Qihoo 360 Technology Co Ltd (QIHU), Netflix, Inc. (NFLX): Did You See What Baidu.com, Inc. (ADR) (BIDU) Just Did There?

Room full of rocking chairs

Netflix, Inc. (NASDAQ:NFLX) was a pioneer in recognizing the broader digital market with its DVD service. Unbound by geography and inventory limits, Netflix, Inc. (NASDAQ:NFLX) was able to acquire and warehouse thousands of old, backdated and obscure titles and find an audience for them within a nationwide market. This ability to provide a seemingly endless array of titles attracted a massive customer base away from the neighborhood video store, which eventually drove the brick-and-mortar competition into bankruptcy.

Another early pioneer was Amazon.com, Inc. (NASDAQ:AMZN). Amazon started as an online bookstore and was able to offer a selection of old, backdated, and obscure book titles that would have been impossible for a brick-and-mortar bookstore to carry. That model has served Amazon.com, Inc. (NASDAQ:AMZN) well as it expanded its offerings from books to nearly every other retail category.

Foolish final thoughts

Baidu sees an opportunity that it believes others have missed: the opportunity provided by huge numbers of low-volume apps as more consumers enter the mobile market. By developing a more efficient search mechanism and distribution platform to get these lower-volume apps to consumers, Baidu accomplishes a couple of key goals: It generates greater customer loyalty with easier-to-find apps; and it generates additional app sales that benefit both Baidu and its developers, making the relationships stickier.

Baidu can apply this strategy to its native app store as well as its recent 91 Wireless acquisition, which could conceivably increase revenue along both channels. Add in the increased consumer awareness and stickier developer relationships, and this is a situation where everybody wins. Sometimes the beauty is in the details.

Did you see what Baidu just did there?

The article Did You See What Baidu Just Did There? originally appeared on Fool.com and is written by Danny Vena.

Danny Vena owns shares of Apple, Netflix, Amazon.com, and Baidu, and is always looking for the next Long Tail. The Motley Fool recommends Amazon.com, Apple, Baidu, and Netflix. The Motley Fool owns shares of Amazon.com, Apple, Baidu, and Netflix.

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