INTERNET: Qihoo Eyes 360 Brand With Record Domain Buy
Bottom line: Qihoo’s apparent attempt to unify its various products around the 360.com brand looks smart strategically, but it needs to improve its search and cellphone businesses to win back investor interest.
I’m not usually someone to write about publicity stunts, but one such new ploy by struggling security software maker Qihoo 360 (NYSE: QIHU) has piqued my interest as it hints at some major new strategic moves. The actual news is quite straightforward, saying Qihoo has paid a record $17 million for the 360.com web domain. This news was almost certainly leaked by Qihoo, since companies pay large sums for domains all the time and the news never makes big headlines since it is kept private. That hints that Qihoo may have big plans for 360.com, most likely as a platform to unify its current stable of domains and brands.
Qihoo certainly could use a more unified approach to its increasingly fragmented product portfolio. Its original security software products were offered under its qihoo.com domain, and in 2013 it launched a search engine under so.com, which it rebranded late last year as haosou.com. In addition, the company also made a recent major move into smartphones with its formation of a $1 billion joint venture with the large but struggling Coolpad (HKEx: 2369). (previous post)
According to the latest reports, Qihoo purchased the 360.com name from European mobile giant Vodafone (London: VOD), after hoping to secure the domain for a while. (Chinese article) The reports don’t contain any additional details on Qihoo’s plans for the domain. A quick trip to the 360.com site redirected me to haosou.com, which Qihoo launched as its main search site late last year.
A trip to Qihoo’s original search engine so.com also redirects to haosou.com, and so does a trip to qihoo.com. That appears to show that haosou.com has become Qihoo’s unified web address, at least for now. But I do suspect that 360.com could soon become the new unified site, since $17 million seems like a high price tag for a site that simply redirects users to another site. The 360 name is also easier to remember, and has the added benefit of an association with a “complete view” of the world, from the expression “360 degrees”.
For anyone who follows the record books, the previous high price for an Internet domain was $16 million for insure.com, paid in 2009, according to several online sources I checked. After that, the next highest amount appears to be for sex.com, which reportedly sold for as much as $14 million. I personally remember the sale of the business.com domain for $7.5 million at the height of the dot-com bubble in 1999, though that price now ranks around fifth on the all-time record list.
But all of that background aside, let’s return to the bigger picture of what all this means for Qihoo. From a purely strategic standpoint, the idea of a unified website and brand looks like a good one, as it reduces consumer confusion. Search leader Baidu (Nasdaq: BIDU), which has recently become one of Qihoo’s chief rivals, has a similar strategy around its main baidu.com website, and has done quite well with such an approach.
But this strategic news leak also looks at least partly designed to breath some life and excitement back into Qihoo’s sagging stock. The company’s shares soared after the launch of its original search site in 2013, at one point quadrupling from their previous levels. But since then they have lost half of their value as investors grew impatient with Qihoo’s efforts to monetize the search business.
The company’s record domain purchase appears to show Qihoo is trying to create a single brand image around the 360 name, which looks smart and logical from a marketing perspective. But the company will still need to show that it can earn money from its search business, and also that it can turn around the struggling Coolpad cellphone business, before investors will start to take its stock seriously again.
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