Commentary: Overture's missed notes

By Harley Manning, Research Director

Overture has concluded that it must offer a way for Web users to search, not just a way for search portals to stack results in favor of advertisers. But if offering competitive search technology is critical to Overture's future, its future is in doubt.

Why? To displace archrival Google as the preferred seller of search technology for portals, Overture must be able to search the Web as well as Google does--but it can't, and it won't.

Users flock to Google's own portal because it lets them find what they want fast. That's a direct result of Google's focus on serving user needs with technology that derives meaning not just by counting links but also by reading links and understanding them. While this general approach has been copied, key differentiators have patent protection. This makes it highly unlikely that any other vendor will equal or exceed Google's performance and explains why portals like Yahoo turned to that company.

In contrast, Overture has now acquired two search technologies, in deals involving AltaVista and Fast Search & Transfer; neither of which are as effective as Google for searching the Web. Worse, AltaVista and Fast have fundamentally different technical approaches that will never combine into a single resource. This means that the purchase of search technology from Fast is not additive, just different, and calls the earlier AltaVista buy into question.

Where will the big portals--Overture's hoped-for customers--go for their search technology in the future? Not to Overture. The real Google alternative for companies like Yahoo or MSN is to develop their own core competencies in search technology. With millions of Web users trained to use them as hubs, these portals don't need to create a better search engine than Google, they just need to become

		Related story New direction for Overture The search powerhouse finds the market is its to lose. Will two technology acquisitions help?

What's next for Overture? Although inferior to Google's approach, Fast's technology is a step up from AltaVista's. To counter Google's modus operandi of leading with the quality of its search capabilities and then selling its ad-placement tool, Overture will end up offering Fast capabilities at fire-sale prices to get what it really wants: pay-for-placement and paid inclusion. In the short run, this will drive average search deal sizes down for both Google and Overture. In the long run, it will fail, as portals optimize for either the quality of Google or the control of rolling their own.

© 2003, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.