Apps vs. Search: An Evolving Story

More than a year ago we wrote the following in the conclusion to a report speculating, "Will Google Dominate the Mobile Web?"

Users have been conditioned to search online some of that behavior will translate into mobile. The evidence is already there; and the transference will likely become even more pronounced if full HTML browsers (i.e., Opera Mini, Safari, Skyfire) gain broader adoption. They explicitly seek to minimize the distinctions between the Internet and the “mobile Internet.” Google also hopes there will be a few distinctions between the two over time – hence Google’s WAP homepage redesign.

Despite this hope for convergence there remain a wide range of devices and user experiences in mobile. That’s partly why Google is pursuing a diversified mobile strategy. It’s very likely that search will have a significant role to play on the handset. The question is: will that be central and primary or secondary and more peripheral? This is very much up for grabs as the mobile market evolves and companies jockey for position. Google has a significant advantage “going in,” given its brand strength and resources. But, as we’ve tried to argue, there are other paradigms and use cases that are emerging. The wide range of devices and user experiences thus creates potential openings for companies other than Google to rise in mobile and potentially gain mindshare and market share. We’ll see if that happens.

I was remind of that report when I saw this article: iPhone apps are Google's biggest threat in mobile search. While the title sums it up, here's the core of the article:

The last example points to one of the reasons why mobile apps trump mobile search. With mobile search you don’t always know whether the stuff you click on in the search results will be viewable or functional on your smartphone. But if you have a mobile app or site that’s designed for that smartphone then you can be relatively confident that a search using that app will quickly return results (and links) that are optimized for a smartphone.

The article also assumes continued smartphone penetration. The question is how much and how soon? 

While apps pre-date the iPhone, the iPhone made apps central to the smartphone experience. Our earlier speculation was that apps, browser favorites and other input methods (e.g., camera phones) could affect the centrality of search as a way to obtain content on mobile devices.

All the major smartphone platforms now have apps stores: iPhone, Android, Windows Mobile, Palm and now Nokia/Symbian. What we're now callling smartphones and their successors will eventually come to dominate the market. But when that will be is up in the air. In five years a significant minority of US and global phones will function as mobile Internet devices (and potentially have access to apps).

The market is fluid and it's still too early to tell conclusively but we agree that the emergence of apps, combined with the limitations of "mobile search" today make it less likely that a PC-like search experience will be as central in mobile as it is on the desktop. That still could change as mobile search evolves -- the iPhone 3.0 upgrade has a spotlight like search feature -- and as voice becomes more reliable as a mobile search interface.

For Google that means it must develop its display and contextual ads business for mobile, which it is, rather than simply assume and rely upon search revenues. They will grow but, in the near term, they may not produce the mobile gold rush that some are anticipating. 

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