This time it’s analyst Charlene Li, whose commentary runs on CNET today. In the piece she gives a fine overview of Google’s weaknesses vis-a-vis MSN, Yahoo, and presumably AOL. Her overview is good, but I disagree with some of her conclusions.
In summary, she argues that Google can’t compete with the portals search offerings, in particular once the portals have integrated search across their sites. Portals, Li argues, are in the best position to incorporate personalization, contextual searching (ie a search for “price delta” within Yahoo Travel yields different results from the same search within Yahoo Finance) and the like. Li further points out that when MSFT integrates search into the desktop qua Windows, Google will really be hard pressed to compete.
Li concludes that Google’s only true advantage lies in its independence as a non-publisher: 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.
Here’s where I think this analysis misses a few key points. One, Google is already a portal, but a loosely joined one. It has Orkut, Groups, Blogger, and – rumored to be coming soon – email (well, they already have email – it’s in Orkut). If for some reason they have to move in that direction to compete, they can and they will.
Second, Li bases much of her analysis on the interface presumption that Google will always take the “blank slate” approach to search – that is, the user comes to a blank box, with no context to guide the search results. While this is true now, it need not be in the future. Page was recently quoted saying “it takes five seconds to type in a zip code” – and I am sure the folks at Google can figure out a way to make sure that zip code (and any other personalized information) only has to be typed in once. In other words, if Google feels compelled to add personalization, they will (and if you’re an Orkut member, my guess is you’ll be able to personalize your search pretty darn soon).
And lastly, Li assume that publishers will prefer Google over the portals, because the portals are competitive with publishers. In fact, publishers will go with whoever sends them profitable traffic, end of story. If Yahoo or AOL can do that, the publishers will work with them.
In any case, I’m glad to see this kind of business model thinking out and about on the web. It’s a refreshing change from the party lines we see so often in the press.