Mobile apps, verticalization may be killing Google's golden goose

Google's third quarter earnings miss may reflect that user behavior is changing to mobile apps and vertical search. That move may impact search profits.
Written by Larry Dignan, Contributor
This is a guest post by Anshu Sharma, a cloud computing executive and an active blogger at anshublog.com and member of Enterprise Irregulars. The post is timely given Google's third quarter earnings miss.
Marc Andreessen rightly pointed out that Software is Eating the World, in a Wall Street Journal article. Well, the rule of creative destruction applies to software companies too including Search. And now this search for dominance is joined by newly energized for another round - Yahoo! with a new CEO and COO. But is this battle for search dominance by Google, Microsoft and Yahoo! still a relevant or are the giants fighting a war for shrinking territory?

I believe that their some big shifts happening in user behavior driven by new technologies. But first let's look at the premise of this post - ask yourself the following questions (and yes, put away the iPhone for a few minutes to think about this):

  • Where do you go to search for a hotel to reserve? (Hint: Google, Hotels.com, Expedia, Hotwire)
  • Where do you go to search for a car to buy? (Hint: Google, TrueCar.com, Edmunds.com)
  • Where do you to to search for a laptop to buy? (Hint; Google, Amazon.com, Best Buy)
  • Where do you go to search for a collection of clothes to browse? (Hint: Google, Pinterest, Macys.com)
  • Where do you go to search for a person you met at a party? (Hint: Google, Facebook, LinkedIn)
  • Where do you go to search for a person you met at a conference? (Hint: Google, LinkedIn, Facebook)
  • Where do you go to search for a movie to rent? (Hint: Google, Netflix, Amazon)
  • Where do you go to search for a restaurant to go to? (Hint: Google, Yelp)
  • Where do you go to search for a restaurant to reserve? (Hint: Google, OpenTable)
  • Where do you go to search for clothes and shoes to just browse and just may be buy? (Hint: Google, Pinterest)
  • Where do you go to search for your future spouse? (Hint: Google, Match.com, eHarmony)

I can go on and on. You get the idea. How many of the search questions did you respond to with Google - especially when you are away from your computer on a phone or an iPad? Do you even go the web browser on these devices or do you go straight for the app?

Think about it.

Did you wait to come home and search for the person? Do you go to a desktop to order a cab? Order a meal? Or do you do these searches on your smartphone?

Do you even go to the web browser any more or do you skip to your favorite LinkedIn, Facebook, Kayak, Netflix app and search for the person, hotel, movie?

Verticalization of Search Leaves Generic Search with the Long Tail

If you observe the list of questions, you will notice a pattern.

  • First, the searches all seem to be category or vertical specific.
  • Second, the searches all seem to have a hugely profitable vertical associated with them be it hotel reservations, airline reservations, eating out, entertainment or be it the mother of all categories - buying everything under the sky where the winner is Amazon.

Here is what Forrester recently pointed out in a blog post outlining the results of their survey:

'Some 30% of online buyers began researching their last online purchase with Amazon, compared with 13% researching a product on Google, according to a new Forrester survey of nearly 4,000 US respondents.'


Source: Forrester Research

Now combine that with the growth of Pinterest - which Ian Schafer calls out as "half-shopping" in his blog post here. In a very revealing article by Fast Company's Co.Design, they point out how Pinterest has solved a problem that Google and others have struggled with - the problem of discovery.

Apps are Eating the Search Pie 

As with many industries, a generic solution was good enough - perhaps even better due to the technological advantage - but over time the web has evolved. Due to user generated content, tagging, social networks - we now have websites that are essentially curated indexes for finding movies, movie ratings, homes, help, restaurants, restaurant reviews, etc.  These curated indexes are maintained at almost no cost to the provider and to us end users usually supported by other economically interested parties. A recent example of this is Foursquare - Foursquare launching local search for everyone - essentially Foursquare took user curated check-in data and realized that the historical data made it a pretty good local search engine.

It will be interesting to see how Google, Microsoft and Yahoo! respond to this eating away of the search pie by vertical search engines disguised as mobile (and desktop) apps. 

Anshu Sharma is a product executive at a leading cloud computing company. He has over 12 years of experience in building enterprise software products including platforms and applications. The opinions expressed here are his personal views and do not reflect views of his employer (Salesforce.com) or any other entity.
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