"Orange recognizes that Internet usage in emerging markets is more likely to be via low-cost small screens," said Emeka Obiodu, principal analyst for telecom strategy at Ovum Research.
As a result, Orange and Baidu will seek to deliver enhanced data compression capabilities so as to reduce the strain on Orange's network and the cost for users, Obiodu said.
But Baidu's deal with Orange may limit Baidu's maneuverability in the market, Obiodu said. If Baidu sticks to Orange exclusively, it will depend on Orange's expansion of its geographical footprint. "Over time, this lack of maneuverability will influence, and maybe undermine, Baidu's ability to exploit emerging opportunities in the market," he added.
Google has prospered by maintaining its independence, even though it has sought partners on a tactical, case-by-case basis.
Meanwhile, Baidu joins a growing list of Chinese companies looking to get a slice of Africa's lucrative mobile and data market. Chinese manufacturers of low-cost networking equipment and smartphones Huawei Technologies and ZTE are using their emerging market expertise to cash in big as customers upgrade to data-enabled handsets from basic phones.
Baidu is expected to get a big cut from the sales of low-cost smartphones by Orange, in addition to revenue collected from data usage. Orange has stressed that it believes Africa will be the world's most dynamic telecom market over the next few years, and that the Baidu deal will help further drive mobile data adoption in markets where the operator is already seeing increased demand for Internet access via smartphones.
In anticipation of growth in the region's data market, Orange has recently been deploying 3G networks in countries where it has operations. Mobile data and broadband technologies are increasingly being used by operators as a substitute for poor or non-existent fixed-line infrastructure in the region.
Social media networks including Facebook and Twitter are said to be responsible for the high demand of smartphones in the region. Marc Rennard, senior executive vice president for Orange activities across Africa and the Middle East, said Africa's appetite for Internet services is very strong -- a key reason for the deal with Baidu.
"Price and access have been a barrier to entry but partnering with innovative companies like Baidu provides unique solutions that gives our customers affordable access to all services they desire without compromising on features or ease of use," Rennard said.
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