I have written before on how Google is maturing and how one might think about competing with them. All the posts can be found here.
This post is an extension of some of those arguments. By their own admission Google is all about search. The following is a quote from their corporate philosophy page where they list their ten things they “have found to be true”.
2. It’s best to do one thing really, really well. …… Google does search.
That’s cool. Focus is good. And they do it REALLY REALLY well. Rising market share as measured by search queries (44% market share in US in July 2006 by Comscore, and by some calculations as much as 70% in reality). All this AND they achieve market leading revenues per query.
But I think they will face some challenges in 2007. Their core search franchise faces a number of threats and their other initiatives are exciting, but unlikely to realise their potential this year.
Challenges to Google’s position in search:
- Microsoft Vista desktop search will challenge Google’s desktop search – see Paul Thurrot for a very detailed review. Web search is where the money is, but some (most?) people will definitely get back into the habit of going back to the browser to initiate searches, reducing Google’s natural ownership of this space. If Microsoft added web search results below the desktop search results like Google does, now that might be really interesting (might get them in anti-trust hot water as well though…)
- Google’s margins and scale are starting to make everyone jealous. Rumours abound of large advertisers getting sick of Google’s massive profitability, e.g Travelocity to Google: Stop dissing multi-million dollar ad clients
- Clickfraud issues rumble on, even after the $90m settlement last July.
- IP challenges might start to hurt – many content owners feel that some of Google’s mega profits should be theirs – witness the ongoing negotiations with content owners re YouTube, the fracas over Google Books, and lawsuits in France and Belgium
- If they really have 70% market share in search then growth will start to get challenging
None of these things are huge in their own right, but Google is priced for perfection, with the share price up over 400% since IPO, so a small dent in their search position could hurt them. Overall I feel that the capacity for bad news far exceeds the capacity for good.
If this topic interests you there is a lot of good material on ZDNet.