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Analysts: Google spreading itself too thin

By Juan Carlos Perez, IDG News Service
September 06, 2008 09:40 AM ET

IDG News Service - As Google enters its second decade of existence with no apparent rivals for the search-king throne, industry observers warn that the company's biggest enemy may be itself.

Ruling the search engine market year in and year out is no easy feat, and Google is continually improving its search technology to better index Web sites, analyze queries and deliver relevant results.

However, instead of focusing exclusively on this search market, where Google generates most of its revenue via advertising, the company plays in multiple other markets.

As such, it has to devote effort and resources to maintaining a host of non-search services that could potentially distract the company and affect the quality of its core search engines.

And while Google dominates the search market, there is no shortage of competitors constantly trying to create a better mousetrap and capture Google's search users.

Some like Hakia and Microsoft's Powerset are betting on their semantic search engines, which don't use conventional keyword technology like Google's, and instead attempt to understand the meaning of Web pages.

Others like Mahalo and Wikia Search maintain that they will provide a better search engine by involving people in the process of building their indexes and ranking their results. Google has avoided that approach in favor of relying on automated processes.

Meanwhile, Yahoo, perennially the distant second in the search market, recently launched Search Monkey, a project to let external developers create applications to enhance its Web search results and make them more appealing and useful than Google's.

Still other search engines like Ixquick and Clusty hope to attract users by offering them more privacy than Google and not keeping records of things like their IP addresses and query terms.

And there are specialists in specific search segments, like Blinkx, which focuses on video search, an area of increased interest as online video's popularity rises globally. Others are going after what's called the "deep Web," documents that are difficult for conventional Web crawlers to find and index.

In all cases, the strategy is the same: identify a perceived Google shortcoming and try to improve on it. While Google retains a broad dominance in search, it's a market with very little lock-in favoring incumbents. It's very easy for people to switch search engines: there is no software to install or uninstall, no stored data to move from one place to another.

Since Google's ad revenue is in direct proportion to the popularity of its search engine, any significant drop in usage would materially impact Google's finances. "Google's fortunes could change dramatically overnight," said industry analyst Rob Enderle of Enderle Group.

Google's list of non-search endeavors is long and Google often shows signs of struggling to provide proper maintenance and development for these services.

For example, in June Internet consumer advocacy group Stopbadware.org reported that Google was one of the world's top five networks responsible for hosting "badware" sites, mostly due to scammers and online criminals abusing the company's Blogger blog hosting and publishing service.

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