Qihoo targets Xiaomi with launch of new mobile OS as it attempts to enter smartphone market

PUBLISHED : Friday, 20 March, 2015, 2:07pm
UPDATED : Thursday, 16 April, 2015, 11:30am

Chinese tech firm Qihoo 360, which has struggled recently to boost its stock performance, is continuing its expansion into the smartphone market with the launch of a new operating system.

The search engine and computer security services firm, which recently entered into a joint venture with Shenzhen-based smartphone manufacturer Coolpad, explicitly went after Xiaomi, China's largest domestic smartphone brand, in the announcement of its new OS. 

"An OS that might be better for Xiaomi phones than MIUI," a tagline on the website of the new system read, referring to the OS used on Xiaomi devices.

More information about the OS itself was scant, other than it will be "based on Android", Google's hugely popular technology which forms the groundwork of MIUI and other mobile operating systems and software "skins", including Samsung's TouchWiz software suite.

Android's market share in China was 78.4 per cent in 2013, compared to 15.6 per cent for Apple's iOS, according to a May 2014 mobile internet white paper issued by the Ministry of Industry and Information Technology.

In December, Qihoo invested more than US$400 million to take a 45 per cent stake in a joint venture with Coolpad, China's fifth-largest smartphone company.

“Combining Coolpad’s extensive experience in smartphone industry with Qihoo 360 strong presence in mobile internet, the partnership will build one of the leading mobile Internet ecosystems in China," Qihoo chairman Zhou Hongyi said at the time.

Coolpad chief financial officer Jiang Chao told Bloomberg last month the partnership was expected to boost smartphone sales to more than 60 million units this year, up from 45 million devices in 2014. This would put the smartphone manufacturer in second place behind rival Xiaomi, which expects to ship more than 100 million smartphones in 2015, according to chairman Lei Jun.

“Our company didn’t have wireless application teams and we didn’t know how to develop mobile software,” Jiang said.

“Now Qihoo has come into this new joint venture so we can use Qihoo managers and R&D employees to develop very good wireless software.”

Coolpad's market share dropped to 9.4 per cent in 2014, down from 10.7 per cent the year before, according to International Data Corp.

Qihoo has experience in going after more established rivals. Since entering the Chinese search market in 2012, the company has cut leader Baidu's market share by almost 10 per cent, with Qihoo serving more than 16 per cent of all search queries in China last year.

Despite its strong gains in the search market and an established anti-virus and computer security business, Qihoo's stock has suffered setbacks in recent months, with its share price falling by around 17 per cent in the first quarter of 2015.

On March 9, Qihoo released its 2014 Q4 earnings report, besting expectations and showing an increase in top-line growth to US$431.2 million, but also dramatically higher expenditures.