Search Engines: The New, De Facto OS?

“Read my lips: no new taxes.”
— President George Bush

“Microsoft and MSN are completely committed to our relationship with Overture. We have no plans to develop our own paid search platform.” — Microsoft spokesperson

Yeah, right.

Never content to ignore a revenue source it couldn’t monop… oh, sorry… competitively control, Microsoft seems to have its sights set on the search industry.

Earlier this month, Microsoft quietly launched MSNBot, a piece of software designed to search the Web and build indexes of documents, much like Google and other algorithmic search engines. Although Microsoft currently uses Inktomi and Overture to power its searches, many believe the software giant wants to take over search capabilities itself, setting its sights on Google as the ultimate target.

Microsoft’s plans revolve around the 2005 release of its new operating system, code-named Longhorn. Microsoft plans to introduce a new file system that will provide a uniform method of storing data, according to a recent report, making searching between documents a lot easier than it is today. Rather than having to search for content in different applications, users will be able to employ one search box to find data anywhere it exists on their computers and in whatever format.

So what? The big story may be search, for all its ubiquity across the desktop and on the Internet, is becoming the single most important way computer users access data, even more so than the point-and-click interfaces we use to move files around.

In May, Peter Coffee wrote “Search Engine as OS,” an amazingly insightful article. Coffee makes the point search engines such as Google are becoming de facto operating systems (OSs) of the wired world, providing the unified interface through which everyone manipulates data. Although Microsoft’s plans surely predate this article, it’s possible to glimpse the future in the similarities, especially if we remember the other software people once saw as a new de facto OS in years gone by: the Web browser. Remember Netscape?

Search is big business. Some recent moves — most notably those involving Yahoo’s $235 million purchase of Inktomi and Verity’s acquisition of Inktomi’s corporate search products — point to some major consolidation and serious jockeying in an industry getting fed up with Google’s dominance. In fact, when Yahoo recently renewed its contract with Google, the term “exclusive” was omitted, freeing Yahoo to go with other providers as it sees fit. Google currently has 40 percent of the search industry. The other once-dominant players are looking to grab a bigger piece of the pie for themselves.

Why should marketers care about Microsoft, Overture, and Longhorn? If Microsoft gets into the search business and integrates search with the OS, the burgeoning paid placement search market could change. Big time.

On the one hand, this kind of move could create huge new opportunities for marketers, if Microsoft plays its cards right. Given the rapid rise of always-on broadband connectivity (some predictions estimate 70 percent of the market by 2008), once search jumps out of the browser and into the OS, advertisers will have compelling new opportunities to deliver targeted marketing. It will be based not only on what people look for online but also what they’re doing on their own computers.

Picture this: It’s 2006. You’re working on your quarterly sales reports. You need the sales statistics for the northeast region, so you type “sales statistics” into your fancy new Longhorn search box. The search function scours your email, Word, Excel, and PowerPoint documents to retrieve all the relevant data squirreled away on your hard drive. But that’s not all. The function is tied into MSN’s new search engine, so it’s got the ability to search the Web for the same information. In a flash, you get back your list of relevant files and a couple of paid ads for companies trying to sell you sales training, contact managers, and business travel services.

In many ways, it’s a marketer’s dream come true, a new capability that will allow advertising to be tied directly to a target audiences’ every move (on their computers, at least). Once paid search is built into the OS, the sky’s the limit. Add to this the fact these searches take place outside an increasingly spam-filled and cluttered online environment, and you’ve got a pretty powerful platform to deliver messages on.

On the other hand, this kind of ubiquity may not exactly be greeted with open arms by users who are increasingly worried about privacy and corporate intrusion. People have grown to accept (and, in many cases, to ignore) copious amounts of online advertising, but bringing ads into the OS may be greeted with even less enthusiasm than spam. And though corporate IT folks definitely will see the advantages in powerful, ubiquitous search, they will inevitably have serious security concerns, especially when corporate data become exposed to searches.

For those of us who know paid search’s power, it’s important to keep an eye on Microsoft’s new developments. There’s a lot of money to be made in search. It seems improbable Microsoft won’t use its vast reserves to carve up a big chunk of the pie for itself. In a recent memo, Steve Ballmer took aim at search as one of the consumer services to be targeted for growth. MSNBot may be the opening salvo in the coming Search Wars.

In the coming months, don’t just read their lips, make sure you read between the lines.