Sohu seeks to outfox competitor firms
By Wen Dao (China Daily)
Updated: 2004-08-04 10:17

Search engines will become a new growth engine for NASDAQ-listed Chinese Internet firm Sohu.com Inc, as the company launched a new search engine yesterday.

Sohu, which means "search fox" in Chinese, launched Sogou.com, whose meaning is "search dog" in Chinese, yesterday in Beijing.

"As early as six years ago, we launched our search engine, but we were troubled by the immaturity of this business," said Charles Zhang, Sohu chairman and chief executive officer.

"But we think it is the right time now."

Sogou is an interactive search engine and can intelligently guess what users try to find from key words.

It took Sohu almost two years to develop the product, but the company declined to say how much it spent on that.

Zhang has high hopes about the new product and said it will become its fourth business line after online advertising, wireless value-added services and online games.

The search engine-related business contributed around 10 per cent of Sohu's total revenues in the past quarter.

The company estimated that its search business will maintain double-digit growth in the coming quarters.

However, Sohu does expect Sogou to contribute revenue in the short term.

"The main task for us is to let Sogou to be known by as many people as possible. We will not launch paid listings on Sogou in the next three to six months," said Wang Jianjun, vice-president of the Chinese Internet company.

He believed paid listings will be Sogou's dominant revenue source, but the company needs to decide on that depending on market conditions and users' reaction.

Shanghai-based industry analyst Michael Yin believed Sogou's launch will help Sohu to offset its slow progresses in some other business lines.

Sohu, which mainly relies on online advertising and wireless value-added services, saw continuous declines in its wireless business over the past two quarters.

Although the company launched online games last year, it did not see the growth it expected.

Yin pointed out that new business lines are therefore critical for Sohu to negate declines in its wireless business.

However, Yin said it will not be an easy for Sohu to grow its search business, when fierce competition is taken into account.

US giant Google has already invested in its Chinese counterpart Baidu.com with an aim to develop the market.

Another US behemoth Yahoo! also launched Yisou.com in China to provide a search engine service, setting up more than 1,000 search engine servers in the country to better serve local users.

Domestic competitors Baidu and Zhongsou also have their own advantages.

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