December 6, 2005 4:00 AM PST

Can there be another Google?

Internet search is reaching an important pivot point, where market leaders are rewarded by Wall Street, laggards are punished, and start-ups try to fill niches left empty by the major players.

Though the market has seen a few leaders come and go over the last decade--anyone remember AltaVista?--few would doubt that a distinct top tier has emerged, occupied by Google, Yahoo, AOL and MSN.

Wall Street has certainly noticed, and it's rewarded the two standout companies--Google and Yahoo. As of the end of trading Monday, Google shares were up about 130 percent over the last year to $405.85, while Yahoo shares were up 4 percent to $40.47.

Google also is getting the bulk of business. Its search traffic rose nearly 30 percent to 83.3 million unique users in October from the year before. Yahoo search saw a 12 percent rise to 52.3 million unique users, according to Nielsen/NetRatings.

News.context

What's new:
Venture capitalists and start-up companies in the Internet search realm are looking for new ways to exploit the field, areas that search leaders Google, Yahoo, AOL and MSN have missed.

Bottom line:
Among the possible consequences--and benefits--of successfully developing a niche product or service in search is that one of the industry leaders acquires your company. Some observers also point out that, with Time Warner looking for a partner for AOL, the search sector could see some major consolidation.

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It's a case study straight out of business school: When a market gets to a certain point, the leader gets the biggest reward on Wall Street. The runner-up does OK too. But investors start losing interest in the little guys. InfoSpace's share price, for example, has dropped about 45 percent in the past year to $26.29, while Mamma.com and LookSmart shares have fallen more than 60 percent to $2.46 and $4.09, respectively.

Though there's still plenty of growing to do--indeed, some analysts estimate search advertising in the United States could grow nearly 80 percent in the next five years to $7.5 billion--the leaders are clearly established. Now they're building from their base into areas like Internet telephony and wireless access, and girding for a protracted market share battle.

That leaves venture capitalists and the start-ups in which they invest looking for areas the leaders have missed. By filling in the cracks, they hope to cash in on their investments by getting acquired by one of the powerhouses rather than through a blockbuster initial public offering. Can another Google still emerge? Never say "never." But industry experts say the barrier to entry gets higher as the big companies become more established.

"In the late 1990s, if you were a start-up and went public, you were just competing with other start-ups. It was a wide-open market. Now it's already a pretty competitive market," led by Google, a $4 billion company that's still growing at a 100 percent annual clip, said Carl Haacke, consultant and author of "Frenzy: Bubbles, busts and how to come out ahead." "The start-ups are competing with the Googles of the world, and the potential for people's imaginations to run wild is tempered because of that."

Of course, the tech industry has seen this sort of thing before. Not long ago, the security market consolidated around a handful of big companies like Symantec and Check Point Software Technologies, while venture capitalists pumped money into start-ups in hopes of an acquisition. Before that, the market for customer resource management, or CRM, software consolidated around big companies like Siebel Systems, Oracle and SAP, while start-ups focused on the niches.

Searching for a niche

Indeed, in such an environment, often the only way to get a seat at the table with the big companies is to introduce a disruptive technology or business model--like Salesforce.com did when it started selling low-cost, on-demand CRM software.

"Salesforce.com...created out of things that existed a paradigm-busting attack at the CRM market," said Joshua Greenbaum, principal at Enterprise Applications Consulting. "It really set the industry on its ear."

So, barring a disruptive innovation, it looks like the best way to get a toehold in search is to think "niche."

23 comments

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Of course...
If you invent something that almost everyone needs. For example a kind of gasoline that takes 2 cents to produce, you can sell it for a dollar and everyone will still buy it since its much cheaper than regular gasoline. Or a cream that lets hair grow back. Or weight loss, this one is a guarantee for profit. There is tons of stuff that needs to be invented that we dont even know about

<a class="jive-link-external" href="http://work-out.blogspot.com" target="_newWindow">http://work-out.blogspot.com</a>
Posted by SqlserverCode (165 comments )
Reply Link Flag
There is a better search engine: AnooX
To your question as to whether there is or going
to be a better search engine than Google &#38; Yahoo,
the answer is YES, it is already out, albeit in
Beta mode, it is called AnooX. Why AnooX is
better, it is because AnooX results are 1st
machine generated but then made better by the
majority Vote of the People, a patent pending
technology that only AnooX uses in generating
search results. You can see the details of this
here:
<a class="jive-link-external" href="http://www.anoox.com/whyanooxsrbetter.jsp" target="_newWindow">http://www.anoox.com/whyanooxsrbetter.jsp</a>

To be exact Google &#38; Yahoo are better than AnooX
in certain aspects, aspects that only have to do
with number of servers that AnooX runs on vs
them, which has simply to do with amount of
funding available to AnooX currently, you can
read details of this here:
<a class="jive-link-external" href="http://www.anoox.com/where-yg-better.jsp" target="_newWindow">http://www.anoox.com/where-yg-better.jsp</a>

And finally AnooX is much better than Google or
Yahoo for Advertisers since Ads on AnooX cost an
average of 5 Cents per click vs 65 Cents per click
for them which is a saving of 90% or MORE for
advertisers.

So yes, there is a better search engine than
Google or Yahoo, if you just type www.anoox.com
and get involved, because AnooX is run by the
people, for the people.
Posted by Info_Max (52 comments )
Reply Link Flag
Anoox search engine
I just use that link to Anoox to search "interactive movies". Apparently, the people voted hard core porn into all ten positions. :) :) :)
Posted by FisherKingKQJ (59 comments )
Link Flag
Anoo is not better, just different
Because of the nature of AnooX
Posted by Al Be (21 comments )
Link Flag
Oops: AnooX is not better, just different
Because of the nature of Anoox, you will always be limited to certain types of searching.
It is cool, but under no means I can be claimed to be better than Yahoo! or Google.
Posted by Al Be (21 comments )
Link Flag
AnooX - HoaX
Why do they need to charge 5$ for you to vote? Why are porn-sites the only high-rated? Why do they have a "earn 20% of our earning"-program? What makes voting better then getting the info using toolbars (alexa, google etc.)? How come sites already indexed, does not show up in the searches?

Something is rotten.
Posted by DaduckDk1 (1 comment )
Link Flag
You've got to be kiddin'
Nothing comes out right!
You are joking right?
Posted by just_chilin (3 comments )
Link Flag
??
I can type in 3 urls, verbatim, and it can't find them. How can this be better?
Posted by ScullyB (47 comments )
Link Flag
Now I see!!
You're the CEO of Netdive!!

Nice job with your advertising.

One would think that if you type a specific url that it would be first in the search or at least on the first page. try <a class="jive-link-external" href="http://www.news.com" target="_newWindow">http://www.news.com</a>. It did show up on page 6.
Posted by ScullyB (47 comments )
Link Flag
Everyone is searching for something
Everyone is searching for something; love, jobs, information, people, cars, houses, music, books, movies, apartments, classifieds, etc. I saw Eric Schmidt, CEO of Google, speak at the Nantucket Conference earlier this year. He asked the audience what activities they did on the Internet. The audience responded with all kinds of activities to which Eric replied "That is search".

Can there be another google? Absolutely! I wrote a blog today on this subject and outlined many specialty search areas that could generate billions of dollars in revenue. You can read it here. <a class="jive-link-external" href="http://dondodge.typepad.com/the_next_big_thing/2005/12/everyone_is_sea.html" target="_newWindow">http://dondodge.typepad.com/the_next_big_thing/2005/12/everyone_is_sea.html</a>
Posted by Don_Dodge (64 comments )
Reply Link Flag
yep,
Its true, as long as the internet is there, people wil be searching, Google wiil always be in business... That is, if the stay on top.
__________________________________
R.K.
<a class="jive-link-external" href="http://www.Remove-All-Spyware.com/" target="_newWindow">http://www.Remove-All-Spyware.com/</a>
Posted by Roman12 (214 comments )
Link Flag
Googles Chink in the Armor
If a competitor was able to develop a search solution based on an open source solution such as (lucene.apache.org) and develop a similar solution to adsense/adwords, but offered a higher payback to content owners for delivering ads, then google would have to raise their paybacks, in turn that would lower their profits (assuming the placement of an ad is fixed based on an advertising budget), and Wall Street would notice lower profit margins.

Google would still be around of course, and that's good that they are, but I'm talking about competition. Right now they have very little competition. Yahoo is really the only one that can compete at this time. Microsoft will eventually get there.

The key to offset Google is a low overhead operation. Just my thoughts.

<a href="http://www.binaryfrost.com">www.binaryfrost.com</a>
Posted by icenfrosty (9 comments )
Reply Link Flag
Opera take scores!
My fastest and best browser ever!
Posted by nanotecher (1 comment )
Reply Link Flag
Check out AnooX - it is better in many ways
I guess the writer does not know about AnooX Search engine. Until I found out about it too, i thought Goog &#38; yah were the best search engines, but not anymore. I mean think about it:
1- AnooX lets us vote for the search results to democratically change them. Whereas Goog &#38; yah tell us to go screw ourselves, they know what is best search results and that is it. Of course unless you pay $10000s of dollars to SEO, etc. and maybe then just maybe change a result. What a crock :(

2- AnooX Advertising rates are like 90% less than Goog &#38; yah, now that is what I call savings.

3- AnooX gives its profit away for the benefit of the people, that is us. Whereas Goog &#38; yah pay out $100Mill, Hek $Bill compensations.

So my hat is off to AnooX - go AnooX go :)
Posted by 207495111267145837975635436522 (58 comments )
Reply Link Flag
Do u work for Anoox?
You've got to be kidin'
Posted by just_chilin (3 comments )
Link Flag
Now....
if it only worked!!!

Of 12 domains that I checked, using their URL, it could find zero results. Kind of hard to vote for a website if it can't find it!!
Posted by ScullyB (47 comments )
Link Flag
I am not going to use Annox just because it give its money way!
Consider the words of Adam Smith...

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love. "
Posted by p.shearer (60 comments )
Link Flag
People sick of Microsoft software being shoved down their throats!
Hallelujah to Google!!

people are just sick &#38; tired of Microsoft crap.

people want good software &#38; people want choice.

Good riddance to Microsoft.

Yer monopolistic ways due to corporate bureaucratic idiots (think large corporations) who didn't care about the end-user having to use crap software has been the Sham of the century*

Google might not be perfect but their search technology is still pretty amazing!

&#38; the Price is Right!!


Cheers!!
Posted by BillyWarhol (12 comments )
Reply Link Flag
Hallelujah is right!
I assume your use of religious terms denotes this is a religious issue with you? I too celebrate Google, but not because they are kicking Microsoft rear. Its because they brought to the market a better business model. Microsoft has done great things for the industry. So has Google. Remember its free markets that gave us both.
Posted by p.shearer (60 comments )
Link Flag
Go Google!
<a class="jive-link-external" href="http://www.analogstereo.com/cadillac_deville_owners_manual.htm" target="_newWindow">http://www.analogstereo.com/cadillac_deville_owners_manual.htm</a>
Posted by 208774626618253979477959487856 (176 comments )
Reply Link Flag
 

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