Why did Baidu Cloud OS, which already has tens of millions of users, suspend updates?

After 1010 days online, Baidu Cloud OS said goodbye to its more than 10 million users. On March 11, Baidu Cloud OS issued a statement saying: "Due to internal business adjustments, Baidu Cloud OS will suspend updates from March 11, 2015." Just two days ago, it had just released Cloud OS for the dual-SIM Samsung N9002.

Xu Guoxiang, chairman of Shenzhen *** Digital Technology Co., Ltd. (hereinafter referred to as "***"), which is responsible for Baidu's Cloud OS business, said in an exclusive interview with a reporter from "*** Financial Daily" that the adjustment of Baidu Cloud OS is due to ***'s ongoing new round of financing. It is now at a critical period, so it hopes to control the pace of investment in the Cloud OS business.

"Cloud OS, including brand and strategy, will only be developed after capital is in place," Xu Guoxiang told reporters.

From Baidu to ***

Baidu Cloud OS, which was launched in June 2012, is a third-party smartphone system (ROM) developed based on Android 4.0 and above, and evolved from the previous Baidu Yi platform. In Baidu's strategic investment in *** in 2013, Baidu invested in *** in the form of Cloud OS assets plus cash.

With this strategic investment at that time, Baidu hoped to improve the mobile cloud ecosystem by strengthening the deep integration of Baidu Cloud intelligent terminal platform with hardware manufacturers, giving full play to Baidu Cloud's technical advantages and ***'s hardware and channel advantages; *** mainly wanted to build a better Internet sales channel, but it required more capital investment, and Baidu's strategic investment undoubtedly met this demand.

As of now, Baidu Cloud OS, which has been online for less than three years, has released 6 official versions (updated every quarter), 67 public beta versions (updated every two weeks), adapted to more than 150 models, and the number of users has exceeded 10 million.

According to a data report on the mobile phone flashing industry in 2014 released by Flash Wizard, among third-party ROM resources, Baidu Cloud OS ranked second after CM, surpassing its competitor Xiaomi's MIUI.

Why did Baidu Cloud OS, which is booming and has tens of millions of users, suddenly announce the suspension of service?

This is partly due to the participation of giants such as Alibaba and 360. It would be difficult to develop a cloud OS without hundreds of millions of dollars in funding, so *** chose to stop OS updates while financing was in progress.

"Others spend in units of 1 billion US dollars, while we spend in units of several hundred million RMB, so we are spending slowly now," Xu Guoxiang told reporters.

He admitted that the mobile phone industry is very competitive this year, with giants joining in. Recently, *** is also doing a new round of financing. Now it is at a critical period. The institutions have basically reached an agreement and are still discussing specific details. "Under such circumstances, we consider that there may be some new strategic adjustments after new capital comes in, so during this period, we have temporarily slowed down the pace of investment in OS. The version and the future direction may be adjusted, so we will temporarily stop updating the old version."

In the opinion of industry insiders, compared with its competitors Xiaomi, Meizu, Alibaba, etc., Baidu Cloud OS lacks the support of powerful mobile phone hardware. It is difficult to successfully break through the chaotic third-party ROMs relying only on simple system services.

Funding Shortcomings

The suspension of Baidu Cloud OS does not mean that this business will be completely abandoned.

Xu Guoxiang admitted that after a few years of operation, Cloud OS has more than 10 million users and has invested several hundred million yuan in total. Now he mainly wants to control the pace of investment and increase the subsequent investment after the investment is in place. He said that this is a normal business behavior of the company.

He said that although the cloud OS business is slowing down, it is still very important to ***. After all, hundreds of millions of dollars were invested in it last year. "This year we will appropriately control the expenditure, and the foundation of the entire business is still here. The basic users of cloud OS exceeded 10 million last year. The subsequent development, including brand and strategy, will continue after the capital is in place."

But the current situation is not optimistic for *** and Baidu Cloud OS.

It can be seen that in the Chinese smartphone market share, compared with domestic and foreign mobile phone manufacturers such as Xiaomi, Huawei, Samsung, and Lenovo, the outside world almost never sees the presence of Bajia mobile phones.

A reporter from *** Financial Daily logged into the Bajia Mall under *** Company yesterday and found that all Bajia mobile phones were sold out; and in Bajia's Tmall flagship store, only one mobile phone was on sale, and the monthly transaction volume was shown as 0.

Before Baidu Cloud OS suspended updates, there were industry sources saying that core members of the Baidu Cloud OS team had jumped to Meizu FLyme, LeTV mobile phones, and 360 mobile phone businesses.

"I don't want the media to exaggerate something that doesn't exist." Xu Guoxiang told reporters about the current situation of ***. He said that the company will always face various capital pressures, and *** must continue to rely on capital support.

He told reporters that from the perspective of specific business, the B2B business is still on a good upward trend, with a turnover of 25 billion yuan last year; the number of stores nationwide has reached 400,000, and it is still the largest B2B mobile platform in the country.

"The only possibility is that the challenges in mobile phones and OS are relatively large," said Xu Guoxiang. "We can see that a bunch of giants such as Huawei, Xiaomi, 360, and LeTV have entered the market. Now we dare not expand easily without hundreds of millions of dollars in capital."