Yahoo's Search Tools Merely Nip at Google's Heels

Google (GOOG), the dominant player in search and search advertising, is seeing its competitors constantly nipping at its heels and it seemingly ignores them and continues to innovate. While Yahoo (YHOO), Microsoft (MSFT), and Interactive's Ask (IACI) are trying to revamp, recreate and reinvigorate the search experience in the hopes of gaining market share and hence more advertisers, Google is padding its lead and running away with first-rate technology innovations.

Ask.com has some neat complete search functions and combines results of all types of media and even includes little previews, but it is still a minor player in the search game. Microsoft's failed MSN unit is still alive and kicking and losing ever more money, while the revamped Live platform has yet to gain any traction, and Microsoft is continually seeing search share losses.

Microsoft even tried to lure searchers by offering them points in exchange for prizes when they did searches, and even included games inside MSN Messenger that forced users to search for answers to questions. Sorry Softie, but that's not gonna win over the advertisers and it's not gonna get people to give up on Google altogether.

Yahoo's newest feature, billed as a Search "Innovation", while positive for the languishing company, signals just how far behind Yahoo is on the technology spectrum. Yahoo was once the poster child for the future of the Internet, and these days it seemingly can't catch a break as revenue growth is slowing, share prices are slipping and it loses portions of market share to Google every quarter.

The new feature for Yahoo is "Search-Assist", which is a Search Suggestion/Completion tool that slides out when users type in a search keyword. As a user starts typing into the search box a list of common or relevant search terms comes up. Pretty cool huh! It is beneficial but looking behind the scenes I think tells a different story. Let's step back and see just what this says about Yahoo's tactics.

I think it showcases a desperation on Yahoo's part that it simply doesn't have the back end grunt to truly become a personalized search power house, while Google is slowly but surely building its own powerhouse as it releases tools such as Web History, iGoogle and Personalized Search. All those quarters of increasing Capital Expenditures that analysts were frightened about are proving well worth their weight in gold as Google is able to change completely the search game again and again while its competitors struggle to keep up.

Yahoo's search box suggestions come off as simply common or popular search terms. While all well and good, that's actually a step sideways and not forwards in the technological sense. As the Internet expands and the plethora of information becomes exceedingly complex only you can determine exactly what you're looking for, not everybody else. Google's got you covered.

A recent post on Google's official blog states (Link) that Yes its concerned about the huge privacy issues and its doing all it can but it also is working tremendously to tailor the Internet to each user.

Search algorithms that are designed to take your personal preferences into account, including the things you search for and the sites you visit, have better odds of delivering useful results for you. So if you’ve been checking out sites about the Louvre and you search for 'Paris,' you’re more likely to get results about the French capital than the celebrity heiress.

Additionally, Google goes on to showcase that a search for Football in Chicago is completely different than a search for Football in London, England. Google is taking localized and personalized search into realms that its competitors can only dream of. This is all due to that massive technology spending to build an infrastructure of computing that can handle incredible complexity when it comes to something that should be as simple as search. That is why Google gets a majority of search traffic, has higher click-through rates for its tailored advertisements, continues to grow rapidly and demands a market premium via a lofty valuation.

Yahoo, Microsoft and Ask right now are simply out of their league when it comes to search innovations. Google has the brains, with its thousands of dedicated creative employees, it has the brawn, with its incredible breadth of technology infrastructure, and it has bank roll to keep innovating in ever-expanding new areas of not only Search Technology but all aspects of our daily Internet lives.

Disclosure: Author is long GOOG