Qihoo reported a 124% year-over-year increase in revenue in Q3 2013. Online advertising revenues recorded a 107% year-over-year increase, mainly from 360 search and personalized start-up pages. Revenue shares from online games increased 163% year-on-year.

The total revenue is $187 million, for the first time, has passed Sina, who owns Weibo which has a similar size of user base with Qihoo’s. Sina operates a news portal and a Twitter-like social service Weibo — sometimes it is referred to as a combination of Yahoo! and Twitter of China. The portal advertising has decelerated and Weibo monetization just took off. While Sina CEO Charles Chao said on various occasions that monetizing the increasing content consumption via mobile would be more difficult, Qihoo has been well positioned, as one of the largest mobile app distributors, in China mobile Internet market.

People who long Qihoo must be confident in its search business. Qihoo management disclosed at today’s earnings conference call that currently Qihoo Search’s market share has increased to 22%. They found the new Sogou, added with Tencent’s search service Soso, actually has lost some market share to less than 13%. Zhou Hongyi, CEO of Qihoo, said on the call that the market can only accommodate two search players and there will be little room for the third largest. Baidu said they still had 70% a market share, Mr. Zhou denounced it saying that’s by Baidu’s own measurement. He said Qihoo’s goal is 30% by the end of next year. Earlier this year the company adjusted the annual goal for 2013 to 25%.

All the traffic on Qihoo Search is from search box within Qihoo browsers and So.com as the company hasn’t built Baidu Union-like contextual ad program. Mr. Zhou disclosed that now 30% users do searches directly through So.com.

Qihoo will soon release a new product for mobile search, Mr. Zhou disclosed. Previously the company had released a mobile search service called Leidian that also helps users manage content in smartphones. He said currently searches for apps or mobile content can be satisfied with the company’s 360 Mobile Assistant alone. It’s early for mobile search monetization, he hinted.

When it comes to mobile games, Qihoo believes it’s the largest mobile game distributor in China. When asked about mobile games on WeChat that became explosive recently, Zhou commented that WeChat is a good platform for premium offerings and cannot be an app market which would conflict with its role as a communication service. He thinks that’s why Tencent hasn’t added an app marketplace to WeChat.

Commenting on smart hardware Chinese Internet companies are chasing after, Mr. Zhou thinks the next trend in China must be smart hardware as smartphone is near ubiquitous. It’ll be hard to make profit from hardware and hardware makers have to build business model on top of software. Qihoo’d always partners with third parties to manufacture hardware. The portable WiFi router Qihoo launched earlier this year has sold millions of pieces. An updated version is under development. The smart bracelet for kids launched last month will be put into mass production soon, according to Mr. Zhou.

Tracey Xiang

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

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