Source. google.com
Many seem to believe that it is a foregone conclusion that Google has already won the search engine wars. After all Google currently holds 66.7% of the U.S. search market as of September 2012, with its closest competitor, Microsoft (MSFT), at a distant 15.9% and Yahoo (YHOO) at 12.2%. Furthermore, Google currently generates about 96% of its revenues from advertising driven by its search engine.
There has been a lot of focus recently on Facebook’s (FB) challenges in monetizing ad revenues as consumers shift to smartphones. The challenge rests with the diminishing screen size; as the screen size of a smartphone is considerably smaller than the screen size of a desktop or laptop, then the number of advertisements that can be displayed is more limited. Such consumer transition to a smaller screen is likely to affect display advertisements more than paid search advertisements, although it will still have some negative effect; hence it seems Google is better positioned to weather such transition than Facebook.
What if the screen size went to zero? How can the screen size go to zero? Voice recognition. Although in reality the screen is still there, when a user dictates his query and the phone provides an answer through its own voice, as Apple’s Siri does, then the user is less likely to look at the screen. This will undoubtedly present a challenge to Google. Consumers may be fine being visually exposed to no less than ten search results on their screen, but it is less comfortable for consumers to actually listen to no less than ten possible answers to their questions.
It is important to note that Siri at this time is not a fully fledged search engine. As a matter of a fact Siri can be instructed to use Google, Bing or Yahoo in retrieving its results. Furthermore, Google has also developed its own voice powered search for iOS. However, Apple will always retain the upper hand, as it has been pointed out by Daniel Eran Dilger of Apple Insider:
Apple previously held up approval of Google Voice for over a year, and kept Google’s Latitude friend finder app in limbo for two years as it considered the features. This left Google to rely upon web app alternatives to native titles in the App Store.
Apple currently generates most of its revenues from sales of its products and services, with minimal advertisement revenues. During the next five years, it is very likely that Apple will try to take a bite out of Google by targeting the paid search market through Siri. As a matter of a fact, if Apple simply succeeds at becoming less dependent on Google in the search market, without a noticeable decline in user experience, then it would consider such efforts well worth it. To such effect, Apple has recently announced the hiring of William Stasior, previously in charge of Amazon’s A9 search engine, hence paving the way for further incursion into the search engine market.
During the next five years, the battle for search engine market share will be fought in the voice recognition arena, where Apple currently has advantages through its iPhone market penetration and Siri. Furthermore, given Google’s current dominant search market share of over two-thirds, such battle can only present downside risk potential for Google, while Apple has a potential upside. To conclude this article on the light side, such search engine wars will not be as entertaining as the Google-MSN-Yahoo search engine rap battles in this video.
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