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Leading the Search Engine Industry

05/14/04

Just nine months ago there was no disputing the fact that Google was the #1 search engine and the company most likely to lead the online search industry for years to come. A wave of mergers, acquisitions, and personnel changes, however, has shaken up this ever-volatile industry. Yahoo now stands threat to Google's dominance for search quality, search quantity, and search revenue.

Today, there are two clear leaders in the search engine marketplace. Through innovation, both Google and Yahoo have distinguished themselves from an industry full of followers, copycats, and licensees. The most obvious factor that sets both Google and Yahoo apart from the competition is that they are the only companies offering both proprietary natural and paid search technology. As a result, nearly 100% of US searches now pass through the technology of one of these two behemoths in one way or another.

Now that a Google IPO is imminent, who really leads the race?

Company   Google, Inc.   Yahoo! Inc.
Incorporated   1998   1995
Origin of Name   A play on the word "googol" the number one followed by 100 zeros.   The company's founders like the definition of the word "yahoo" - rude, unsophisticated, and uncouth.
Headquarters   Mountain View, CA   Sunnyvale, CA
Founders   Sergey Brin - 30
Larry Page - 31
  David Filo - 37
Jerry Yang - 35
Employees   1,100   5,500
2003 Revenue   $962 million   $1.63 billion
2003 Profit   $106 million   $237.88 million
Initial Investment   $100,000 from Andy Bechtolsheim   $2 million from Sequoia Capital
Primary Search Property   google.com   yahoo.com
International Versions   95   22
Average Searches Per User   28.4   16
2003 Unique Visitors   61.5 million   111 million
Secondary Search Properties   none   overture.com
alltheweb.com
altavista.com
Key Licensees   aol.com
netscape.com
  msn.com
hotbot.com
lycos.com
Share of US Searches   35.0%   27.1%
Key PPC Distribution Partners   aol.com
askjeeves.com
  msn.com
Recent Acquisitions   Sprinks
Blogger
Applied Semantics
 

Overture Services, Inc.
Inktomi

Properties You May Recognize  

gMail.com
Orkut.com

  HotJobs.com
Yahooligans.com

Which company will dominate the search industry for years to come?

No one can say for sure. Time and time again the company leading the internet search industry has been demoted to failure in just a few short years. In the late 90s, everyone would have thought Excite was leading the way, AltaVista shortly before that. Now, these two fledglings are secondary properties of more major contenders (AskJeeves and Yahoo, respectively).

Are there any dark horse candidates for success?

Microsoft, for one, has already invested millions of dollars and over a year's worth of effort into developing a proprietary search technology and index for their MSN portal. Likewise, AskJeeves has begun establishing a revitalized reputation by posting several straight profitable quarters and increasing its Teoma distribution network by over 100% through the recent acquisition of excite.com, iwon.com, and a number of related search properties from private Interactive Search Holdings. In the paid search sector, FindWhat has come on strong, announcing a number of acquisitions creating a large international distribution network as well as proprietary technologies in email sponsorship integration and product search.

You never know what company will emerge to challenge the forerunners at any given time. Yahoo and Google may dominate today, but the "little guys" aren't so little and the industry has a history of instability near the top.

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