China's Baidu sees profit surge as lead over Google grows

Top Chinese search engine Baidu.com reported a 40 percent hike in net income on Monday as the company appeared set to continue strengthening its lead over rival Google.

"Today more than ever Baidu is the number one search engine in China," said company CEO Robin Li in a call with analysts.

Mobile search is one rising focus for Baidu and the company is working hard to develop new mobile services, Li said. Baidu last week announced a search deal with local carrier China Unicom, dealing a blow to Google as the companies race to grab a slice of China's growing mobile search market.

Baidu dominates China's Web search market, accounting for about three out of four searches performed in the country. Google is in a firm second place, but its market share slipped as Baidu's rose slightly in the second quarter this year, according to local analysts.

Baidu reported net income of 493 million yuan (US$72 million) for the three months through the end of September, a rise of nearly 42 percent from the same period a year earlier. Revenue was also up nearly 40 percent, reaching 1.28 billion yuan.

Baidu earlier this year announced a vision for its future services that it calls "box computing." The term describes a Web search box that can also carry out non-search commands, such as launching an application or connecting directly to an online service, said Li. The vision will increasingly drive future Baidu initiatives, he said.

Baidu will switch advertisers to its new bidding platform, Phoenix Nest, later this year, it said. The company expects the switch to dent revenue at first but boost it in the long term.

A recent Chinese government report predicted that Baidu's dominance over Google will continue to grow because Baidu is more popular among new Internet users in the country, who often come from rural areas.

The IDG News Service is a Network World affiliate.