On Apirl 28th, 2010, Baidu (NASDAQ:BIDU) announced the Q1 2010 earnings. The revenue shocked experts, and Baidu’s shares soared 14 percent after the bell.

Baidu switched their customers to a new AD platform called Phoenix Nest (Feng Chao) in 2009. And now, the strong revenue growth, proved that Phoenix Nest is a more powerful tool. From the mass observer’s point of view, Phoenix Nest is totally nothing new but changed the display form of ADs. However, in deep, the new platform allows competitive terms as Google does.

Once the competitive terms can be bid, I’m pretty sure the term price will grow higher and higher. This explains why Baidu’s revenue has improved so much, while Baidu has been weak in Q1 in so many years.

Recently been found, image-ads appeared in Baidu Image Search results. While other search engines (like Google) still put text-ads on top of  Image Search result. Check out the snaps below:

When search “长城” in Baidu Image Search, the result may contain ads about tour of the Greate Wall (“长城” means great wall, in English). From my perspective, I think this type of ads is fairly intuitive, however, I don’t know whether the ROI is higher than those normal text link ads.

As a comparison, I’d like to take a snap from Google.

Well, Baidu is exploring various forms of advertising, in order to raise the income. And placing image ads in image search results, is a really great idea.

Today, Alibaba announced that, the Alibaba Group will invest 5 Billion RMB to Alipay. This is a long-time-investment which will last for 5 years.

Notice that Alibaba Group is not the company named Alibaba.com Limited (HKG:1688), but the mother company of it. Alibaba Group is also the mother company of Taobao and Alipay. However, Alibaba Group has also invested Taobao 5 billion on 2008.

Nowadays, Alipay is the leading company in the 3rd payment service field, and holds nearly 50% market share. So I don’t think this huge investment is for Alipay to expand in China, but to speed up the internationalization process in the world. It’s opponent is now Paypal.

There’s one thing I still wonder: where’s comes the money? From the financial report, Alibaba.com Limited, the most profitable subsidiary of Alibaba Group, earns about 1 billion through a year. Whereas, Alibaba Group is to invest 5 Billion in 5 years. Where can Jack Ma get so much money from?

As languages differs, I’d explain in brief. Taobao adds a Category named “Digital Entertainment” at the top of the category list. This new category contains links about hot Videos, different types of digital magazines, but nothing about goods.

When Taobao Video (Actually, it is based on joy.cn, which is a poor video company in China) came out, experts surprised. However, once take a look at other new services of Taobao, like DaTing(not dating), digital magazines, etc, they may not be surprise any longer. For one thing, as is the biggest trading platform in China, Taobao cannot get an explosion increase on its market share. For the other thing, it it hard to meet the expectations of investors if Taobao is just a trading platform.

For Taobao, free or not is no longer a problem. Taobao is profiting from multi types of advertisements. This made taobao became simmliar with Baidu (NSDQ:BIDU), and also make taobao became a media platform. The users and the traffic came with users, are the most valuable asset of the platform. This explains why Taobao is introducing new products which are not firmly related with ‘trading’. Taobao also advertises on TV, which is proved effective. The alexa rank of Taobao is now higher than two of the three largest portal website in China: Sohu and NetEase.

Where to IPO, is a new problem for Taobao. It cannot be HongKong: Alibaba(HKG:1688) is a bad sample, it IPOs at HKD 14 and after 2 years raised to HKD 18. NSDQ is a better choice, but EBay, Taobao’s sample, is going down these years. Taobao needs to make some difference to claim it’s not another EBay.

BTW, the noun “Media Platform” is not clearly defined yet.

As a large trading platform, Taobao manages tons of information of products.  As a open platform, Taobao has a strong desire to label all e-commerce websites “powered by Taobao”. Actually, this is the blueprint that called “Big Taobao”.

Thus, a search engine for “Big Taobao” is required.

However, this new search engine is no more than a alpha version. For one thing, the domain “search.taobao.com” is quite funny: the first section is a English word “search”, but the second section is pinyin “taobao”. This is really hard for those primary users in China. For the other thing, taobao’s lack of tech hurts the result. “Taobao’s search even don’t know word segmentation”,  said a Baidu’s Senior Engineer.

In the afternoon of September 28 Beijing time, Alibaba(HKG:1688) announced that they will invest RMB 540M (USD 80M ) in HiChina (net.cn) for about 85% share.  And the investment will be settled before the end of 2009 by 2 steps. This is the largest investment to outer companys ever since Alibaba got IPO.

HiHhina is an old IDC in China, which holds a great market share in IDC field. However, HiChina is poor on reputation. Alibaba believes the firm cooperation with HiChina will lead to better service to its customers.

These years, SME (Small & Medium Enterprises) is a growing group, and also a growing market for companys like Alibaba, Baidu, etc. This investment can express the determination to customers of Alibaba, whereas, the poor reputation of HiChina may affect its parent company. In a word, risks and opportunities exist side by side.

With box computing,  things go creative. Try search “126″ in Baidu, the 1st result is no longer a nomal text link but a login form. As 126.com is one of the biggest mail service in China, Baidu provided a form to help user login directly.

box computing

So what’s the difference? For one thing, this simple form simply saved a click to the login page; for the other thing, this strategy can easily prevent primary users from being cheated. This is neither Universal Search nor Onebox can provide.

Another sample is related to E-commerce. When searching for a mobile phone, such as “诺基亚5800” (means “Nokia5800″ in English), Baidu will give basic infomation about the phone, like camera, operation system, etc. Baidu also shows different prices from different B2C websites of this phone. It’s really cool.

box computing

The last sample is also about E-commerce. Taobao.com, the biggest C2C platform in China, announced to block Baidu’s spider in 2008. But Taobao now relies on Baidu’s box computing to display its customer service number. It’s funny.

taobao is a clown

That’s right, Taobao is a clown.

Box computing is cool, and it will be better when combined with E-commerce.