@ozzie232 Fail to see why you aren't concerned. It's the cheapest phone in the market, with nVidia's Tegra chip, preloaded with Qihoo browser, and more importantly offered as a special by China Telecom (China's largest mobile firm).
Yes, handsets are being offered by many firms, and as such may appear to be no big deal; however, it is hardly a hardware sales game, it is a services game. Qihoo gets to offer mobile search, and gets to play SO-LO-MO (at least the "local" & "mobile" leg of it), ie local based ads.
Incidentally, surely you don't believe Baidu is going to gain much traction in Europe, do you? With Google the king there. It never is easy, especially when they have to rank across various languages. Look, they couldn't make much headway in Japan, so not sure why suddenly they will find El Dorado in Europe.
As far as Europe and even the rest of the World, please see Wikipedia regarding Chinese populations around the World, including Europe, Africa, Canada, the U.S and you might see where they (Baidu) are going with this. If you do no think westerners are interested in all things asia just consider what u-tube video just became the most watched of all time. Also, I think competition is good and Baidu and Qihoo have plenty of it. The Street today took Qihoo's news and shrugged it off. They even got a headline about speed check. You are correct that it is a services game and that is why Google is continuing to stand above all else. In China Baidu comes closest to the image of Baidu. Don't take my word for it, even Googles Eric Schmidt says that Baidu will be the leader in China for a long time. He made no mention of Qihoo.
So, everyone and their brother is offering a smartphone. In Qihoo's case it is from an unknown and as yet untested manufacturer. It will come pre-loaded of course with Qihoo apps. I may be wrong but I don't see this as taking anything away from Baidu, but rather a necessity in today's market place just to keep up with what everyone else is doing or has already done. Smartphones will almost become a lost leader for these companies in many ways and a way to attract customers to their services. Look at who offers smartphones in this Country? Still a few companies stand out, and Google is one because of the total user experience. In the future it won't be so much about the device (as in the case of Apple) but about the total experience and in this respect Google is winning in this Country and elsewhere. Baidu is the Google of China and expanding in other Asian Countries. Yesterdays announcement by Baidu barely got a notice that they have hired the top internet marketing firm in Europe to help them expand in Europe and 42 Countries. Baidu is going global.