Qihoo 360: A Subversive Tiger in the Internet Jungle
Qihoo 360 Technology Company was a leading Internet platform company in China, the number one provider of Internet and mobile security products as measured by user base. The company entered China’s fiercely competitive Internet market relatively late and adopted the “freemium” model as the basis of its business. “In the beginning,” said Qihoo founder Zhou Hongyi, “Forget how to make money – focus on how to create a valuable service for every consumer.” Qihoo sought to monetize through continuous product-side innovation and product-design that puts users first.
Quihoo’s flagship product is 360 Safeguard, an anti-virus application that protects computers against various forms of malware and is provided to customers free of charge. Qihoo also has a computer browser – the 360 Safe Browser – that is also provided free of charge. Equivalent products are also provided for mobile devices. This enables a business model in which users are shown ads, are sold services like games, and potentially routed to online merchants from the 360 home-page. The case discusses this “Freemium” business model, exposes students to the Chinese internet market, and facilities discussion of competition for users online. It also helps understand the key elements of an ad-driven strategy for an internet company, and the challenges of operating in a competitive market like China. As of Sept 2014, Quihoo’s PC-based products had 495M users and its mobile-based products had 673M users.