It's finally official: Baidu Inc. has sold its home delivery business Waimai to Ele.me.
News of the sale has been hanging around for a while, and with the companies announcing a merger Thursday, that chapter seems closed.
What's also fast shutting down is Baidu's strategy for the online to offline, or O2O, business -- which CEO Robin Li once said his own shareholders didn't understand. Another more famous plank of that endeavor was the search engine's tie-up with the China unit of Uber Technologies Inc. That ended with Uber China's sale to Didi Chuxing and ultimate exit from the market.
Li's pragmatism in ditching a business with little chance of turnaround should be lauded, although he was probably a bit late. Hindsight is a wonderful thing for columnists, but even Li must have known a year ago that O2O was a no-go.
Investors may forgive him for holding on a little too long. Looking forward, though, we need to ask of Baidu not "what's next?" but "what's left?"
O2O was supposed to be Baidu's way of leveraging its connection to consumers to build a business for the coming decade. The Beijing-based company is nowhere in social media or e-commerce, and search is dying. It does have some remaining exposure, including iQiyi.com's deal to distribute Netflix programs in China.
All the talk of late has been of driverless cars and artificial intelligence, the company's attempt to play off its big data chops. Neither of those arenas are consumer-facing, though. For example, it won't be end-users making the financial decision on whether to buy a Baidu-powered driverless car. In reality, most of the new technologies it's building will be sold to corporations.
This means Baidu will have to transform itself from a consumer company to a provider of technology to corporations, with the requisite management structure and sales teams to make it happen.
Baidu may get away with losing on O2O, but it can't afford to fail at B2B.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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