Rich Skrenta has this amazing article on his blog that proclaims Google as the undisputed leader of the Third Wave of Computing after IBM and Microsoft. According to him, the search industry has sorted itself out such that no other competitors, not even Yahoo or Microsoft, can face up to Google’s dominance in search technology, revenue monetization nor brand perception.
So, has Google really won the war?
No way. I am not going to argue that at this current time, Google search is superior in the 3 areas i pointed out in the last paragraph. But i dispute the fact that Google’s position as the leader in search is dominant to the extent Microsoft and IBM had for the PC and mainframe industries.
Google’s next step: owning the rest of the page views on the netJust as Microsoft used their platform monopoly to push into vertical apps, expect Google to continue to push into lucrative destination verticals — shopping searches, finance, photos, mail, social media, etc. They are being haphazard about this now but will likely refine their thinking and execution over time. It’s actually not inconceivable that they could eventually own all of the destination page views too. Crazy as it sounds, it’s conceivable that they could actually end up owning the entire net, or most of what counts. — Rich Skrenta
For one, Google does not have dominant market share of the search market. According to the latest (?) Comscore ratings of August 2006, Google’s market share of search is just under 50%, while, dominating Microsoft and Yahoo in head-to-head comparisons (at 12.5% and 28.7% respectively), do not grant it dominance to the extent of Microsoft’s near-monopolistic share over PC software, or even IBM’s share in their heydays. Of course, Rich Skrenta cites Google’s true search market share at 70% based on his own analysis here, which makes for compelling reading as that is closer to my own analytics on this blog and elsewhere too, but its still hard to dispute comScore methodology without deeper analysis. Google has to fear a resurgent and cash-rich Microsoft buying over a Yahoo that is looking vulnerable after recent management revamps and strategic missteps in its bid to become an online media giant at the expense of search.
If Microsoft and Yahoo combines, not only do they form a formidable threat in terms of search market share, they also bring large audiences and strengths in content (through the MSN and Yahoo sites) under the same roof. This effectively kicks the wind out of Google, especially if they intend to diversify into areas other than search, such as social media, photos, mail or finance (as listed y Rich Skrenta). We know how Google fares in those verticals currently, it has already exited the user-dependent Google Answers service while Yahoo Answers roars ahead. While I am a rabid fan of Gmail, Yahoo Mail and Hotmail still have overwhelming numbers of users that are unlikely to convert their loyalty in any significant way to Google soon.
Transfer of Brand-Trust
The brand perception of Google might be strong, but it is only limited to search, and not in email as yet, and similarly for other services other than search. How users will translate their trust in the Google search service to other Google-affiliated services is an open question even Googlers must be asking themselves too. As it stands, Google has launched an amazing number of services under its Google Labs, few of which have truly stuck on that metaphorical wall of user-consumer acceptance. While its culture of innovation is laudable here, doubts have crept as to how Google intends to curb its dependence, in terms of revenue, upon search as its sole revenue driver. If we are to take revenue generation as a reliable symtpom of brand equity, Google is only good in search, so far. Period.
All in all, I think its still premature to say Google is the dominant search engine for this Third Age of Computing. It has been the first to get search truly right (first-right-mover advantage) but the jury is still out on the success of Microsoft’s new advertising platform AdCenter and Yahoo’s Project Panama. Furthermore, the search engine marketing industry is not just limited to CPC ads which Google totally rules, but also CPM and CPA ads (Dave McClure made a strong case for CPA here). There’s still a long way for Microsoft, Yahoo or even NewsCorp to muscle in and determine the path for search engines to lead the evolution of its advertising-reliant monetization model. I think 2007 will shed more light on the final destination of the Crown for Search, especially so if Microsoft and Yahoo hook up.
The war for search engine domination is not over because monetization lies at its root, and the best man who figures out how to sell effectively (CPA ads) to an intent-based activity like search, wins.