Microsoft Is Winning The App Search Wars

| About: Microsoft Corporation (MSFT)

In-app ecosystems not too far away we may soon have Search Wars. Search is not easy. Just ask Apple (NASDAQ:AAPL). Enabling users able to easily find the apps they are looking for is a crucial part of the mobile experience and will become increasingly important as the number of apps continues to explode at a phenomenal rate.

Apple's efforts to improve search in iOS 6 App Store have been met with a lukewarm response. App developers and consumers both continue to complain about several aspects of search in iOS 6. For instance, finding new apps is still not easy and finding apps by their brand name can be more difficult that it should be. It appears that finding an app in the new App Store with search is determined by how many downloads that app has. Apple's search algorithm works on the ranking of apps and many so-called "zombie" apps simply fail to appear in the App Store. If an app has only a few downloads it can be very hard to find with search and with more than 700,000 apps available in the App Store it is nearly impossible to sift through to find the one you are after.

All of this is after Apple's $50 million purchase of Chomp in February - intended to improve App Store search and its search interface. It is clear that Apple's purchase of Chomp wasn't the cure-all to its App Store search problems. In fact, the main thing Apple may have achieved so far in buying Chomp was to ensure that you can no longer use it on the Android platform.

Google (NASDAQ:GOOG) is one of the world's most valuable companies and most of its value is based on search. But while it may be the undisputed king of desktop search, finding apps on its app store, Google Play is still far from perfect. Microsoft (NASDAQ:MSFT) seems to be keenly aware of the need for refined app search and recommendation as demonstrated by Steve Ballmer's recent interview with LinkedIn founder Reid Hoffman in which he characterized Google's Android app ecosystem as "wild and "uncontrolled."

Microsoft appears to be making the right moves in search by partnering with several companies to enhance its own app store and search capabilities on Windows Phone 8, Surface and Windows 8 platforms. The deal it recently signed with pure play search and recommendation company Mimvi (MIMV.OB) is intended to enhance search and recommendation on Microsoft's Windows Azure and Windows Mobile 8 platforms. Its $240 million investment in Facebook (NASDAQ:FB) enabled its Bing team to power searches on the social networking site. Likewise Microsoft's 2009 partnership deal with Yahoo (NASDAQ:YHOO) gave the Bing team control of Yahoo's search. As Yahoo moves more towards becoming a mobile centric company, Microsoft's partnership with Mimvi should become increasingly vital to its relationship with Yahoo as it relies on Mimvi's core strength in mobile search and recommendation algorithms.

These deals underscore the complexity of refining search and recommendation. As I've said, improving users ability to find apps is not an easy task in ecosystems of millions of apps. It is a continually developing part of technology that calls for special teams of engineers to create better user experiences. Microsoft's partnership with Mimvi illustrates this point. Microsoft sees an expertise in the Mimvi search and recommendation engine and the team behind it with its long track record of search and recommendation algorithm excellence, going back to its founder's background at Lawrence Livermore Labs.


As Apple continues to demonstrate, search is not easy. The latest incarnation of the App Store just goes to show that enabling users to find the apps there are looking for is not easy. I don't think the iOS 6 App Store is necessarily an improvement over previous versions. Apple is still striving to get search right. Apple's recent price fall may be indicative of numerous problems, including MapGate, that it is having post-Steve Jobs. However Apple is still innovative. Who knows they may well end up partnering with Mimvi too. Google continues to increase its smartphone market share - recently jumping to 72% according to the Gartner Group, but it also has its problems with mobile search. The results of Microsoft's partnerships to improve its mobile search capabilities and app store have yet to be determined, but I believe the company realizes how critical search is and that it must form strategic relationships here to succeed. As a consequence I would recommend Microsoft as a strong buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.