Algorithms are a sequence of steps that solve a certain task. Increasingly crucial in shaping the digital world, they actually have a long history as a mathematical skill set, deriving their name from a ninth-century Persian polymath. But they are also fundamental to the future of Chinese tech giant Baidu, which wants to move away from an over-reliance on search and advertising towards a new reputation as a trailblazer in artificial intelligence (AI).
Once a controlling gateway to China’s internet, Baidu has been battered by competition from companies like Tencent, Alibaba and Bytedance, which boast walled-off ecosystems that push the search giant to the fringes of the action. Out of favour with investors, Baidu’s shares are trading at much lower multiples than its rivals.
Robin Li – the company’s founder – is trying to battle back by expanding its core business beyond browser-based searches, with the launch of its own super app, called the Baidu App, which now boasts about 200 million users.
But the company is also counting on a ‘platform as a services’ strategy (or PaaS) in which a range of software and support services is made available to third parties to develop their own applications.
In a cloud-based approach, the customer controls the software deployment process, with the cloud provider delivering the components needed to create the customer’s applications, such as servers, storage systems, networks, operating systems and databases.
In Baidu’s case, there’s a twist in its focus on deployments of artificial intelligence via Baidu Brain, which incorporates a range of AI-inspired solutions and services. That includes PaddlePaddle, a deep-learning tool that helps developers to build neural networks; Kunlun, an AI-focused pro-cessing chip that powers customer applications from Baidu Cloud; and a growing series of algorithms that enhance performance in areas such as voice technology and computer vision.
The company claims that this open platform offers over 260 AI capabilities that are being tapped by more than 2.1 million developers.
Probably the most high profile of the results is its driverless operating system Apollo, sometimes described as the Android of the autonomous driving world. Baidu says that more than 100 third parties have signed up as partners, including leading carmakers and their main suppliers. Its bet is that the open-source philosophy will bring together the many different technologies – including radar, LiDAR, machine learning, robotics and high-definition mapping – needed to make Apollo an industry leader.
Another contributor is DuerOS, which Baidu describes as a conversational artificial intelligence system that allows users to communicate with hardware by speaking to it. One of the leading applications is a range of smart devices under a brand called Xiaodu, which includes speakers and wireless earphones equipped with the voice assistant.
The company says that there are now more than 40,000 developers working with DuerOS, although the blowout success is Baidu’s brand of smart speakers, which fuelled a new round of financing for Baidu’s Smart Living Group last month that valued the unit at $2.9 billion
In another strand of its strategy, Baidu is introducing the same building blocks in AI to the healthcare industry to support the development of new drugs, the diagnosis of diseases, and the delivery of medical treatments.
Drug discovery companies require huge libraries of sequenced genomes to identify the mutations that drive the growth of irregular cells, while the new breed of AI should be capable of delivering diagnoses in a matter of seconds, as well as providing predictions of how individuals will respond to different treatments.
Advanced computational power and the spread of machine learning techniques are hailed as key technologies for realising this vision – and something that Baidu will offer via a new subsidiary called BioMap, which it announced in September.
The company showcased some of the possibilities for the healthcare sector at the height of China’s Covid-19 outbreak in February, when an algorithm designed to identify the genetic make-up of viruses was made available to testing agencies and research institutions. Reportedly, it reduces processing times for genetic analysis from almost an hour to less than half a minute.
Because of China’s rising number of cases of cancer and other chronic diseases, the market for so-called ‘precision medicine’ (treatments or illness prevention plans guided by genetic, environmental and lifestyle factors) could reach Rmb135.6 billion ($19.96 billion) in sales by 2024, according to Qianzhan, a Shenzhen-based consultancy. Pfizer acquired a 10% stake in Suzhou-based CStone Pharmaceuticals for $200 million last month for its precision medicine capabilities and similar aspirations have spurred the emergence of companies such as Burning Rock Biotech (a provider of sequencing technology for oncology treatments) and Genetron Holdings (a molecular profiling firm). Both went public on Nasdaq in June.
The new initiatives in precision medicine dovetail with the growing reach of Baidu Health, an established healthcare and wellness brand that reported an 87% increase in subscriptions from ‘top-tier doctors’ in the first half of the year. Baidu says that newsfeeds from healthcare experts, short-videos and live broadcasting are bringing new traffic to the platform, resulting in online consultations more than doubling from last year. The plan is to create new revenue streams in online prescriptions, dietary supplements and other health-related services.
Longer term Baidu is banking on its repositioning as a launch pad for AI across a variety of sectors and industries. Hence the trumpeting of its number one position in AI-related patents in China, with a particular focus on innovation in deep learning, natural language processing and speech recognition.
Its quarterly results tell a slightly different story, with company cash flows still heavily reliant on sales from its core search and advertising business, as well as a smaller contribution from iQiyi, its online video streaming site.
Baidu’s AI business contributed 9.7% of sales in its most recent quarter, up from 8% in the same period last year. Robin Li and his executive team will be hoping for a lot more traction in the quarters ahead, although the biggest of their investments – the bet on autonomous driving – may not see significant returns for some time.
Baidu has tried to forge ahead in getting driverless cars onto the streets, with the launch of a third robotaxi service in Beijing last month, following similar projects in Changsha in Hunan and Cangzhou in Hebei. But Li Zhenyu, the head of Baidu’s autonomous driving unit, told media that wider deployment of self-driving taxi fleets isn’t very likely until 2025. A lack of clear regulations, ongoing technical challenges and a limited supply chain for self-driving vehicles means that the robotaxi market is still in its infancy, he said.
In the meantime Baidu is finding other ways of embedding its driverless operating system with new clients, with the opening of Apollo Park, the world’s largest autonomous driving testing facility, in Beijing earlier this year. Another focus is sales to municipal governments of its V2X infrastructure – technology that allows vehicles to communicate with traffic lights and road signs, as well as cars nearby – as part of smart signalling and smart parking projects.
In September Baidu presented the latest round of releases of its suite of AI solutions at its annual technology conference. One of the debutants was a fully autonomous robotaxi that can carry passengers without a backup driver. Baidu partnered with FAW Group last year to make the fully-electric robotaxi at FAW’s luxury subsidiary Hongqi. However, government guidelines currently stipulate that a safety driver must be sitting in every robotaxi to prevent possible accidents. Deployment of fully driverless cars is still some way off.
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