(I violate the rule that you should only make predictions when you're about to die)
I saw this article (http://www.forbes.com/forbes/ 2009/1005/technology-baidu-robin-li-man-whos-beating-google.html) and it struck me that there were certain parallels between the Google China-Baidu and the MySpace-Facebook dukeouts:
- Network-effect business
- Low switching costs
- Up-and-coming contender with a better product and less-evil approach
- Bifurcated demographics between educated (Google China / Facebook) and less-educated users (Baidu / MySpace)
To be clear, no one today (that I know of) is saying Baidu will fail. They still dominate this market. But what's the fun of making a prediction if you already know the answer? China has a growing educated middle class who, with the help of the Internet, are making leaps in cultural sophistication. As Steven Levitt describes with baby names in Freakonomics, less-educated populations often follow behavioral patterns of educated populations. That, combined with the fact that China is only becoming more educated, might spell downward spiral for Baidu unless they can adapt quickly to improve the user experience (as it seems they are trying to do). In the past 3 months, Google China has outgrown Baidu. Is Baidu where MySpace was in early 2007?