(Yicai Global) Feb. 1 -- Sogou Inc., the search engine arm of internet firm Sohu Inc. aims to filch two to three percent of China's search market from Baidu Inc. annually, said the company's chief executive Wang Xiaochuan.
Baidu, which has long been China's biggest search engine by market share, is now taking Beijing-based Sogou more seriously now, Wang said in an interview with Yicai Global, adding that his company has earned the search giant's respect.
Sogou's search traffic via mobile devices increased 31 percent last year for an 18 percent share of the Chinese market, while that of Baidu remains above 70 percent. The number of Sogou's daily active users on its Chinese character phone input service rose 46 percent to 330 million.
Sogou entered into a partnership with its backer internet behemoth Tencent Holdings Ltd. last year, and its search services went live on the Tencent's popular social media app WeChat last October, Wang said.
The firm has also rolled out a series of high-profile content services covering multiple verticals, from its proprietary medical platform Sogou Mingyi to professional legal Q&A platform Sogou Da Lv Shi. Medical-related searches surged by more than 50 percent last year, he said.
Some 38 percent of Sogou's search traffic comes from Tencent, while about 22 percent is generated by the firm itself. Smartphone manufacturers chip in the remaining 40 percent through referral marketing, Wang added.
He predicts that going forward, search growth will derive from organic traffic, and traffic derived from Tencent and paid referral schemes will decrease relative to the total traffic volume.
In the past, Sogou adopted a triple-layer business model (input method editor (IME) – browser – search) revolving around search as the central business, he said. From this year onward, however, it will focus on two priorities, namely, to make the IME more than an input tool with new functions such as information retrieval and traffic distribution, and to develop commercial applications for artificial intelligence technology.
Its next goal is to connect information, services and products. For example, he explained, in the future, if a user searches "where to go for lunch", Sogou IME will be able to display a list of suitable restaurants.
Web feeds have also become a new battlefield for major internet companies, but Wang considers it nothing more than a supplementary service. All Sogou products -- browsers, search app and IME -- have web feed integration capabilities. The firm has a vast Big Data network, accurate user profiles and more than 100,000 users, so web feed only plays a supplementary role to existing product lines.
On the smart device front, unlike some other tech companies, Sogou has not developed its own smart speakers. Instead, it unveiled two automatic translation devices, Sogou Travel Translator and Sogou Transcription Pen. Machine translation is already a reality in theory, but some issues still remain before it can be used on a practical level. Sogou wants to facilitate the process, he noted.
The company is shifting its focus toward machine translation and input method development. The former is a rather niche market, and the latter is something of a rarity on Wall Street.
It would be unrealistic to expect any company to sell more than one million translation devices in a year, Wang explained. His firm only wants to establish itself as a first-rate solution developer in various market segments, and does not want to turn the new business into a big revenue earner.
As for IME, investors will not see the beauty of this business until its commercial potential is unlocked, he pointed out.
He gives himself a score of 80 for the firm's performance last year, adding that Sogou has made inroads into the search, Q&A and AI markets, though he is not someone who monitors share price every single day.