Does Baidu Have to Start Worrying About Microsoft?


You can't spell Beijing without B-I-N-G, and Microsoft (NAS: MSFT) wants to make sure that China doesn't forget that. The world's largest software company is ramping up its efforts in the world's most populous country.

Microsoft executives detailed its growth plans at a news conference this morning. According to the Associated Press, Mr. Softy plans to hire more than 1,000 employees in China, as it boosts its R&D spending in the region by 15%.

Microsoft's emphasis is mobile. It's tired of letting iPhones and Androids have all of the global fun. However, it's also likely to bump heads with Baidu (NAS: BIDU) along the way.

China's top search engine has also been making a mobile push.

Baidu has seen its market share shrink by nearly $8 billion since reports surfaced of Qihoo 360 (NYS: QIHU) gaining market share at the leader's expense. Qihoo 360 operates a popular Internet browser and suite of anti-virus solutions.

Sensing that mobile and browsers are valuable tech currency Baidu recently rolled out Baidu Explorer, an Android-based mobile browser.

Microsoft's push may be to win market share for Windows Phone as a mobile operating system, but it will find that Baidu also has its smartphone dreams. Sooner or later, Baidu and Microsoft will have to come at each other with fists flying.

If anything, it may be a surprise that it's taken this long. When Google (NAS: GOOG) staged a symbolic retreat out of China on censorship principles, the climate was ripe for Microsoft's Bing to take its place as the Western hemisphere's search alternative.

This has failed to materialize, but now, Microsoft may not have much of a choice. China is now the world's largest market of Internet users. Android has become the country's smartphone platform of choice -- with 76.7% of the market, according to researcher Analysys -- but it's widely believed that Apple's (NAS: AAPL) iPhone 5 introduction next week will finally make the iconic iOS-fueled smartphone available on China's leading wireless carrier for the first time.

Microsoft may be aiming for Google and Apple, but Baidu would be smart if it decides to take the first swing in the inevitable fight. The Fool breaks down each critical element to truly understanding Baidu as a potential investment in the Fool's new premium research report on Baidu, diving deep into China's dot-com darling. The premium research comes with a year's worth of updates. Check it out.

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