May 18th launch of Xiaomi's "youth" handset. The characteristic that made it "youthful?" A 1,499 yuan ($240) price tag. Xiaomi's unit will be limited to a special edition number of 150,000. While the Xiaomi phone may tickle the Changhong's price range and offer a great camera, storage and batery, it still doesn't offer the Baidu-powered cloud platform. But the message is clear for Chinese sonsumers: Expect more for less.
The iPhone is likely to remain the status symbol device, but at 1,000 yuan, it's very possible many Chinese consumers will simply not be able to ignore the number of features at that price point. Until now, the Baidu platform was out of reach at the bottom end of the market, with the Dell Streak selling for around 3,000 yuan ($480). Director of intrernational communications, Kaiser Kuo, sees the storage-price combo as the "wow and dazzle" of the H5018, which is a surprisingly rich feature set for that price. He said that nobody at Baidu has used the term "iPhone killer" yet, adding, "That would be hubris, and we're not big on hubris."
Instead of iPhone killing, what Baidu may be carving out for itself is a place as the brand of everyone else, "the people," the ones who cannot afford the iPhone's $700 price tag but who nonetheless want all the features. Kuo explained that this step means that Baidu is "shifting from a product-focused company to a platform-focused company. We want to build the platform--the cloud storage and servers, the tools, the backend services like data and monetization platforms, the APIs--to allow developers to build the best apps for users on all of the devices that the cloud can power: desktops, laptops, tablets, smartphones, and even devices yet undreamed of."