The new search engine is a joint venture between the state-owned mobile operator China Mobile and Xinhua news agency.
Considering that Panguso is operated by China Mobile, the leading carrier in the country with 70 percent market share, one would expect the government-owned engine roll out a mobile friendly search service or mobile Internet search engine to capture the mobile search market in the country.
However, it seems the only mobile aspect of Panguso is that Internet users could send search results from computers to cell phones by SMS, according to Xinhua.
If you navigate Panguso, that mobile feature is available under the buzz category showcasing hot topics aggregated from various microblogging sites in the country.
Panguso isn't the first state-owned search engine in China. In December 2010, People's Daily, the official newspaper for the Communist Party in China, launched the People Search Engine, Goso with the goal to break Baidu's monopoly.
But Goso is more realistic in grabbing a large portion of the search market share in China. Gong Yuguo, vice president of Goso, was quoted in local media that the People Search Engine would seek different ways to win over market share and not wage war against commercial search engines.
Navigating Goso, it looks like the search engine continues to add features since its launch two months ago, including app versions for Android and iPhone. Comparing Goso's mobile feature to Panguso, it seems Goso understands the importance of making its service user friendly for Chinese Internet mobile users more than China Mobile's search engine.
In a Nielsen report by Shan Phillips, vice president, Greater China, telecom practice, he said mobile Internet is more popular in China than in the U.S. -- 38 percent of Chinese mobile subscribers use mobile devices to access the Internet compared to 27 percent of American mobile subscribers, despite less advanced networks.
With consolidation of the telecom market in China in 2009, three carriers dominate the market, Phillips said. China Mobile is in the lead with more than 70 percent market share, followed by China Unicom and China Telecom.
He pointed out while almost 40 percent of Chinese phone users access mobile Internet, they don't use as many data intensive applications such as mobile video and content uploads. A number of reasons include 3G was only launched in 2009, smartphones such as iPhone and Android penetration is still low, and the mobile app ecosystem remains fragmented.
As an established mobile carrier in the market, there's still a high possibility for China Mobile to deploy Panguso on its network in the near future.
Putting the mobile aspect aside, SEM practitioners I spoke to off the record are underwhelmed with yet another state-owned search engine launch. The general sentiment is while these government entities are established they aren't necessarily experts in the area of search.
Baidu's search dominance in China continues to soar. Its market share by search queries rose 6.5 percent to more than 83 percent in Q4 2010 compared to the previous year while Google slid more than 11 percent in the latest report by China research firm iResearch.
In Baidu's latest financial report, ad revenue for the fiscal year of 2010 increased 78 percent compared to 2009 at more than $1 billion. The increase in ad revenue is driven by a rise in both the number of active online marketing customers and revenue per customer.
Baidu had about 412,000 active advertisers in 2010, representing a 30 percent increase from 2009 with revenue per advertiser also increased up to more than 35 percent. With a focus on social networking this year in a statement from Baidu's chairman and CEO Robin Li, several media reports speculate a possible collaboration with the Paolo Alto headquartered social networking giant Facebook.
Although Baidu is clearly leading in the search landscape in China, search marketers continue to look to Google and increasingly Sohu and Soso for their paid search campaigns. It remains to be seen if state-owned search engines such as Panguso and Goso will be in their list of consideration anytime soon.
This article was originally published March 1, 2011 on SearchEngineWatch.com.
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Adaline Lau, ClickZ Asia editor, oversees day-to-day editorial operations covering digital marketing from search to social media, mobile to analytics in the region. Before ClickZ, she was senior reporter at Marketing Magazine and has worked as a journalist for The Singapore Marketer and Asia Pacific Broadcasting. Connect with her @adalinelau or Google+.
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