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Why search competition isn't the point

This morning, in response to my Microhoo: Corporate Penis Envy? piece, Michael Arrington wrote The importance of a competitive search market.

First, let’s be clear. I agree with Michael that competition is a good thing, and that there’s a real risk that, absent competition, Google will become “evil,” as “absolute power corrupts absolutely.” Nonetheless, I thought I’d take a few moments to explore why Michael got it wrong, despite the fundamental appeal of his assertion, especially to people who grew up learning the lessons of the Microsoft desktop monopoly.

  1. To focus on search is to miss the big picture. Web 2.0 (or whatever the fullness of the Internet Operating System ends up being called) is far bigger than search. Yes, search is currently the most valuable and monetizable Web 2.0 application–or perhaps better-named, subsystem. But look back at 1984: Lotus was bigger and more valuable than Microsoft ($153 million in revenues to Microsoft’s $100 million, and growing faster — Lotus had tripled in size, while Microsoft had only doubled.) But we now know that Microsoft had the stronger position. As I’ve said in my Web 2.0 talks from the very beginning, a platform beats an application every time.

The key question is what kind of platform we’re collectively building.

There is strong evidence that the platform that’s emerging is more like Linux than it is like Windows. That is, no one player is going to own all the pieces. But that could change if someone owned enough of the pieces that everyone else became dependent on them. So I’d be much more concerned about a single player rolling up unrelated and complementary pieces of the larger internet OS till they owned critical mass in multiple areas than I would be about a single player owning a best of breed application in one area or another.

The sooner we start getting serious about interoperability between best-of-breed services (the next step up from first generation mashups), the safer we’ll be against a single dominant player turning their subsystem into the “one ring that rules them all.”

  1. I think Google understands the need for interoperability better than Microsoft. When Eric Schmidt says “don’t fight the internet,” I believe he means it. Google seems to be doing their best to balance competitive advantage with giving back and the overall health of the internet ecosystem.

  2. Even if Google does achieve true monopoly status, that monopoly will be short-lived. Just as Microsoft stumbled at what appeared to be the peak of its power, so too will Google. The pace of technology is increasing, and it’s rare for a company that led with one generation of technology to also win at the next. Take mobile, as hopmojo notes, or as I wrote myself in Static on the Dream Phone, mobile is going to be a make-or-break transition for Google.

  3. Many Web 2.0 applications tend naturally to monopoly, precisely because they harness network effects. In fact, one of my short definitions of Web 2.0 is the design of systems that get better the more people use them. Network effects apply to the Web 2.0 system as a whole as well as to any individual subsystem. In What is Web 2.0?, I wrote:

    The race is on to own certain classes of core data: location, identity, calendaring of public events, product identifiers and namespaces. In many cases, where there is significant cost to create the data, there may be an opportunity for an Intel Inside style play, with a single source for the data. In others, the winner will be the company that first reaches critical mass via user aggregation, and turns that aggregated data into a system service.

    The critical point is whether or not, having achieved critical mass, you take the next step and turn that aggregated data into a system service. If Google doesn’t do that, and the rest of us have done their homework, then someone else will beat them in search because the network effect of the entire system will be greater than the network effect of the search ecosystem alone. If Microsoft understood this, they’d be competing with Google by making search services that are more open, re-usable and re-deployable than Google’s search services. Since they aren’t operating this way, they ought to throw in the towel.

  4. We’re still so early! There’s so much yet to invent. Take what Amazon is doing with S3 and EC2. They broke new ground and took a leadership position in an emerging category, while A9, their attempt at incremental innovation in search, got them nowhere. If Microsoft and Yahoo! want to compete with Google, go where they aren’t!

True search innovation will come from something that doesn’t look like search. Google’s video search efforts foundered, while YouTube took off. (Google was smart enough to buy YouTube quickly.) Facebook took off in an area that could be characterized as “people search.” Tweetspace is becoming a hidden transmission channel for information, one that Google doesn’t yet search. Everything Microsoft (and other explicit search competitors, including most specialized search startups) is incremental innovation. Google’s search dominance will be toppled by a disruptive innovation that changes the game, not by playing catch-up at the same game. The challenges that keep Google on their toes, innovating in search, will come from outside the current system.

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  • http://www.blogdimension.com Henrick

    Yes, I agree “search” is not the aim. Search is just a “function”. Every app has a search. It is just a mere feature of a more complex whole made of data and information.

    Of course, the search function can be improved and many developments can be led.

    For example, I believe next developments will be around search agents. Users won’t search but “something” (an agent) will search for the user and deliver him the valuable information.

    I guess Google has understood that search is not the point. That’s probably why Google are trying to build the infrastructure (mobile, Wimax, Internet networks, etc.).

    We, at Blogdimension.com, as a social media search engine depend much on Google. Google brings us 80% of our traffic. So, Google is a competitor and at the same time also our partner. Google will always be a frenemy “friend+enemy”.

    Good point of view from Tim.

  • Anton

    The VC model complicates the community’s effort to move “past” search and look at different ideas. If Ballmer and Gates are obsessed with search, its unrealistic for smaller players in the food chain. These seemingly arbitrary gatekeepers(VCs) of innovation understand utility better than media but still pull back from making bets on the unknown. Only the past winners seem eager to reach, putting power in a diminishing group of hands (another choke point) to fund new ideas.

    Perhaps cloud computing coupled with the diminishing costs of production will break this model — one can only hope.

    Anton

  • http://dasht-exp-1a.com Thomas Lord

    Tim,

    I’m interested in this “Internet Operating System” vision of yours because I share a similar vision. I wonder if you can be engaged in drilling down to details, a bit, and refining this vision.

    “Services” on the web are a unifying concept, roughly analogous to unix streams. In unix, or more purely in Plan 9, all data sources and sinks, all services, are unified in a few key ways. They all get names within the “filesystem” namespace (analogous to URLs). They all (at least can) use the same set of generic system calls to read from and write to (analogous to HTTP and other core protocols). Unix (in idealized form) has a way to compose computational resources: the pipe. Over those basics, a shell is layered so that flow control (decision making, looping / recursion, etc.) can be applied over systems of functional composition using pipes (no clear analogy).

    Sometimes forgotten is that Unix was part of the “time sharing system revolution” which stood in contrast to batch processing (batch being analogous to today’s web service programming frameworks). Unix gave each account holder a personal directory for persistent storage. “Logging in” was comprised of the provisioning of a personal shell process.

    Current web standards give us the analog pipes. Of course, it isn’t quite simple “streams of bytes, usually taken as newline separated lines….” It’s richer than that. But the standards give us the raw materials of functionally composing data sources and sinks and services over some handy dandy data models (c.f. XML).

    Where is the personal element? Where and how will we see users empowered with the analogs of a shell and personal storage? You are probably aware that my answer is the basiscraft.com stuff. What’s yours? How does it come to be?

    I do not see any of the mega-sized players working in that area — or having much incentive to work in that area. Yet, if we agree that an “Internet Operating System” is vital, that area would seem to matter.

    What’s your take? Where is the personal computing revolution in all of this?

    -t

  • gregory

    one of the markers of the greatness of this moment in time … it is now normal wisdom to say, stay loose, what’s on its way is even better …

    so given that, how do you build businesses, countries, governments?

  • rokhayakebe

    The issue is Search itself. Any startup looking to eat Google’s brunch by offering a box and a Search button is clearly going the wrong way. Search will die and give its place to Suggestion from applications that continuously harvest our personal/professional data across the web and predict our behavior.

  • http://wrldsanalogii.org Marta

    It would be very interesting to see an operating system for the net, that was inclusive of search, but was also integrated with clusters of public companies. Each company would be facile at developing software with very short life spans, and a very simple user interface, (like Tumblr and Twitter). There would be a move away from the ad revenue model, which would keep a lot of irrelevant filtering at bay, and allow for more teleological forms of knowledge to emerge. You could shift revenue making to a use model, based on tiny cents. (as Google does with it’s ad models). Only charging for interest in or time of product use. To keep is affordable to all, users could group together, paying these small fees as a group. As the share price in each public co. grew, the user fee could go down; increasing overall market share.

  • http://avc.blogs.com fred wilson

    tim

    these two posts, along with mike’s counter, are the kind of thing that make blogging great

    what a wonderful discussion

    i also happen to agree with you

    fred

  • Moe Glitz

    The Search Interface of today, with its Keywords Indexing/Sponsored Links Model,will in the future be surely ripe for tomorrow’s innovation.
    Tomorrow’s Search Interface shall offer a much more engaging Search experience, through Keywords Presentations and Community Integration.

    For me the most important side for the next development of Search, or whatever you want to call it, is Community Integration. With the key driver of this Community – and one that shall replace todays Search Sponsored Links Model, is Business engagement.

    The Search Model of today does not offer that vital Business engagement that is surely required for key Products and Services Searches. This lack of Business engagement in todays Search Model, is down to the lack of vision from Businesses, that feel that the Keywords Indexing/Sponsored Links Search Model is the only way for users to find their Products and Services online.

    Current Business Websites are nothing more then Business Catalogues, that rely on Search Companies to not only index all of their online Products and Services, but also act as their main point of entry for all users. Businesses in the future will have to offer all users a much more engaging and proactive Search experience, unlike todays hit and miss Search Model.

    For me, the creation of Cloud Networking can offer all Businesses the chance to truly interact and engage with the whole global web community.
    The ‘Cloud’ should not only be about Businesses collaborating and communicating with their own Employees inside their own Business Enterprise. It should be about colllaborating and communicating with everyone inside a new Web 2.0 Platform.

    I have a great understanding of how this new Web 2.0 Platform should look and operate. Plus, as you suggest earlier, Tim, it would involve turning key aggregated data into a relevant system service.
    I only wished that I had the opportunity to try and execute this new Web 2.0 Platform that I have in mind. But what I do have in mind can not only change the Search Model of today, but it can also be the Web OS of tomorrow.

  • http://dmine.blogspot.com Matt Smith

    Tim,

    On this issue, I tend to agree with both you and Arrington. In fact, I would bet you and Arrington both agree more than you disagree.

    In the case of Microsoft, I am extremely tired of seeing their mediocre versions of the software that Google has already created. In many areas, they seem to mimic what Google has already done, thus providing little value for me.

    It has been fun to see Google compete in the office suite space by building collaborative versions of Word, Powerpoint, and Excel. In this area, Google has the unique opportunity to extend the traditional Microsoft Office and incorporate social aspects that had never been available in the traditional Microsoft product.

    Microsoft should most definitely innovate in areas where Google isn’t already dominating. Otherwise, there is no point for users to switch to using their online products.

  • http://hiphop-blogs.com Hashim Warren

    Tim,
    you don;t think that search is the operating system for the internet?

  • http://www.khaitan.org/blog Indus Khaitan

    Tweetspace is becoming a hidden transmission channel for information, one that Google doesn’t yet search.

    Tim,

    Google has already started scanning the tweetspace. Take a look at this Google Custom search [http://www.google.com/coop/cse?cx=014599840503357229935:xasfvuxtuai] for your tweets. The results are thin compared to the actuals– maybe they’re just indexing the public timeline.

    Indus

  • ray

    - good discussion. i agree mike-arr is not thinking big enough.
    - if google put their money where their mouth is they’ll open up search. i think they probably will

    there’s bigger fish to fry than search. ‘internet utilities’ are only just beginning to be flushed out

    so what should microsoft do? (slight deviation here, but i think its related) in buying yahoo they’re looking for multiplicity of business models (i.e. search advertising). BUT THIS IS A STRATEGIC MISTAKE IS – THEY’RE LOOKING FOR PROVEN BUSINESS MODELS.

    - microsoft has become too myopic wrt its shareholders.

    - a greater outside-in approach is req’d (focus on user) – shareholders/microsoft are too fixated on proven business models, but most importantly they dont have the patience. proving, engineering, carving out a business model on the ‘next big web 2.0′ takes time – eg look at adwords.

    microsoft – open up – network play – create huge value for your users (incubate/cultivate/nurture web 2.0 startups) -become ambidextrous and THEN experiment like hell on business-model-innovation.

  • http://www.youlicit.com/ Toufique Harun

    I suppose the big thing to point out is that “search” != “keyword search.” Keyword search is just the initial subset of the much bigger “search” problem. Since Google does have a sizable advantage in keyword search right now, Microsoft and other search players’ best bet would be “to skate to where the puck is going to be, not where it has been.”

    I blogged about this a while back (What Comes After Google – http://blog.youlicit.com/?p=37), but the basic idea is that any disruptive innovation in search has to simultaneously increase “Average Relevance” and decrease “Recall Effort” of the information people are looking for, and it will most likely look different from keyword search. While I’m not suggesting that keyword search will go away anytime soon, I am suggesting however that we will be phasing out keyword search as the primary source of our daily information just as we’ve phased out Yahoo Directory in the past.

  • http://scottpurdie.wordpress.com Scott Purdie

    Tim

    The posts on this subject are what blogs are all about, its fantastic.

    Iv changed my mind after the 3 posts. I agree with you now.

    However, just because it’s rare for a company that led with one generation of technology to also win at the next, they could, their free free free approch could be key in how it develops, especially with mobile and what we can do with mobile in the next few years.

    Its been fantastic reading,

    Scott

  • http://www.watconsult.com Sahil

    I must say a great analysis of future of web technology has been done,i really agree with your point that technology has evolved and will keep evolving which will mean that whenever there is a microsft threatning to monoplise this world there is a google coming up and whenever google may think of monopolising , facebook comes up; it is the sheer sense of competition which keeps bigger players on their toes

  • http://www.loupaglia.com/correlate Lou Paglia

    Tim: Fantastic post in response to Arrington’s arguments about the search monopoly. And your first post that ignited the conversation was spot on as well.

    I also happen to agree. Microsoft needs to go where Google isn’t playing. And for those that think they need to compete with Google, your point is still valid. Go where Google is not, go to the future (not the present) and dis-intermediate from your current or future developed position of strength. It seems Microsoft continues to try to take them on straight-up and after five plus years, I think the track record is set that a change in tactics is necessary.

  • http://webbloggers.de Olli

    what a wonderful discussion
    Greetings
    Olli

  • http://xentek.net/ Eric Marden

    “Of course, the search function can be improved and many developments can be led.”

    Thing is it really can’t. Not by a significant amount (significant being a game-changing amount).

    Search agents already exist, and while they can be useful especially in providing updated info on your interests, it will never supplant instant search – and google has that pretty much nailed. The only thing they can do is increase the size of their index (mostly by adding new domains / silos of information) and keeping the search relevant and quick.

    And the internet operating system is already here, in a limited fashion. Its not about moving my office application TO the cloud. Its about building my apps WITH the cloud.

    Amazon EC2 to serve, Google Custom Search, Flickr for Photos, etc. I can already do a surprising amount without having to reinvent wheels and be able to operate at internet scales cheaply. More subsystems are needed, but the emerging forces are already here.

    Microsoft and Yahoo just need to figure out what some of those are and get there first. Right now they are too worried about catching up to what google has done, instead of innovating their own (huge) niche in the cloud.

  • http://wwww.joeduck.com Joseph Hunkins

    Many excellent points by both of you. My concern is less over competition (which as you note will not be stifled for long) as it is with how commercialism will affect the online environment.

    The huge potential of Television as an enlightenment medium was almost immediately stunted by overwhelming commercial considerations which tend to improve the technologies and open up the medium in many ways, but usually diminish the richness of the experience. Maybe the cheapness of internet publishing will help us avoid this pitfall?

    Search is important to companies primarily because it is lucrative, not because it is important for users.

  • http://tim.oreilly.com Tim O'Reilly

    Hashim — No, I don’t think that search is the OS. It’s a darned important subsystem, but it is far from the whole thing.

    When you put a music CD in your computer, and it automatically looks up the song titles from Gracenote, is that search? When you go to Mapquest or maps.yahoo.com or maps.msn.com (or even maps.google.com) is that search (at least as Microsoft is defining it in their quest to unseat google)? When in the not too distant future your car and your phone just know where you are, and do things differently because of that, is that search? When you collaborate on a document in the cloud, is that search?

    There’s a lot already in play that has nothing to do with search, and a lot more to come.

  • http://tim.oreilly.com Tim O'Reilly

    Toufique –

    I agree that we’ll eventually get to a point where a kind of super Google suggest will anticipate things we’re looking for, but I think that search will be with us for a long time. But it won’t be experienced in the same context, and it will decrease in its overall importance. The real key to all the fuss isn’t that search is the most important internet OS function — it’s that it’s (so far) the most easily and powerfully monetizable.

    One way to think about the problem Microsoft faces is not just to imagine other areas where you can create user value with new services but also where you can get someone to pay for them at the rate demonstrated by Google. And so they should be thinking deeply about how and why Google’s ad auction works so well, and imagining other activities where they could uncover similar dynamics.

    What’s so sweet about keyword search advertising is that it’s minimally intrusive and the most effective form of advertising yet invented, because, as John Battelle so memorably put it, it relies on a “database of intentions.”

    Microsoft should be asking themselves “where else can we make advertising this powerful and effective without being intrusive?” rather than saying “we have to win in search.”

  • http://tim.oreilly.com Tim O'Reilly

    Indus –

    What I meant when I said “Google is not scanning the tweetspace” I was referring to the fact that they don’t follow tinyurl and other shortened links in their crawl. Since this type of link is the currency of twitter, they are suddenly missing a huge source of relevancy. Kind of like when they didn’t really follow blogs because their crawl wasn’t updating frequently enough.

    I pinged Matt Cutts about this, and he didn’t see it as an issue yet, but I’m pretty sure he’s wrong.

    I probably follow more links now from twitter than from any other source.

  • utilitus

    one word:teleocom

  • http://www.khaitan.org/blog Indus Khaitan

    On tinyurls:

    The opacity of shortened urls is a problem. Apart from the architectural issues (a slashdot rant http://ask.slashdot.org/article.pl?sid=07/11/18/1319201&from=rss), a lot of what we click depends on the url domain, title and the link text (except when it comes from a twitter friend).

    Indus

  • http://yihongs-research.blogspot.com/ Yihong Ding

    Tim,

    I like what you have said. There is a much broader picture than search on the current Web.

    The key question is what kind of platform we’re collectively building.

    You are absolutely right, Tim. Individual attempt means little with respect to the collective forces. The attempt of academic Semantic Web research in last few years is an example. When the targeted platform is out of the realistic at the meantime, a project can hardly succeed even after being engaged with thousands of most brilliant researchers. To either a company, an organization, or even an individual, the most important thing is to understand what kind of vision they are contributing for and whether the vision is realistic based on the current technology. Besides it, we may not count too heavily on any particular technology, such as Web search.

    Google has been succeeded not due to its search, but because Google embraced the concept of Web 2.0 earlier than others. Many people have missed this point and thought Google just to be a search company. No. Google is beyond search. Google is one of the most important foundation of Web 2.0. This is the fundamental reason that Google is the most successful company in this Web 2.0 age.

    And I agree with you, Tim, too that Google will not be a monopoly (if once it becomes) for long. It is not only about the reasons you have mentioned, but also because Web 2.0 will not last forever. The Web is evolving but the evolution of companies is harder than the Web because there are too much private interest among humans. Hence Google is unlike to continuously be the leader of the next-generation Web (or Web 3.0). This is another reason why Google might be a monopoly, but not a long-time monopoly.

    At last, probably you would be interested in reading my very recent post about “We are in a new transition”. It is an extensional discussion about the Harmonious Age suggested by Adam Lindemann. I believe that we are in another great transition since the last industrial revolution started by the Watt steam engine. This time, World Wide Web plays the role as Watt steam engine. In this first part, I am just doing some philosophical discussion. In the second part (I have not posted yet), I will discuss in more details the relation between this theory and World Wide Web, especially its potential impact to Web industry.

    Moreover, maybe you would be interested in my series of Web evolution that is also in my blog too.

    Thank you for you work. You are indeed my hero that has enlightened many people including me on how the Web is moving forward.

    Yihong

  • http://martalyall.typepad.com Marta L.

    I also wanted to add, and forgot to mention in my previous comment, that we are putting together panels of artists/thinkers, who are highly skilled at recognizing and conceptualizing patterns in information.

    I believe these panels will be valuable for ontological development. We need to include contrarian perspectives and information which crosses conceptual and disciplinary boundaries. Otherwise, we will not have dynamic search results.

    Programmers depend too much on syntactical forms. Our participants have the ability to work with language as image, and image as language.

    After teaching in undergrad and graduate programs at several universities I observed the strength and skill of certain artists for these applications.

    If you are in the process of developing applications for which require ontological research, please contact me for more information.

  • http://www.techstrategypartners.com George Gilbert

    Tim,

    I agree with you that Microsoft always seems to be fighting yesterday’s battles with respect to consumer Web services. But Microsoft rightly calls search the killer app for advertising on the Net. That advertising platform is going to be key for monetizing many more consumer Web services in the future.

    The killer app can have a lot of influence over how the platform evolves and where value accrues. As someone who worked at Lotus from 1987-1994, I remember the Windows transition. I believe it is fair to say that at the height of their power, Lotus and WordPerfect together could have heavily influenced if not defined next generation GUI standards if they hadn’t avoided Windows so stubbornly.

    Similarly, I don’t believe Microsoft can let go of search until it can find another way of influencing the advertising platform as one of the consumer Web’s most important subsystems.

  • Falafulu Fisi

    Tim O’Reilly said…
    When you put a music CD in your computer, and it automatically looks up the song titles from Gracenote, is that search?

    Yep, it is called search, but in a slightly different context. It is similar to online item/book recommendation that is done by Amazon. The general definition of search in computing technology (information retrieval context), is to find a match (fully , partial , closest proximity) from a stored sets of instances (database objects) that is closest to a target query instance ,ie, query word(s)/phrase(s)/paragraph(s). The query can be user driven, ie, Google, LiveSearch, Text/site search, and so forth or intrinsic feature driven, which is the example you’ve just given, ie, automatically looks up the song titles from Gracenote. The song’s features are already indexed (name-entity-wise or content-wise), so those features are used by the system as the target query instance. In music content search capability, the user doesn’t need to specify the pitch, beat, spectrum of the selected song, since those intrinsic features have been stored (indexed). All is need by the user is to select a song, where the feature sets of that song (from the feature database which is different from the song database) is pointed to by the song ID of the selected song is retrieved and used as the target query instance. Now, once you have a target query, then it is obvious that is a search task. I think that your confusion is that you only think of search as user-driven rather than feature-driven. Look at Amazon, once someone types in an item to search for, when there is a match (fully or partial), then the top item is retrieved. The retrieved item , suppose this item is the book “Lord of the rings” has already got features stored in the database (those features are the frequency or number of times that it has been browsed or clicked, number of times it has appeared in a basket ,ie, being co-bought with other items, etc, etc,…). Lord of the rings feature sets is retrieved, then use it as the (target) query to find match of books that have been co-bought with it (target), and you end up with a recommendation such as:

    Customers who bought item A also bought item B

    Search is quite wide, and innovation has just begun.

  • http://direwolff.wordpress.com P-Air

    Very provocative exchange Tim. Glad to see you and Michael taking this discussion public.

    First off, I see a lot of references (in your posts and the comments) to Google’s biz being in search, which doesn’t seem quite right to me. Perhaps better to say that their biz is in the monetization of content, where today search results generate a lot of content. What Google has achieved better than anyone else, is the aggregation of AdWords buyers as well as the distribution of these ads through a network (or aggregation) of sites (even where their site monetizes better than all others). Hence, if someone made a better search engine, that’s not enough because it would be in their best interest to work w/Google to access this critical mass of advertisers. Note, that in effect that’s the approach that Yahoo! wants to take to better monetize their search and other parts of their site.

    Second, while I don’t quite see Microsoft pulling this off, Yahoo! is in a better position to open up the ads marketplace. Exploring ways to open source or open something up around what Google currently has locked up and operates in a proprietary mode, could be the answer to breaking their control. Note that all of the applications that they offer for free are being subsidized by basically one of their business units, AdWords/AdSense. If someone opened that up and managed to find another source of revenue to support a free (as in taking no fees for operating the service) AdWords/AdSense marketplace, then Google would be forced to fend off this competition. Somewhat analogous to how Linux has been taking on Windows. It’s a long road to breaking down the Google dominance, but it has to be rooted in sensible economics and the interests of a community that stands to gain more from Google’s break-up.

    Either way, taking the position that search is what has to change may be missing the business focus which is providing Google their esteemed position in the marketplace.

  • http://eedious.blogspot.com friarminor

    Oh, this discussion has opened my eyes to the encompassing world of a theme that is ‘search’. Irrespective of your positions and the comments you have in here, I felt I’ve been schooled.

    I wonder if 3.0 would be clannish or something but never proprietary. As if info gathered from users networks only, will be deemed relevant with occasional cross-over between communities. Will there be exclusive search? I wonder if were there but definitely it isn’t Google’s platform we’re on.

    Best.
    alain
    mor.ph

  • http://blog.youlicit.com/ Toufique Harun

    Tim,

    That’s a brilliant restatement of the problem:
    Microsoft should be asking themselves “where else can we make advertising this powerful and effective without being intrusive?” rather than saying “we have to win in search.”

    Search monetizes well because there’s an intent to buy when somebody searches for “lawn mower reviews.” “Abe Lincoln’s birthday” probably wouldn’t monetize as well. So if we reframe the problem in the way you suggest, only the portion of the “database of intentions” containing purchase intentions is valuable to Microsoft. I suppose the trick would be to figure out where on the Internet OS people have the intent to buy that is currently undermonetized and focus there.

    Another thought occured to me after reading Jakob Nielsen’s comment on TechCrunch “Remember, it’s not about finding documents, it’s about getting things done.” Although search is much better than previous solutions, it is still a step between wanting something done and having it done. History shows us over and over again that disruptive innovations always come along and remove steps. I’m going out on a contrarian limb here, but I think search is a means not an end. It exists because of the lack of a frictionless alternative. In a perfect world, would search even exist?

    Toufique

  • http://www.polka.com Mike Kirkwood

    Tim: Thanks for opening the lens and making it real.

    Agree with the assessment, especially as it relates to ms-yahoo merger and the general landscape we live in.

    End-to-end experience becomes the bottleneck factor in making the chasm and in finding the new un-tapped business models across the network.

    Search should be considered a crown-jewel in the stack. Search is pretty important, but commerce is even more today. But, I’d suggest that Search is the easiest place today to “get there” from what our expectations are.

    Commerce represents the “do” part of the equation, that the web is only just starting to provide an answer for, but Search is today’s user interface to the ecosystem, and it seems very slippery to get the rest. However even mighty google seems to fail when it comes to “buy”

    It seems if you MS is missing a huge piece (e.g. analytics about what people search for), hard to get a full view of them and what they need. Google probably won’t share those analytics as an open standard, so the choices become dimmer for MSFT unless they capture critical mass (somehow) of what people are looking for.

    I would suspect that is on Steve’s mind every moment of his day. He won the first time by controlling the api/drivers to the selling of the PC and the PC ecosystem. Now, it’s time for the rest. Search is pretty important, but commerce is even more.

    Tim, would you be even more concerned if it was MS-Visa vs. MS-Yahoo?

    Misa?

  • http://martalyall.typepad.com ML

    Would you be willing to explain the MS-Visa comment? Is MSFT moving into financial services?
    Thanks

  • http://www.polka.com Mike Kirkwood

    ML

    I’m not predicting the future.

    Just suggesting that if “all the pieces” are the key to getting there, a MS-Visa tie-up would give them an alternative to Google’s empire of data. MS-Yahoo tries to keep it even, but going to Financial Services and the direct transaction would be more than incremental approach.

    Wondering in the landscape that Tim suggests if this would shake the foundation further than “search”. Go to “buy”. ;-)

  • http://martalyall.typepad.com Marta Lyall

    Mike–
    This is very interesting. Thanks.

    First, you are the first I have come across to use the term “empire of data” & Google, but this is a very accurate desription. Not that this is not known, but stating it as such is great.

    Visa is a mechanism, but there still needs to be innovation that reflects how buyers want to buy. The move towards “curated buying” is very interesting and rapidly increasing. This is very different than the old advertising model. It fits with the trend away from mass production, towards singular production of objects by the end user. This could include technical production from “building blocks”, (not the dell type of “build your own”, but more conceptual building blocks built into development). Anything that makes purchase more personal/human fits within the viral transmission, and social media model.

    MSFT could easily adopt to this model. And then adapt to a User-Pay “by use” system, (incorporating visa or).

  • http://pardalis.squarespace.com/blog/ Steve Holcombe

    A trackback comment –

    “O’Reilly maintains a blog he calls O’Reilly Radar and the other day he posted an entry he called ‘Why search competition isn’t the point’. It happens to include viewpoints I share ….”

    Tim O’Reilly: Why search competition isn’t the point

  • oklhd

    Would you be willing to explain the MS-Visa comment? Is MSFT moving into financial services?
    Thanks

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  • http://tim.oreilly.com Tim O'Reilly

    oklhd — the point of the Visa comment is that if Microsoft really understood where the internet is going, instead of looking over their shoulder, they’d see that search is only one of many threads that are going to come together into something much bigger. Payment is one of those threads.

    Of course, given Visa’s market cap (more than 2x what MS was proposing for Yahoo!), this is unlikely. More of a thought-experiment.

  • Daisy

    Such like the quotation said, In our current moment of conceptual uncertainty and technological transition, there is an urgent need for a pragmatic, historically informed perspective that maps a sensible middle ground between the euphoria and the panic surrounding new media, aperspective that aims to understand the place of economic, political, legal, social and cultural institutions in mediating and partly shaping technological change.(www.technorealism.org)

    I like the point of “Web 2.0 (or whatever the fullness of the Internet Operating System ends up being called) is far bigger than search. Yes, search is currently the most valuable and monetizable Web 2.0 application–or perhaps better-named, subsystem.”