Bottom line: Baidu’s reorganization of its mapping unit reflects growing competition in the space, and could ultimately end in a shuttering of the service if its usage continues to decline.
The wheels of restlessness at online search leader Baidu (Nasdaq: BIDU) are grinding into motion once more, with word that the company has made a major shift in its popular mapping division. Company watchers will know the restlessness to which I refer is a direct reference to Baidu’s founder Robin Li, who is famous for getting into new businesses, only to tire of and ultimately jettison them after just a few years.
In this case it’s probably far too early to say if that’s the case for Baidu’s mapping unit, which has been one of its most popular products for quite some time, thanks in no small part to its dominance in online search. The problem is that Baidu has failed to keep pace with more nimble competition, most notably from the Alibaba-owned (NYSE: BABA) AutoNavi. What’s more, an equally large potential rival is looming in the form of global giant Google (Nasdaq: GOOG), which has recently begun updating its previously dormant China mapping service.
The bottom line is that Baidu appears to have been caught napping while mapping, so to speak, and now looks like it’s trying to right a sturdy but potentially troubled ship. According to the latest headlines, Baidu is performing a relatively major move for its mapping service by moving it into its artificial intelligence (AI) unit, from its previous location within its core search business. (English article) The move also includes replacement of the mapping unit’s chief.
Following the move, Baidu will try to integrate more AI functionality into its maps, including more high-definition mapping elements. That’s an important element for self-driving cars, an area in which Baidu is hoping to become a leader, somewhat similar to what rival Google has done in the US.
This kind of move by Baidu certainly seems to make sense, since maps are going to be a critical part of any kind of future apps involving locations. The question is, why didn’t Baidu do this sooner, and is it already too late to play catch up? The answer is that Baidu probably can’t afford to jettison its mapping unit if it really wants to become a leader in autonomous driving.
But that said, there’s no denying that Baidu is sinking fast in the mapping business. The company still has more than 200 million active users of its mapping service, which is certainly a large number. But AutoNavi has 340 million, which is even bigger and probably on a more upward trajectory.
What’s more, we saw indications at the start of this year that Google may be preparing to re-enter the China map scene after an absence of several years. The company stopped updating its local mapping service after its blow-up with China in 2010 over Beijing’s strict self-censorship requirements. But early this year, observers, including myself, noted that it had quietly started updating the service, even though it hasn’t promoted that service on its existing and largely static China page.
The resumption of updating would seem to indicate that Google plans to relaunch and promote the service in China at some point, which is part of its broader plan to re-enter less sensitive areas in the country such as mapping and app store operation.
All of that brings us back to Baidu, and this latest move that appears to indicate its mapping service is slowly losing its audience. Founder Robin Li is famous for taking such fading or money-losing services and scrapping them, which we’ve seen in the past in areas such as e-commerce and travel services.
That said, this mapping service could be different, as it’s central to his future dreams of leading China in self-driving cars. What’s more, Li has put big money into Baidu’s AI investments over the last year. That means one could view his movement of mapping services into the AI division as reflecting the importance this division will play in the future. But at the end of the day the market probably won’t be able to support too many companies in this space, and I wouldn’t be surprised if Baidu’s fading mapping service is ultimately unable to make the cut.