Baidu to offer navigation service for free

Baidu Inc, a Chinese search engine provider, will refund the previous buyers of its Baidu Navigation as it believes free navigation service is an irresistible trend, the company said Thursday on its Sina Weibo account.

Baidu Navigation is a smartphone application and used to cost 30 yuan ($5) in the app store.

"Free service is a part of Baidu Navigation's long-term plan. With the fast development of mobile Internet, offering free navigation service is an obvious choice," Feng Hua from Baidu's User Product Marketing Department told the Global Times Thursday by e-mail.

Autonavi Navigation, the most popular navigation app in the Chinese market, also announced to offer free navigation service at a press conference held Thursday, which was live on its Weibo.

But it will not refund the previous buyers, according to a post on its Weibo. Later the post was deleted.

Autonavi Navigation is an application made by AutoNavi Ltd (AutoNavi). which specializes in map and navigation service in China. It was priced at 50 yuan.

"In the field of navigation service, Baidu is still very young and its current user base is much smaller than AutoNavi's. That is why it can afford to refund the users," Wang Liyang, a Hangzhou-based independent Internet analyst, told the Global Times Thursday.

As the leader in the navigation market with a 30 percent market share, AutoNavi regards free application as an inevitable choice, Cheng Congwu, director and CEO of AutoNavi, told the press conference.

Compared with Baidu Navigation, AutoNavi has much bigger market share and mature technology, Liu Dalong, an analyst with iResearch who attended AutoNavi's press conference, told the Global Times Thursday.

An investment from Chinese e-commerce giant Alibaba Group Holding Ltd helped AutoNavi to attract users initially and maintain a stable position in the market, Liu said.

"After gaining enough users, the navigation service provider can move to 'online-to-offline' business, and provide other kinds of information including advertisements. Both AutoNavi and Baidu are providing free navigation service for potential profits in the future," Wang said.

AutoNavi will move to Internet regardless of the costs, Cheng said.

The free strategy of AutoNavi and Baidu heralds a new trend in the map and navigation field, which will create a dilemma for other companies in the industry, Wang said.

"If they continue to charge for the application, they will lose users and will be eliminated from the market. But not everyone can afford to follow the free strategy. Eventually, the big companies may buy the smaller ones, which will create a new industry structure," he noted.