China’s Qihoo bets on old software and new hardware to crack global markets
When it comes to Chinese companies looking abroad for growth, most industry observers keep their eyes firmly on Baidu, Alibaba, and Tencent – the so-called BAT companies. The three internet giants have each stretched beyond their borders and are making high-profile investments in US-based companies. While Qihoo 360 isn’t as well-known internationally as BAT, it’s just as serious about winning over users outside of its backyard.
Qihoo executives have expressed a tentative commitment to expanding abroad,
particularly to fast-growing developing nations. Over time, Qihoo’s vision for international growth has become a bit clearer. In a conversation with
Tech in Asia at
Asia Beat in December, Tiger Shen, VP at Qihoo, elaborated on the company’s structure and vision for international expansion.
Old software, new markets
Founded by Zhou Hongyi in 2005, Qihoo became best known for its PC security software. Using aggressive user acquisition tactics, the company fought its way
onto 95 percent of all desktops in China. Its reckless approach to growth and penchant for lawsuits earned it the ire of China’s longer-established internet giants. But the strategy paid off, and the company ultimately leveraged its market reach to launch a search engine, a browser, and a mobile app store. All of those products make excellent touch points for advertising and app distribution, and that’s how the company earns its revenue.
Outside of China, however, Qihoo faces several challenges. How can a company borne out of China’s insular internet capture users in a world where Google and Facebook, not Baidu and Tencent, reign supreme? How can a company borne out of the PC era jump right over to mobile abroad?
As Shen describes Qihoo’s operations outside of China, it’s clear that there are two components to its international strategy. The first involves exporting its competency in utility apps – things like antivirus software – and distribution into markets where it can add value, specifically in Taiwan, Brazil, and Japan.
Qihoo’s strategy for Taiwan more-or-less mirrors its strategy for China, but Shen claims that its PC software isn’t as important as mobile. Its team in Taipei localizes Qihoo’s mobile security app and promotes it aggressively. Ads can be seen inside taxi cabs around Taipei right now.
“Smartphone penetration is extremely high in Taiwan, and there are many Android phones. So we feel that it’s a perfect market for our security app. We also promote our PC security app here, but we believe that it will gradually become just a base to promote other products in the future.”
A screenshot of Qihoo’s security app for Taiwan. One of the ways Qihoo monetizes is by facilitating installs of other apps through its own properties.
In Japan, Qihoo owns a
2.6 percent stake in KLabs, which it partners with to publish China-made games.
“We originally wanted to [publish PC security software] in Japan, but we realized that PCs had already died out. We then decided to use our security app as an entry point onto users’ smartphones, but we also gave up on that. [We realized that] smartphone games in Japan had potential, so we considered how we could make a difference in this space,” Shen explains.
In Brazil, Qihoo has a joint venture with PSafe, which it invested
US$25 million a year ago. True to its partner’s origins, PSafe offers antivirus software for desktop and mobile that’s free to download, and has an install base in the tens of millions.
“Brazil, in my opinion, is more similar to China,” says Shen. “We’ll start from the PC there, and then do smartphone security. We might even do an app store. We can maybe cover more ground there because our Brazil team is pretty big.”
Qihoo at home
Even beyond security software and utility apps, Qihoo has its sights set firmly on an entirely different speciality – smart home devices. Under its own name, the company has released a
location-tracking wristband for children and a
security-focused router. Beyond that, Shen added that the company has invested in Life360, a San Francisco-based location tracking app that has
ambitions to integrate into cars, and will also open an ‘internet of things’ accelerator in Sunnyvale in the near future.
The connection between security software and connected devices might seem tenuous. But Shen says that Qihoo will leverage its brand (and possibly its technology) by targeting hardware and startups that factor in safety as part of their mission.
Tiger Shen, VP at Qihoo 360
“Our router is a safe router. In the future, your household lamps and TVs will all be online. We can prevent hackers from entering your network. So we’re expanding our brand.”
Qihoo’s commitment to developing smart home devices places it right alongside China’s biggest internet companies.
Baidu,
Xiaomi,
Tencent, and even
Cheetah Mobile (which Kingsoft owns a majority stake in) have all either developed hardware for the home, or have integrated their services into it.
“I think our model is in between that of Xiaomi and Baidu,” says Shen. “Baidu mainly does the cloud, it doesn’t have a team that does hardware. Xiaomi is of a different type. It does all of its own products – smartphones, batteries… it’s similar to Apple. We do a little on our own and then collaborate with others.”
The jury is still out on which Chinese tech giant is best poised to dominate the nascent smart home industry. At
Tech in Asia, we’ve written that Tencent has an
extremely strong advantage in this space thanks to WeChat, its powerful chat app that’s using messaging as a means to branch out into marketing, ecommerce, and even banking. But Shen thinks that WeChat’s stronghold on communication doesn’t necessarily transfer over to hardware.
“WeChat’s most important function is connecting people to other people. [A person] that likes to jog might want a group or community to share [data with], but you won’t want to share about your household appliances,” he says.