Baidu has agreed to buy a 57.4% stake in a five-year-old Chinese app store called 91 Wireless for a staggering US$1.9 billion, making this the largest Internet based acquisition in China. It values the company at 40 times its 2012 revenue.
91 Wireless is described as an alternative mobile app store (91 Assistant and HiMarket) akin, in purpose, to Apple iTunes, Google Play or Samsung app store.
Most Chinese smartphone users shun non-Chinese app stores, for patriotic reasons, language or better value. 91 Wireless has distributed 12.9 billion apps - more than any other local provider has. It also has relationships with nearly 100,000 local app developers and this gives it access to more relevant, localised apps and potentially a pathway to developing its own smartphone OS in the future.
Baidu expects to attract large numbers of advertisers through its purchase of 91 Wireless.
China’s smartphone market is booming. Data from the China Internet Networks Information Centre shows that China's online population reached 564 million as of the end of 2012, with more than 74% of them, or 420 million, using smartphones to access the Internet.
Baidu trades on the Nasdaq and shares rose 4% on this news. Baidu’s chairman, Robin Li, ranked No. 172 on the 2013 Forbes Billionaires List with wealth of $6.9 billion, is one of the world’s most successful Internet entrepreneurs.
One thing is for certain. Based on Chinese support alone Baidu has the potential to eclipse Google in size, sooner rather than later.
If Baidu is half the Asian tiger that Huawei is proving to be, it will not be long before it goes global. In fact, I am told that its US site has more Games downloads than Google Play and is looking to significantly expand its app categories there.