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Google Acknowledges Need To Enhance Search

Posted on Tuesday, Jul 20th 2010

After years of ignoring context-sensitive search in major vertical categories, Google (NASDAQ:GOOG) finally entered vertical search within the travel domain earlier this month with a bang. It acquired ITA Software, the Boston-based specialist in organizing airline data, flight times, seat availability, and pricing, for $700 million. While the move is sure to be subject to scrutiny by antitrust enforcers, it was long overdue.

Google is going full speed with its acquisition spree and has completed over sixteen acquisitions in the past ten months – for most of them, however, financial details have not been disclosed. Within travel, the company recently purchased Ruba, a visual travel guide and tour review site to strengthen its travel offering and also to own an equivalent of TripAdvisor. To help boost semantic search efforts, Google recently acquired Metaweb, a company that maintains Freebase, an open database of over 12 million “entities,” including movies, books, TV shows, celebrities, locations, companies, and more. Google is planning to maintain and further develop Freebase as a free and open database.

To strengthen its Android platform, Google acquired Simplify Media, a tech company that lets users stream music from the desktop to their mobile phones. Google plans to use the acquired technology to stream music to Android handsets. The acquisition is expected to help it compete with Apple’s iTunes. While Android may be doing good business, Google did not succeed in establishing successful Nexus One stores and recently announced the closure of the sale of Nexus One phones to the public. The company will instead work on making additional Nexus One devices available to developers through its Android developer program. Nexus One support will be provided by Google and Nexus One phones will be sold by partners such as Vodafone in Europe, KT in Korea, and others based on local market conditions.

Google continued with its attempts at monetizing YouTube and acquired Episodic, a platform that allows users to monetize Web videos by inserting ads. Episodic also offers an analytics engine to give publishers metrics about audience engagement, performance, network, and viewer experience quality. Further, it gives content producers the capability to build custom, branded iPhone applications around their media. While at present Episodic supports the iPhone, the company is also working on device support for Android, BlackBerry, and Symbian.

To enhance the user interface experience, Google acquired Bumptop, a company that makes 3-D interfaces. Google is looking to use Bump’s interface to help design better-looking operating systems for netbooks, and for its phones. However, Google’s netbook/tablet ambitions suffered a blow when HP acquired Palm, indicating that it is going for a proprietary OS à la Apple.

And despite many strong moves, Google delivered a somewhat mixed Q2 performance. EPS of $6.45 fell below the market estimate of $6.52. Revenues of $5.09 billion, however, managed to exceed the market’s projected $4.99 billion target and recorded 23% growth over the year. Revenue growth was driven by growth in both Google properties and network revenues. Paid clicks grew 15% over the year but fell 3% over the previous quarter.

The stock is trading at $466.18 with a market capitalization of $148.4 billion. It reached a 52-week high of $629.51 earlier this year.

Google finally seems to be heading the right way. With the travel vertical on track to getting its own search engine, it would be a good idea for the company to look at other key verticals such as jobs, real estate, and health before competitors such as Bing start to steal Google’s market share in these areas. With a cash balance of $30.1 billion at the end of the quarter, Google is in a good position to buy. Trulia (real estate), Indeed (jobs), and Healthline could be targets worth considering.

In summary, it seems as though Google is acknowledging that its current search engine feels dated, and a more powerful, accurate, precise (and, I hope, personalized) search experience is overdue. The goose has laid golden eggs for a decade. But now, it may need some TLC.

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Stuctured Web Saturday, October 8, 2011 at 2:43 AM PT