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Google, Microsoft each seek search 'game changer'

Analysts expect big moves after Google and Bing maintain leadership positions in 2011

While Google and Microsoft waged "trench warfare" in the search business this year, both are hoping to come up with a market game changer for 2012.

Analysts are split over which firm got the better of 2011, but most agree that the search business is critical to the future of both Microsoft and Google .

The growing competition between the tech giants in 2012 is good news for users, analysts said, noting that it will likely result in more innovation and the development of strong new search features .

"Neither of them were able to make game-changing moves in 2011, so the battle settled down into trench warfare," said Dan Olds, an analyst at Gabriel Consulting Group. "Competition between the two isn't going to get any easier. Both are going to try to get to high ground in this battlefield. That should be interesting."

Analysts generally agree that Microsoft's big win this year came via its partnerships market leading social partners -- namely Facebook and Twitter.

Patrick Moorhead, principal analyst at Moor Insights & Strategy, said the agreements gave Bing a slight advantage over Google's 2011.

"I believe Microsoft won the overall rivalry this year in terms of overall growth and strategic moves," Moorhead. He cited Bing's "improved integration of social media, the Bing iOS app, and Bing for Xbox and Kinect. But on the flip side, Microsoft has made little traction on the international side related to search metrics."

Rob Enderle, an analyst at the Enderle Group, agreed that Microsoft's marketing investment in Bing is paying off so far. "They increasingly appeared as the nicer, more interesting, alternative to Google search," he said.

The work has resulted in some momentum for Bing.

For instance, the Microsoft search engine picked up some market share after a partnership deal with Yahoo that was signed in July, 2009. And the company got some more hope in July, 2011, when Google's search market share dipped below 65% for the first time in two years. Over that same two-year period, Bing's share of the search market had almost doubled.

But Google's share did rise past 65% again this fall and the battle of two strong contendors continued.

"Google seems to be capitalizing on their brand and isn't having a problem holding onto its market share," said Olds. "At the start of 2011, Google had 66% of U.S. searches while Bing had about 30%. In October, we see pretty much the same thing -- Google with two-thirds of the searches and Bing with 30%."

Meanwhile, Google failed to come up with partnership agreements with social network leaders like Facebook or Twitter , which could come back to haunt it, analysts said.

Google has taken advantage of the Google+ social network it launched last summer, integrating it with the search engine, but the product's user base is far below the reported 800 million Facebook members, putting it at a significant social search disadvantage.

Moorhead said that both companies have to focus on the mobile market in 2012, which he calls "a year for mobile integration. Search will attempt to permeate every kind of imaginable smartphone app in one way or another. This includes searches on videos, pictures and even sounds. Some of the largest advances will come in the form of image search, which will augment shopping, maps, and even food reviews."

Olds agreed that both companies must focus on improving integration with social networks with, for example, local shopping and daily deal features.

Olds also noted that the precarious position of Internet pioneer and one-time search leader Yahoo creates some intrigue for the search business next year.

Some analysts have been speculating since the firing of CEO Carol Bartz in September that Microsoft may try again to buy the firm, though for much less than the $40 billion-plus it offered in 2008. Acquiring Yahoo -- or even of parts of it -- could prove a boon to Microsoft in its battle with Google, they added.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin , or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com .

Read more about internet search in Computerworld's Internet Search Topic Center.


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