Baidu And Alibaba Launch Mobile OS

According to the China Internet Network Information Center, at more than 500 million Internet users, China has the largest population of internet users in the world. McKinsey estimates that in China, 6 million people access the Internet for the first time each month. They expect China’s Internet population to rist to 750 million by the year 2015. The company’s Internet players are already having a good market run.

Baidu’s Financials
Baidu’s (NASDAQ:BIDU) Q2 revenues grew 78% over the year to $528.4 million, ahead of the Street’s targeted $502.08 million. EPS of $0.72 grew 95% over the year and also beat the market’s expected EPS of $0.66. For the current quarter, Baidu is expecting revenues of $611.1 million-$626.6 million.

Baidu’s share of the Chinese search engine market grew marginally from 75.8% in the previous quarter to 75.9% last quarter. Google’s share during the period fell from 19.2% to 18.9%.

Baidu’s Mobile Expansion
Baidu sharpened their focus on the mobile devices segment and released mobile operating systems Baidu Yi and Baidu Easy. Baidu Yi is similar to both Android and Apple. Its features and user experience are rated to be similar to that of Android, while like the Apple store, Baidu also enables third-party apps to be distributed. Analysts expect Yi to be stiff competition for both Google and Apple in the local market.

They recently tied up with Dell to work on phones and tablets. Baidu Yi will be incorporated in Dell’s smartphones and tablets for the Chinese market. It is expected that Baidu will work with other hardware makers as well.

Baidu Expands Internationally
Meanwhile, Baidu is also expanding into regions beyond China. It already has a presence in Japan and recently opened new products for Egypt and Thailand. In Egypt, they launched Baidu Knows, an Arabic-language question-and-answer service. In Thailand, they launched a Thai version of their Web directory, Hao123, which links to a webpage with features such as weather forecasts, social media links, and mail account access.

The stock was trading at $123.40 with a market capitalization of $43.1 billion. It touched a 52-week high of $165.96 in July 2011.

Alibaba’s Financials
Alibaba’s (HKSE:1688.HK) Q2 revenues grew 19% over the year to 1.62 billion yuan (~$345 million). Revenue from their China Gold Supplier package grew 20% at 921.19 million yuan in the quarter. Net profit in the quarter grew 28% over the year to 464.55 million yuan (~$99 million), ahead of the Street’s target of 420.4 million yuan (~$90 million)

During the quarter, the number of paying members fell 2.1% over the year to 832,469. The number of China Gold Supplier package subscribers fell 3.7% over the year, and Global Gold Supplier package subscribers fell 3.2% over the year.

Alibaba’s Mobile Expansion
Like Baidu, Alibaba is also focusing on a mobile operating system. In July this year, they launched their self-developed mobile operating system and smartphone. The K-Touch Cloud Smartphone operates on Alibaba’s own cloud operating system and meant to address the growing Chinese smartphone market. The company is also looking at expanding their smartphone market reach worldwide and is developing an English language OS.

Alibaba’s stock is trading at HK$6.99 (~$1.48), taking its market capitalization to HK$35.38 billion (~$7.5 billion). It touched a 52-week high of HK$17.70 (~$3.77) in February 2011.