Is Apple's (Nasdaq: AAPL) next feat of magic a search engine?
TechCrunch is receiving "multiple" yet "thin" reports that the Mac daddy may be gearing up to launch a search engine. It's easy to see why the rumor mill is buzzing. Apple's Safari browser is gaining in popularity as its MacBooks and iPhones expand the company's market share in the computing and smartphone realms, respectively.
Hold up there, though. Even TechCrunch is dismissing the chatter as baseless, pointing in part to a lack of search-guru hiring at Apple. That's not the only thing making a push into search unlikely for the Mac maker.
Having a popular Web browser isn't necessarily the ticket to mastering search. Microsoft (Nasdaq: MSFT) makes the most popular browser on the planet, yet its search engine runs a distant third to Google (Nasdaq: GOOG) and Yahoo! (Nasdaq: YHOO). Apple's Safari is also well behind Mozilla's Firefox in the browser battle, and Firefox isn't championing a proprietary engine.
Breaking in a new search engine would also mean displacing Google as Apple's search engine of choice. That may very well be a long-term goal for Apple, given the way that Google and Apple are starting to butt heads these days.
- Google's Android mobile phone operating system -- and even Google's own apps-selling store -- are clearly angling for Apple's iPhone market.
- Google's YouTube leans on Adobe's (Nasdaq: ADBE) Flash as its video platform, undercutting Apple's QuickTime player.
- Google's push toward cloud-computing solutions like Google Docs is a subtle jab at Apple's productivity software, and may be a bigger blow to Apple's pricey computers if cloud computing makes more computer owners operating-system-agnostic.
Desire versus reality
Apple will have its cage match to the death with Google for global supremacy somewhere around 2014, but now is too soon to start swinging.
Does Apple have the technology to put out a superior product? The last thing it wants to do is put out a subpar search engine, especially if it alienates the growing number of "I'm a Mac" converts.
Perhaps more to the point, even if it does have a killer search engine in the works, how is it going to monetize it? Apple has been served well with Google's paid search assistance. Like so many companies that belong to Google's AdSense program, Apple collects the lion's share of the money that Google generates from placing ads on Safari-fueled searches. Apple is unlikely to ever build up the kind of $15-billion-a-year online advertising network that Google has amassed over the years. Even Yahoo! wanted to hand over its paid-search real estate to Google, before Big G got cold feet and walked away.
In other words, even if Apple launches its own search engine, it's probably still going to hand over the monetization keys to Google. So what's the point? Whether or not Apple goes through the rigmarole of christening a new search engine, all roads lead to Google's fattening pockets.
The real search party
Game over? Google wins? Not exactly. Apple isn't entirely out of options, and I'm not talking about the backdated ones, Steve Jobs. Apple can team up with Microsoft or Yahoo!, even if it means taking a step down in monetization. Microsoft and Yahoo! can offer a greater percentage cut of the revenue-sharing, though it's unlikely to match what Google can provide.
The other option is for a cash-rich Apple to do something bold like buy Yahoo!. A reader emailed me this week suggesting an Apple-Yahoo! alliance after I suggested that Yahoo! is bottoming out here. I couldn't wrap my head around it at the time, but it does make plenty of sense now.
Search or not, Apple is going to keep butting heads with Microsoft and Google. Yahoo! is pretty much the Switzerland of search. Apple can always aim for a smaller purchase like Ask.com parent IAC (Nasdaq: IACI) or even Time Warner's (NYSE: TWX) AOL, but Yahoo! is a one-stop shop in display and paid search that will serve Apple well, especially as it explores ways to enhance its revenue-generating potential online without going through Google.
So there is little reason for Apple to break into search today, but it's never too late to start searching for solutions for tomorrow. It has a cage match with its name on it in six years. If it wants to be the one standing at the end of the fight, it's never too early to start training.
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