Wednesday, October 24, 2007

It's Official, Search Sucks

AutoByTel just commissioned a study on people's search habits, which found that 72% of Americans are experiencing "Search Engine Fatigue". They search but they are not finding what they are looking for. We in the industry are quite familiar with search fatigue. As I have posted before, most of the searching I do is vertical search from the Firefox toolbar with plugins like Wikipedia, Yelp, IMDB, Whois, etc.

Search ranking based on counting the number of inbound links made a lot of sense when inbound links actually meant something. Today, people have gamed the system so much that inbound links mean nothing. If you don't believe this statement, search for something that nobody cares to make money off of like Bridge Construction and the first few links actually are relevant and there are relevant targeted ads off to the right! It the mindblowing Google experience we all had a few years ago when we set Google to be our homepage.

Now search for something like Futon Filling or iPod Connectivity. These types of searches used to point to the content that people thought was most relevant. Now it points to the content that has the most cross linking by smarmy advertisers. Global search has made a gradual transition over the years from something useful to something useless, yet people are still repeating the patterns that used to work and wondering what is going on.

Is link-based page ranking dead? Maybe not, Jimmy Wales announced last year that he is building a search engine based off of the number of links from Wikipedia, which are well qualified links. Google keeps trying to stem the tide of bad links, but eventually they will have to change their algorithm to reflect the reality that most links suck. In the meantime, I think it is safe to say that global search is pretty lame, and I am going to stick with vertical search for most of my searching.

Friday, October 19, 2007

GOOG >= MSFT Redux

I got some good natured ribbing when I posted nine months ago that Google would soon exceed Microsoft's market cap on the rational that the market would soon value the dominant Internet company as worth more than the dominant PC company. At the time, Google was worth $150B (64 P/E) and Microsoft was worth twice as much at $300B (26 P/E).

Google is now worth $201B and Microsoft is worth $284B, so Google is now worth 71% as much as Microsoft. If Google's P/E had held at 64 it would now be worth more than Microsoft. At Google's current P/E of 55, it only needs to increase its annual revenue by a few billion to equal Microsoft's market cap.

That would put GOOG at $915/sh, although it is likely that some type of market correction will lower the value of both companies. It is also interesting to note that Google is now worth more than CSCO, the dominant networking company, whose market cap is $192B (27 P/E).