Desktop Search and Revenue Streams

Search is a hot topic in high tech right now, so industry experts at Cyberposium’s "Search Visionary" panel drilled down for the most promising avenues to growth.
by Julie Jette

The name of the game in Internet search has always been helping users find what they're looking for as quickly as possible, as precisely as possible. The panelists at the 2005 Cyberposium's "Search Visionary" session at Harvard Business School on January 29th spoke about the latest efforts to refine search capabilities.

With that in mind, panel moderator Thomas R. Eisenmann, associate professor of Entrepreneurial Management at HBS, noted that the next wave in search tools is going beyond material on the World Wide Web to finding data on desktops as well as elsewhere. He asked panelists where search competitors could gain the most distinct advantage.

"I think for us at Yahoo right now, we see an opportunity in helping users manage their personal information," said Bradley Horowitz, director of Yahoo's media search. "So our desktop search product is not really about the desktop; it's not about where the content is on your hard drive versus on a public-facing Web site. It's really about the user's relationship to that content."

The company also has a product on the market, Horowitz said, "that really points the way toward personal search."

Yahoo is able to collect data, such as click patterns, from its users and use the information to individually "tune" searches to users' personal tendencies. Such product improvements, Horowitz said, will change the nature of search from a one-size-fits-all experience to a more individually oriented one.

Dipchand "Deep" Nishar, head of products for internal applications at Google, said his company's mission is to expand the amount of information available to searchers. With only 5 percent of the world's content accessible on the World Wide Web, countless more articles, images, and other types of data are still locked away from Internet users.

It's really going to be about great execution.
— Mark Kroese, MSN

"Rather than leave someone behind, the approach we at Google take is, 'Let's make all that information that could be valuable to you and make it universally accessible and useful to you,'" he said. Like Yahoo, Google also recently launched a desktop search product.

Mark Kroese, general manager of information services and Merchant platform product marketing at MSN, said it is clear that more personalized search products, and ones that enable search in places other than the Web, is clearly the next frontier.

"Between Microsoft and Yahoo, we all have similar strategies. It's really going to be about great execution," he said.

He added that desktop search offers an opportunity for companies to gain greater traction with customers, who are then less likely to switch from a program they have spent time customizing than they are to switch from one search engine to another. "In Web search, it's going to be really easy to always tab over to another search engine," he said. "In desktop search, I don't think anyone here is going to want more than one indexer on their hard drive."

Rahul Lahiri, vice president of search and product management at Ask Jeeves, said improving the specificity of search results is the key to improving users' experience. "It's certainly very interesting to go and index more information…(but) the problem is at the end of the day, the user wants an answer—he doesn't want more and more of them."

Herve Gellaire, chief technology officer of Xerox and president of Xerox Innovation Group, said, "I believe there may be means to look at results, removing most of the answers from the inquiry that you get" and getting to the "right" answer faster. The speakers noted there is a trade-off in further personalizing searches: Users have to be willing to share some personal information, even if it is simply their tastes, with the companies designing the searches.

"It's really a push-pull. I don't think this is an area where the technology is not there…. It's more about whether people are ready to give up something in order to get something," Nishar said.

Horowitz agreed that users must see some value in sharing information. In some cases, Yahoo has seen the information exchange work very well. Horowitz said the company's music division has been collecting personalized song ratings from users for years. Over time, users can create a personalized "radio station" based on the music Yahoo predicts they'll enjoy.

"Those are the kinds of systems we see as being very effective, in that they're not intrusive…and the value you get back far outweighs the expense of clicks," he said.

Eisenmann also asked participants if the advertising revenue model will remain the chief way that search companies generate revenue in three to five years.

"We see other business models emerging, and like everybody else we're playing around with those," answered Kroese.

Horowitz said that Yahoo thinks the business is still "sound and exciting." He is frequently asked what the company's monetization strategy is for different products. His answer, "our monetization strategy today, which has been effective over quite a long period for Yahoo, is to fulfill the unmet need of the user."

Lahiri said his company has taken a similar approach over time and is taking the same one now. "The product came first, the product was refined, and the business model came after."

Kroese also pointed out that of the $36 billion spent on advertising in 2004, only $10 billion was spent in online advertising. By 2008, he expects online advertising to expand to $20 billion. That shows, he said, there is plenty of room to generate more revenues in online advertising.

About the Author

Julie Jette has been a business reporter for eight years.