The three giant Internet-focused companies in China are better known as BAT – Baidu, Alibaba, and Tencent. BAT certainly sounds less ominous than the American equivalent of FANG – Facebook, Amazon, Netflix, and Google, but will it soon be all change for the B in the BAT?
JD.com is catching up fast. It is now within 1% of the market capitalisation of Baidu. Could we soon see the market analysts referring to JAT instead of BAT?
It is close, but I think there are a few reasons why BAT will survive. To start with, consider the performance and revenue of both companies. The first quarter of 2017 was the first time in several years that JD.com has actually made a profit. After operating at a loss for years, it is no surprise that the share price spiked in 2017. Baidu has been consistently profitable and during the same period when JD.com became profitable (Q1 2017) Baidu profits were double those of JD.com.
The real story for the past few years has been that both Baidu and JD.com have underperformed Alibaba and Tencent. The AT in BAT is actually pulling away from the competition, so how will they respond?
In 2016 the Baidu CEO said: “The era of the mobile Internet is over.” He meant that the era of using phones to access services is almost at an end. Baidu has been investing billions of dollars in Artificial Intelligence (AI) research in a belief that we will soon want to interact more naturally with devices through natural speech.
The strategy is called “All-In AI, AI First” and is focused on a blend of AI, Big Data, and Cloud Computing. Baidu claims they can unify technology, talent, and data, but what does this really mean? What services will customers see because of this new approach by Baidu?
The conversational open platform DuerOS is likely to be the initial focus. DuerOS was originally developed for “Dumi”, the Baidu voice assistant. However if it is released to a more open environment, so companies can use the system for their own customer interfaces, then it could be a game changer.
American companies, such as Apple and Amazon, have also been focusing on the connection between AI systems and voice operation. Their systems are improving quickly, but are still not capable of accepting entirely natural conversations. If Baidu can offer an open voice-based operating system that any brand can use and if it can improve on what these American brands have already done then there is an enormous global market just waiting to be captured.
They are investing heavily in this area. If this gamble succeeds then Baidu will not only accelerate their own importance in the Chinese BAT, they will be a serious competitor to the FANGs too.
Let me know what you think about this research and how you think AI might be used to improve the customer experience by leaving a comment here or getting in touch via my LinkedIn.
Teleperformance has 40 years’ experience on customer service industry, and has been investing to extend and propose offers along the AI evolution. All of this while ensuring that people should be able to interact with technology intelligently. Therefore, we’ve been working with one of the leader in AI platform that enables enterprises to build an intelligent, conversational AI solution that can be simultaneously surfaced across multiple channels, devices and languages. This partner is ARTIFICIAL SOLUTIONS and we can integrate it with proprietary CRM: Teleperformance Client.