COMMENTS
disagree, all your criticisms are base on the assumption that the average user will take the time and effort you have to compare the results, or at the very least listen to someone else who has done the research.
if one looks at microsoft vs. firefox, it's been almost two years of positive press for for firefox -- high profile positive press. microsoft on the other hand has been continually dogged by flaws with IE. if people used products solely on the basis of their quality (all other things being equal), firefox would have a much larger user base than the 11-12% it does now.
five or more years ago when internet usage wasn't so high, you might have a point, but now google has become the generic term for search. it's search results aren't appreciably worse than any other search engine, and i doubt they're sitting back and letting their initial algorithms stagnate.
as long as they don't do something absurdly silly -- and by absurd i mean something worse than exposing millions of people to viruses and malware on a daily basis* -- they will maintain their search engine lead.
* i point this out not as a slant against microsoft, but rather to illustrate the general public is exceptionally forgiving of even the most egregious errors.
Dasheil,
You make some excellent points and may very well be right. One thing I would say about the browser v. search analogy is that the switching costs for a browser are much higher than the switching costs for search. The avg non-technical user would rather not go through that download process and worry about losing their web favorites...
Brian.
The single most useful asset Google has on the wild west internet of spam, information security, and fraud:
People trust google.
Microsoft is the opposite. As the AOL search result leak showed, privacy is a concern in search engines. Do you really want to use Microsoft's search engine knowing what they will inevitably do with the personal information?
Yahoo isn't much better than Microsoft.
Would you rather use hotmail or Gmail?
I don't think any of your arguments make sense, how does someone using Yahoo mail make it harder to switch from using Yahoo search? I have Yahoo, Hotmail and Gmail (which you have ignored) but that doesn't have any affect on which search engine I use.
How do advertisers and users form a loop? More advertisers don't bring in more users, you seem to contradict yourself by pointing this very fact out in your yellow pages argument. More advertisers and more advertising may in fact drive away users.
Disruptive threats from small companies are not any issue, with the amount of money Google has in the bank they could easily buy any company with a better search algorithm. Not that they would have to, they could just offer the company Google stock ala Youtube and not spend any of their own money.
1) You make no justification for the impending "record loss" aside from Google being "overvalued". I hate to break it to you, but overvalued stocks exist in the market, and you sometimes even make money in them! Aside from some extreme news event ("Google scraps search for hookah business"), only severely missing their earnings could ruin a stock so, and the earnings call will be about mid-January. But you did manage to cobble together a sensational, attention-grabbing (albeit 100% unsubstantiated) headline!
2) You unjustifiably assume that the case for your site is representative of the web as a whole. Google and Yahoo might not "get" your site ... or maybe your site doesn't "get" Google and Yahoo. Remember that Google and Yahoo and MSN drive traffic TO your site, not the other way around and while it is in their interests to correctly classify your site, it's also in your interests to fit your site to the #1 search engine. It sounds like sour grapes that you don't feel like the most popular search engine understands your site. Change your site.
3) You also unjustifiably argue that "best" (or, more precisely, your definition of "best") is equivalent to "most successful". There are thousands of examples of the "best" product not succeeding and, even if Google actually isn't the best, there's no reason why Google can't succeed in spite of it. They're already far and away the most popular search and you're subjective "analysis" that it isn't the "best" search doesn't present suitable justification for why that will change.
I second dukael's points above. You cite only one example -- your own blog -- as evidence that MSN is better than Google because it lists your blog higher than Google does. But how do you determine the objective, "correct" rating for your blog? At very least, you should use some more examples to demonstrate your point. Most of the rest of your article is just pure speculation about what would happen if the world's analysts and pundits rose up in unison and shouted that Google sucked. First of all, why would they do so? Second, look at dukael's point about Firefox, and more generally apply this lesson to Microsoft Windows, the qwerty keyboard, and the internal combustion engine. Success breeds success, partly because people form habits. Finally, your argument against Google's simple interface -- that it makes it easy for people to leave because they have a small investment of learning -- also could be used as an argument for Google's simple interface -- because more people can and will start using it in the first place, people who don't want to make a large investment of learning. On the whole, the most plausible interpretation of this article to me is just that the author is trying to get attention for his blog by coming up with speculation counter to widely accepted opinion. Either that or he's trying to drive Google's stock price down so he can buy in.
Well I am using Google right now. I amsatisfied and I think it will be harder forme to switch.
I too have been noticing the relevancy of results for MSN/live.com getting better recently. In fact, one of the things that I've commented on recently is that for my site's key phrases, I consistently rank better on Microsoft's search engines.
And yet, I have Google's free search utility on my site. Why? Because they make it easy to copy and paste some simple HTML onto your site: http://services.google.com/searchcode2.html?accept=on
To do the same for Microsoft's search, you need to download the API, add some folders to web server, copy some files into it, add the script and HTML to your web page, then get your developer ID from the MSN developer center.
So, before Microsoft can take the edge away from Google, they need to learn to be customer friendly and make things easy for their users.
Google is not far with privacy from Microsoft & Yahoo. Recent deal with Chinese gov shows this, they are pragmatic so why not exposing some amount of data for some benefits?
So privacy and information security arguments doesn't hold. Quality brought Google to front and it can set it back. I remember those days helping novice relatives with the internet and it was hard to describe search engine like AltaVista to them as you need a long savvy nose. Now all I say just type google.com and find what you want. If Google lost that lead, I can't say type Google anymore
Interesting the way the day is playing out. You have a nice business examination of the shakiness of Google, I went the technical route.
http://www.readwriteweb.com/archives/changing_climates_microsoft_google.php
I think you have some great points as well, especially the low cost of switching.
Best Regards,
John Milan
I thought some of you Google watchers might enjoy Nicholas Carr's thoughtful piece today on Google: http://www.roughtype.com/archives/2006/12/the_five_google.php
Dear Layman,
Thanks for your comment...
1. I stressed yahoomail over gmail (and hotmail) because of the "relative" percentage of google customers who are search only v. the "relative" percentage of Yahoo customers who use multiple apps. I might be all wet, but I think using multiple apps on a site (especially when you customize them) creates higher barriers-to-exit.
2. By the loop between advertisers and users, I am simply putting out there that the more users are on Google, the more advertisers are going to want to buy adwords on Google. Just like in the billboard industry, I'd pay more for an billboard on a busy highway with traffic jams than I would pay for a billboard on a quiet country road. If there was a construction project on the highway and its utility went down meaning there were less cars there, I would pay less for that billboard.
3. Wrt disruptors, history is rife with examples of big successful companies that we thought could never be disrupted. If you turned back the clock a few years, who ever would have thought the windows and office franchises could be disrupted, especially when Msft had billions in the bank to buyout any potential threat...guess what, they might just get disrupted.
Brian.
I agree, Google will be a good short at some point in the future, but the question is when?
There's a famous quote (forgot by whom) about timing shorts, even when you "know", based on fundamentals, a correction is due: "the market can stay irrational longer than you can stay solvent".
I'm not a stock trader, but I am an IT technician. I use searches on a daily basis just to perform my job. What many of you may or may not see is how badly Google has fallen prey to black hat tactics. What you call (and assume) are organic links are more often than not link farms.
No, if you're looking at google to make you money by it's stock...best of luck to you. If you're a person that needs a search engine that works, find another engine. I can honestly say that after months of "checking", I get far better results using either Yahoo or MSN. Contrary to what was said here, I get the best results from Yahoo.
When the rest of the world starts to realize this, you're going to see the unwarranted "darling" status of Google fade. Maybe quickly, maybe slowly over time, but it WILL happen.
Sorry, i don't have time to discuss...but you will eat your words.
i agree with you and then some. Google is the new Microsoft. It seems this happens to many companies. What they initially created surpassed everyone else, but Google looks more and more like a one trick pony. I also believe that while they've made a sickening amount of money off their ppc model, eventually advertisers are going to want verifiable sales instead of sheer visits. But Google is so tied up in PPC, that's all they can think about. Google is desperately trying to get ahead of the curve and come up with the next best thing, but I just don't see it. Their search engine was their best thing, but now they're crapping that up with so many junk ads, it's corrupted.
I just wanted to bring up a recent quote by Eric Schmidt where he said that giving users the option to switch would force google to stay honest. So not having sticky users might not be as bad a thing as you think. If you look at real life, real world retailers dont have any such stickyness, but people still have preferred retailers.
Another point, is under estimating the value of the information that google has collated in terms of user data, searches and searches. It could be argued that google has a deeper insight into how people buy online, and what they are looking for, more then the companies themselves who are selling goods.
Google's valuation is based more on money from AdSense related revenue than merely search results. Search engines are free, advertising is not.
All they have to do is ensure that their AdSense (Ads by Gooooooogle) remain relevant to the content on the page that contains them. Which they will.
The only thing that could hurt them is if people stop clicking those Ads by Goooooogle. They won't. How do I know? 9 out of 10 emails sent in this world are Spam. Up from 6 out of 10 just last year. Why? Because people are still clicking the dang things.
I found this article on google. I tried to find it on yahoo and couldn't.
Goog is extremely overvalued. It's PPS is based on projected growth. The main question is....will advertisers keep bidding up the keywords? Will the online search market expand to keep up with the PPS? Those are questions that will tank or not tank GOOG. I don't think MSFT or YHOO's search technology will be the main reasons. I see GOOG stalling at 500 and if they announce a mediocre quarter, their stock could get a 15% haircut. If they report a bad quarter, we could see 25% haircut.
There are a lot of instituion money in this pig and these funds will not let the pig die easily. They'll prop up the pig as they exit the back door.
AGREED - The single most important thing GOOGLE has right now is TRUST of the user.
Yahoo has a lot of great products and so does MSN, but I prefer GOOGLE HANDS DOWN when it comes to trust, logic, and open use.
MSN, in no way, on any of those.
Yahoo, will see.
Dear Deep,
1. I don't buy Eric S's arguements about stickiness as they have come out with a myriad of other products. Some of which are fantastic and others have been flops.
2. I do agree that there is a lot of wisdom in the clickstream data for them go beyond where they currently are in determining what each users individual interests are a la what Amazon does when you buy a book and what they are tryint to do with A9.
Brian.
Without a doubt Google is overvalued. And though it may be tough to see an end to their remarkable growth, it will one day happen and Google will be priced as a mature company, rather than a growth company. It may not happen in 2 years or even 10 years but it will happen.
I think that the assumption that Google will go away without a fight is absurd. Are they overvalued? Probably they are, however, I wouldn't put it past them to innovate through acquisition (an oxymoron), but Google is not a technology company as people expect them to be. They are a marketing/advertising company.
Will Google's stock drop? Yes, it has dropped and then has gained again in the past. Will there be a precipitous drop? I doubt it. A mega company will not drop or grow exponentially after a strong foot hold unless something catastrophic happens or something brilliant. You can not predict brilliance or catastrophe in business or life.
Google will lose a dramatic amount of users when they clutter up their home page. The word Google itself has taken place in modern language.
If you don't like the ads use firefox and adblock plus, works like a charm. the cutomize google extension lets you block all ads from google too.
You mention that Google shows more paid results than do Yahoo or Microsoft search, as if it were a bad thing. Has it occured to you that this might simply be because Google attracts far more paying customers because of their popularity? I'm sure both Yahoo and Microsoft would love to have more advetisers, since ad revenue is the sole source of income for these sites. And it is ultimately the ability to generate income that decides the stock price.
Whoa...... one of the best headlines I had seen in recent times... except d headline, I'm sorry, every other point on this post SUCKS very badly... Pls try to justify before generalising something...
"joe guy" is on to something: Google's clean home page is a big attraction for me. Who wants to look at all of the ugly "portal" crap that clutters the Yahoo and MSN pages? And that's not to mention the ads. Ugh.
And Brian, fer crissakes don't go shorting GOOG! You're opening yourself up to unlimited risk. If you really think it's ready for a fall, buy some cheap out-of-the-money puts instead. (If you don't know what that means, just search on Goog-- well, whichever. :)
On thinking more, the following scenarios seem interesting
a) Microsoft subsidises ads by selling them cheaply over X amount of years
b) Microsoft and other companies compromise user privacy and start selling detailed demographics (and personal data ) to advertisers.
c) Local search takes off. (Which in my opinion google is really betting on, as it plays into their core strength of permuting ads with relevant locations. ) I think local search has the potential to bankroll google for quite some time to come. There are challenges here , of educating small businesses and selling door to door.
"What would constitute a real threat is if some of these new types of search engines avoided acquisition and started merging together in a couple of years: Digg, del.icio.us, & Snap.com for example."
a little late for that: del.icio.us is owned by Yahoo, since about this time last year.
see, whilst physically its easy to switch, mentally its less so. Google has been THE search engine for so long now, its almost inconceivable to use something else. Remember the no 1 characteristic of internet users = laziness. In order for somebody not to use google they must do the following:
1)research the effectiveness of the different engines themselves (not gonna happen)
OR
2)read an opinion that states something is better than google, believe this, remember this, and care if another engine is slightly better
AND
3)remember the name of this better search engine
4)remember the address of the better search engine
5)manually type in the address of the better search engine (rather than just use the default 'google box' in ff and opera
6)get used to the other search engines interface.
instead, they could just do the easiest thing by far and use google.
The costs of switching are low as compared to most other activities (moving house), but relative to the characteristics of the average internet user (extreme laziness) these costs arent actually low at all.
The only way a competitor can beat google is if the results are seriously better, seriously to the point of not having to sift through anything, just getting 1 perfect result better.
Google will be around for a long time until they, too, will be become overthrown by the another disruptive technology. For now, you can always "trust" Google to do no evil. Well, until China buys them out and then we'll have lots of fun then. Soon the US will be a Chinese colony.
Here's the thing. If some company (maybe google, maybe not) can leverage a legitimate voting system to get the best sites to the top of the list, then that system will win out. That's what I'm waiting for. No site has done that yet without having some glitches in their systems.
Silx
-http://techstuff.goboardz.com
If you use Firefox, you can install the CustomizeGoogle plugin. This plugin modifies the google web pages to do lots of nifty things like add extra links on
www.froogle.com to let you compare results with yahoo shopping or ebay, etc. and also you can hide all the ads and anonymize your google uid. I have been using it for 6 months, and don't see any google ads even though I still use google every day.
Also, for pure information, I find that http://www.wikipedia.org is quickly surpassing google in terms of relevant information.
Hi Dharmesh
The article is really nice and a good read... With all due respect to your research what clearly comes out is that players other than google are catching up and are improving by the day.
But arent we missing the point that since you as an external entity can analyze these trends then i am sure the team at google will be observing very closely every single day.
The big question is ..."will google sit idle and watch these players catch up.. or the guru of search might have something up their sleeve to sustain their inherent advantage.
I believe with the acquisition google is making in the long run its no longer going to be abt search capability but the precise reach that particular search engine offers. LIke google is trying to get more and more personal to each users and hence the add will be much for targeted. going further
amit desai
MSN and Yahoo migth be catching up in search results area, but one key issue is there home page loads a bunch of junk, causing the page to load slower.
You know when you goto http://www.google.com you are gonna get a nice clean search window without a bunch of junk.
I do agree in the search results the ads are becoming more obtrusive. But as I mentioned above, you should just install Customize Google plugin in Firefox, and all the ads go POOF!
I'm rather surprised that you have the time and energy to waste on such drivel!
layman said "how does someone using Yahoo mail make it harder to switch from using Yahoo search?"
It doesn't, but if you're using Yahoo's email service, you're more likely to use the Yahoo search box beside it.
"I have Yahoo, Hotmail and Gmail (which you have ignored) but that doesn't have any affect on which search engine I use."
Yes, but you fall into the usual trap of assuming that all users are the same as you. On the contrary, I suspect that the vast majority of people reading and replying to this article are *not* typical users.
Brian, Good analysis with real examples of results. You are right, Microsoft search is as good or better than Google, and the switching costs for users is zero.
Your commenters are also right that the Google brand is very strong and competing search engines need to be MUCH better to get users to switch.
There are several ways to disrupt Google and change user behavior. One is to put a search box right in the browser so that users don't need to go anywhere. Microsoft is doing this with Explorer V7.0. This is also why Google and Yahoo do everything possible to get users to download their tool bar.
Second, search competitors could change the game by focusing on local search. Local search is a HUGE potential business. No search engine does it well today. It is up for grabs.
The third area is classified advertising, something like Craigs List, which is again a local targeted search experience. Classified advertising is HUGE,, and is done by individuals...millions of them, at very high advertising rates. Newspapers make all their profits on classified ads.
So, three ways to topple Google and its stock price; 1) search box in the browser, 2) local search (business), and 3) classifed search (consumers).
All the search engines will compete head to head on search results quality. Search quality is the "table stakes" to play the game...but it will not win the game.
In terms of Google's search product, I don't see a lot of potential for such a crash because iof the simple fact that it works. While on the margins one or another search engine might be better than Google, for 99% of searches you can usually find what you want within a few seconds.
To gain market share, a new search engine would have to have a SIGNIFICANT advantage over Google's search. Just being a little better wouldn't cut it. The only scenario I can think of then would be Google sabotaging themselves and screwing up their own product, allowing a competitor to move in. While this is possible, the people at Google aren't stupid, so the probability is still really low.
regarding barriers to entry, what about the google toolbar ?
Quality Parity - a rigorous experiment would have you type one query and compare the reachness and quality of results - not the other way around (trying to find your website by typing queries)...
I think the analysis of which is the best search engine _now_ is irrelevant. The key point is it would be trivial for users to switch and Google may well not buy the next Google. Google itself tried to sell the technology to Yahoo and others before they launched. We must all remember the unstoppable giant that was Altavista and where it is now.
This doesn't have to happen but if users switched in significant percentages (think 25%) Googles ad revenues would drop rapidly enough to be share price effecting. They've been generally great at responding to threats and innovating, but then so was Excite, Altavista, IBM at one point etc.
I think you are right that the switching costs from google are actually suprisingly low. I would even go so far as to say Google is mostly riding on momentum now. They haven't had a hit product since gmail, they are getting more evil, and their search is no longer a decisive improvement over its competition. All that points to trouble... although they have a bunch of smart people working there, so I wouldn't sell short anytime soon.
Great post. Thanks!
It seems that your argument about the quality of Google's search coming under attack by industry watchers has already begun. Phil Wainewright, a columnist at ZDNet, and hardly a Google basher, thinks there is a growing problem with Google's search results. He observes that the advertisements are more accurate than the organic results.
Says Wainewright: "There's a paradox at the heart of Google's success that highlights the location of its Achilles' heel. It makes money because users of its search engine find what they want by clicking on ads. That's right, the ads are better targeted than the search results. It's not so much a search engine company, more an ad engine company. The search engine is almost a smokescreen...
"Now think for a moment why the ads work better than the search engine itself. The simple explanation is the wisdom of crowds. The ads are more accurate because they benefit from the concerted efforts of hundreds of advertisers competing with each other to float to the top of the ad rankings. Whereas the search results are based on algorithms that explicitly filter out the attempts of website owners to game the results. They're based on the passive, serendipitous wisdom of hyperlinks.
"Google's exposure is to a search engine competitor that finds a way of harnessing the wisdom of crowds to producing better search results. Someone like UK-based Trexy.com, for example, which uses a downloadable toolbar to collect information about user search behavior, and then aggregates these 'search trails' to improve the accuracy of its results."
http://blogs.zdnet.com/SAAS/?p=256
Trust came up in the postings above. How much of the trust people feel in Google has to do with the image of Google as a 'good' or at least not evil company v. the perception of MSFT and YAHOO? Part of this perception is reality, in that Google's business practices may well be different, and part of it is that Google does a lot that is not conventional throughout their organization. As a founder of a somewhat less successful company I am biased, but I think the continued perceived influence of the founders in mantaining an innovation friendly eccentric culture is proving to be critical.
In short, maybe you short the stock when you hear that the founders are starting to focus on something else. Are they?
People will continue to use Google because it is fast, relatively reliable, and, mostly, because it is a habit and their friends are doing it. People have a very herd mentality; when one person does something, like fad, others want to do it, too. Most of the people I know use Google, because their friends are using it. Sounds like circular reasoning to me. As for me, I use all 4 major engines; I find the results are better and more varied.
Dharmesh,
Your prediction might be true albeit for different reasons. The global economic meltdown.
Oops sorry. Its posted by Brian Halligan