Baidu's Latest New Product Shows Its Strategic Shift Remains in High Gear

As far as comparable companies go, search providers Google and its Chinese counterpart Baidu share no shortage of similarities.

Both dominate the search industry in their respective geographies -- Baidu in China, and Google largely around the rest of the world. Both enterprises produce fantastic profits. And both companies aggressively moved into providing a whole host of new products and services to buoy user engagement and position themselves as integral providers of our increasingly digital lives.

And as if they needed another shared trait, Baidu also sees a major opportunity for fresh innovation in one of the areas Google also covets -- healthcare.

Baidu's digital doctor Earlier this month, Baidu unveiled a new product, which roughly translates to Baidu AskADoctor. The service effectively acts as a voice-powered search engine for all manner of maladies. An ailing user simply dictates his or her symptoms to the service, and the app's algorithms provide a most likely diagnosis, as well as the probability of the diagnosis' accuracy (i.e., a 75% chance of the flu). In terms more familiar to English-speaking readers, the service seems like a combination of the Siri voice assistant combined with the leading Internet health destination, WebMD.

According to Baidu, the service currently works only on PCs, although it plans to launch a mobile app for the service in short order. Baidu eventually intends to integrate AskADoctor with users' digital health records, a shift itself that only recently began in China. In terms of the bigger picture, Baidu plans on adding functionality to allow users to progress from receiving a predicted diagnosis to actually scheduling an appointment at a doctor's office through its budding healthcare ecosystem. At the moment, AskADoctor compares users' symptoms versus a database of 520 different diseases, which one Baidu executive said accounts for roughly 90% of all common medical issues in China. However, this storyline fits perfectly within the broader investing discussion surrounding Baidu as well.

Rise of the machines Say what you will about AskADoctor's overall usefulness, but the move represents an undeniable signal of interest on Baidu's part in tapping into the increasingly blurred line between technology and healthcare. This move also represents one of the first real products to emerge from Baidu's nascent machine learning initiative.

Late last spring, Baidu made waves in technology circles by hiring away Andrew Ng, Stanford professor and Google's head researcher, as part of its efforts to develop its own deep-learning lab in California. Baidu already operates another deep-learning lab in China, but it hopes that by gaining greater access to Silicon Valley's massive pool of deep-learning specialists and academics, the Chinese search company will make ever greater impacts on this high-interest space.

Of equal importance, the launch of and long-term vision surrounding AskADoctor perfectly represent the next great phase of Baidu's business model -- what it calls online-to-offline services, or O2O. Baidu, and a number of other large Chinese technology companies, all see a tremendous opportunity in creating services that help connect online users with real-world services. In fact, Baidu's recent earnings-driven sell-off occurred as a result of Baidu's higher-than-anticipated spending on the rollout of these services.

Baidu has made major headway in three main O2O product verticals -- travel, shopping, and food delivery -- and will undoubtedly launch additional products in the coming months. All told, Baidu CEO and co-founder Robin Li claims the broader Chinese O2O market represents over $1 trillion in various market opportunities, and the company rightfully intends on pushing into this nascent space as quickly as possible.

I've long argued that Baidu offers some of the greatest long-term potential in all of tech today. The company faces a number of well-capitalized and highly capable competitors, but moves such as AskADoctor and its broader O2O rollout, in addition to core search, should provide ample opportunity for Baidu to continue to generate compelling returns for investors well into the future.

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Andrew Tonner owns shares of Baidu. The Motley Fool recommends and owns shares of BIDU, GOOG, and GOOGL. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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