By Forrester Research
Special to CNET News.com
March 2, 2004, 9:30AM PT
By Charlene Li, Principal Analyst
Moving toward a highly anticipated initial public offering, Google looks unstoppable.
But there are limits to Google's ambition for ubiquitous search--and ways for portals and technology companies to gain an advantage. Over the next few years, search will be fought on three battlegrounds--structured search, portal integration and advertiser sign-ups. Google will have to cede the first two to Microsoft and Yahoo. But the company will maintain its position as a general search utility and will become an effective and lucrative ad network.
Doesn't provide as much value as portals. Although Google has a strong search following, its users also frequently visit other portal sites. Google doesn't give people enough reason to abandon those relationships--leaving the door open for portals to win back search users.
MSN and Yahoo will leverage their toolbar technologies to place their respective search boxes near features like Hotmail and Yahoo Mail. And as they improve and expose search to their loyal users, the portals will only have to offer search that is "good enough" to make the net value of search plus portal features greater than what Google can provide on its own.
Tries to stretch a simple search box to fit all queries. Google's commitment to its simple interface means that it buries its different search features. Instead, it believes in surfacing those features after people enter their queries. But this requires that people first know that they can even ask a question, such as looking up a flight departure time.
In contrast, portals like MSN can integrate search into the activities people conduct on their networks everyday, allowing the site to both influence the queries and to make educated guesses about their intent. For example, a search for "insomnia" returns pertinent information on symptoms and self-tests, but not links to the movie of the same name.
Has few advantages when it comes to specialized search. Google's biggest technology advantage was its PageRank algorithms that examine link structures to determine relevance. That's great for hypertext information, but the Internet is quickly incorporating new types of content like databases and executables that will require a different type of search.
While Google can and will develop specialized search, it will have no technological advantage over focused players tuning custom search capabilities for specific activities like buying a CD or investigating a potential employer.
Must invest heavily to stay out in front. Dependent on word-of-mouth marketing, Google must continually put innovations in front of evangelistic users. Google relies on having and hiring the best technical talents in the world to keep up this pace. But major portals, aspiring start-ups, and the next pair of bright Stanford roommates compete to concentrate this brain power, too. In addition, powerhouses like Microsoft and Yahoo need only to draw off of Google's innovations. The portals will then promote the features relentlessly throughout their networks.
Microsoft will win in integrating structured, desktop search. In its next version of Windows--due out in late 2005--Microsoft will revamp desktop search by turning the existing file system into a database. Applying its now considerable experience in searching and clustering structured content to the Internet, Microsoft will extract and exploit structure beyond link popularity. While Google will also develop structured search capabilities, Microsoft will strike the winning blow by placing its uber-search box directly on the desktop.
Yahoo will excel in creating the portal experience. Even if Google can overcome a deep-seated cultural focus on search, it lacks the experience to compete against the three portals. Yahoo leads the portals in creating a satisfying consumer experience, and it will continue to enhance and extend search throughout the portal network--leveraging its daily interactions with consumers to fine-tune the site. Lucrative areas like shopping and local search will also go to the portals, leaving Google with general queries that are difficult to organize in a portal environment.
Google's forte and fortune will be locking in advertisers--and publishers. Google will become the dominant pay-for-performance ad network because it will deliver the biggest and best audience through its network of publishers. Yahoo-owned Overture Services will be hard-pressed to compete. In a choice between Yahoo, which competes at multiple levels with publishers, or Google, which is focused solely on search, publishers have and will continue to sign up with Google in droves. As contextual marketing makes inroads, Google will evolve its ad network into utilities that will enable the contextual placement of display ads--and siphon a portion of traditional branding ad dollars away from the portals.
© 2004, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.