The success of Google has spawned over 1,000 search related startups. Search market share is dominated (94%) by the big five; Google 53%, Yahoo 20%, Microsoft Live 14%, AOL 5%, and Ask 2%. That leaves 6% for everyone else. However, remember that "1% of search marketshare is worth $1 Billion". Will any of the 1,000 alternative search engines ever gain 1% market share?
Nitin at Software Abstractions has some thoughts about possible exit strategies for these small search engines. My thoughts? Some of these will be acquired by the big search engines or big content publishing networks. Most of them will fade away. I don't see any of them breaking out and creating a significant stand alone business with the possible exceptions of Powerset, Hakia, and Mahalo.
Charles Knight, keeper of the list of The top 100 Alternative Search Engines has suggested a Universal Interface for all of the alternative search engines as a way to aggregate traffic. There are already lots of meta-search engines, Dogpile is an example, that essentially do this now. They send your query to all the major search engines and present the results on one page. They use only the biggest and most popular search engines, and still they have far less than 1% market share. So, I don't see an alliance of the small search engines working either.
Human powered search, or “pre-created results pages”, seems to be popular now, but it too has been done before. Yahoo’s directory was an attempt by human editors to catalog and classify web sites in the early days. About.com used guides as topical editors to create very rich and useful links to content. Both approaches eliminated spam and SEO tricks.
Mahalo, and others, are doing the same thing today and calling it “human powered search”. Jason Calacanis is a talented entrepreneur, and he has some big backers like Sequoia, Mark Cuban and Elon Musk. If anyone can do it Calacanis can. But, I think history has proven that this approach will have marginal success.
Big content publishers can be very successful with the human prepared search approach. In fact, as readers this is what we expect from them. Be the editors that find and catalog the best content on any subject. They will of course highlight their own content, but that is fine with most readers. This is why I said earlier that some of the big content publishers will likely acquire some of these alternative search engines. It makes sense.
Vertical search - There are lots of opportunities in vertical search such as jobs, shopping, medical, investments, real estate, cars, etc. People search, classified search, and local search are also big opportunities. These are smaller niche markets but attract very high advertising rates. There are two or three players in each of these market segments that can build a reasonably profitable business.
My guess is that most of the alternative search engines focusing on broad web search will fail. A few will achieve some level of success and then be acquired by one of the big five search players or large content publishing networks. Vertical search engines will find some profitable niches.
The big untapped opportunities? Local search, mobile search, and voice search. I think all three of these will converge on the cell phone to create a whole new approach to search, and a new set of winners.
