Baidu announced they’d stop charging its navigation app. Later the same day AutoNavi, a veteran mapping data and service provider, held a press conference announcing the same thing. To fuel the hype, in the next day Baidu stated that they’d refund users who had paid for it. It’s unknown how many installs of Baidu Navigation, which costs 30 yuan, have been sold. AutoNavi cannot afford to do the same, for its premium navigation app, priced at 50 yuan ($8), had been downloaded and pre-installed in more than 70 million smartphones.

It’s no secret that Baidu looks AutoNavi as the biggest direct competitor in location-related service. AutoNavi is the first of conventional mapping data companies in China that shifted from serving businesses to developing consumer-facing services. Amap, the maps app developed by the company, is for free while its navigation app previously was not. It is estimated that the premium navigation apps sold to smartphone manufacturers or distributors and telecom operators must be at a lower price than those sold to end users. But still it’s a big chunk of AutoNavi’s revenues.

At AutoNavi’s press conference, Zhou Hongyi, CEO of Qihoo and an independent board director of AutoNavi, showed up in a video touting the going-free strategy, which he applied and succeeded with. When 360 Safe Guard, the flagship security product of Qihoo’s, started generating a considerable number of revenues, his company decided to offer the product for free — the first in China — and quickly gained a large number of users. Other security product providers had to follow suit for the sake of users but fail building a business model, while Qihoo successfully converted the security product users into its browser users and monetize their online activities on the browser.

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Tracey Xiang

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com