How Qihoo 360 Won the Browser War in China

The Qihoo 360 Safe Browser surpassed Microsoft’s Internet Explorer last November to become the most widely used web browser in China. Not only has the three year old browser now hit 57% market penetration, but achieved its dominance in record time.

An onomatopoeia for the sound of a sneeze, Qihoo is best known for its 360 Safe Guard anti-virus software. Once a traditional software company, Qihoo shifted gears in 2008 from selling security software to selling ads. The company gave away its product for free which served as a force multiplier to build up a vast user base and expanded into new areas like a web game portal, an e-commerce site, directory listings, and released more free software to attract more eyeballs to the former, with one product in particular the 360 Safe Browser.

The largest component of Qihoo’s revenues today comes from advertising on hao.360.cn, the default home page of the 360 Safe Browser, which the company sells links on and refers search queries to Google for a fee. Online advertising revenues were $35.1 million in the third quarter of 2011, up 227% from the same period last year and 31% from the prior quarter.

While its competitors use traditional means of promotion, holding grassroots events and recruiting campus ambassadors, Qihoo instead built a powerful distribution channel using the authority of its anti-virus software to play off netizens’ fear of an insecure computer to also install their browser.

How 360 became number 1

Icon similarity

The 360 browser icon bears an uncanny resemblance to the Internet Explorer icon. While IE is blue, 360 is green.

The default browser when opening links

A popup from the 360 anti-virus software asks users to install the 360 browser when clicking links in chat programs or emails.

Reminders that the 360 browser is safer than IE

Everytime IE encounters a security vulnerability, a 360 anti-virus software popup occurs promoting the 360 browser.

As IE became safer, 360 anti-virus started to ask users on its own to set their default browser to 360.

Other browsers blocked from becoming default

When you attempt to install other browsers, the 360 Safe Guards will allow the browser to be installed but will then popup saying not to let it become the default browser.

A system scan results in a lower score without the 360 browser

When users of 360 Safe Guards run a check of their system, if they don't have the 360 browser installed it will give them a failing grade. If the user chooses another security software to protect their failing grade browser, the Safe Guards say no.

When another security software is chosen to protect the browser, it says no immediately.

Software bundles and pre-installation on new computers

The 360 browser is bundled in the installation of the 360 Safe Guards. The dialog boxes cannot be closed intuitively and most people simply click “Next”.

Difficult uninstallation

When a user tries to uninstall the 360 browser, they are presented with three choices: Repair, Change to IE9, or uninstall directly. If they choose to change to IE9, after installation another popup occurs and when you click “Next”, it reinstalls the 360 browser and makes it the default.

Problems accessing the Internet after uninstallation

There’s instances of people uninstalling the 360 browser and then being unable to access the Internet.

What next?

Society trains people not to question authority. Qihoo took advantage of years of accumulated branding as an authority on security to exploit the “suspension of suspiciousness” that arose when users were asked to install or make default its browser. The company must continue to approach product promotion from new angles to support its strong growth in advertising revenues.

One way for Qihoo to accomplish this is through its technical support and repair services. Since May 2011 the company has provided within a year free computer repair services for Internet users, implemented by remote control. When Qihoo’s computer technicians repair, will they also install the 360 browser and set the homepage to hao.360.cn?

Another is through optimizing ad delivery itself. Zuoli Xu, CFO of Qihoo, said in an iChinaStock interview, “We have exploited our big share in the browser market by inserting an intelligent tracking program into our browsers that can track the habits and hobbies of each individual user, and then re-route links that suit the user’s interest to the home page of the browser.”

While the distribution of free Internet security software has helped Qihoo achieve the distinction of most widely installed browser in China, its new ad-supported business model has not been easy sailing. Qihoo in 2010 was in a battle over alleged unfair business practices with Tencent, today finds itself under attack from short seller Citron Research calling it a fraud, and in the future must counter companies like Sogou and Baidu using a similar strategy to promote their own browsers. You can be sure that Qihoo will not be afraid to upend its whole business to put up a fight.

Special thanks goes out to Tie Jun for his initial post about Qihoo’s tactics. If you’re interested in discussing further analysis of Qihoo or other firms, please contact us.