I have always thought Apple should have their own search engine. Way back when Altavista was being snapped up by Overture (then swallowed by Yahoo) I thought Apple should be in the search engine market. I still do, so here are five reasons why Apple should have its own search engine.

[Disclaimer: I own a few hundred shares in AAPL. These ideas are my own.]

1. Revenue

We know that Apple’s core source of revenue of hardware sales which is not about to change. However, stock market analysts Trefis suggest that 8.2% of Apple’s share valuation comes from App related income.

This is an income stream that has been around for about two years, in which time the share price has risen from $96 per share to $270 per share (date: 26 April 2010). Now this share boost cannot be attributed to the apps alone (lest we forget countless iPhone releases and the iPad) we can see that new income streams are helping grow the overall size of the company and diversify the revenue streams away from just hardware income.

Creating a search engine that sold ads, on competition with Yahoo, Google and Microsoft could create another source of income that would be valuable to the long term business of Apple.

2. Consumer Relationship Channels

If we look at Google for a minute, we can see that Google started with a pure search engine, then added other search related services before expanding to offer blogging tools, and productivity apps to compete with Microsoft and Apple. Google Apps like Google Docs and Google Mail work to bring the user relationship closer to the ‘start’ of their online behaviour as well as working to retain them for longer [and know more about the user through smart data management.] The development of Chrome Browser, the OS, the Nexus One and the rumoured iPad challenger are all reasons for Google to grow the relationship with the consumer to boost its core business of search related advertising.

Why is this relevant to Apple? Because Apple already has those channels and more. They have the top selling mobile Internet device, known as the iPhone. They sold out the first stocks of the iPad. They make their own desktop hardware, own an email service and email client [Mail] as well as desktop software with their iLfe suite of products. So Apple already has the customer relationships across a wider suite of hardware, software and services than Google. Microsoft would still be dominant in this category but have struggled to really make the connections pay pre Bing. Yahoo only has a search engine and some additional web services that seem to wither once purchased (MyBlogLog anyone?)

Where Apple has a further advantage is their connection in the living room of homes. Whilst the Apple TV is small beer in terms of sales and revenue, it is still a connection that could only be rivalled by the Windows Media Center. Whilst Apple still define the Apple TV as a hobby they aren’t cancelling it, more trying to work out what to do with it. Could this be their Trojan Horse?

3. Traffic

The Apple site is a well respected and active site on the web. With estimated traffic figures for Apple.com standing around 5.6m visits per day [source: statbrain.com] it is a long way off Google [estimated at 118m] but much closer to AOL with an estimated 8.267m visit per day. On a pure comparison basis, Apple would not be able to compete with Google, Yahoo or MSN for traffic. Nor should it need to. If we look back at the AOL comparison for size of site [if Apple.com just became a search engine which would of course not happen] we could see promising income. For Q4 2009 (the latest AOL earnings report) advertising income stood at $500m. [source] Basic maths says that’s a billion dollars a year business – something that could be achievable for Apple.

Again, taking AOL as a comparison, not all Apple’s income would come from the core search engine. iWeb, the website building tool from Apple has the ability to include advertising widgets. These widgets at the moment are Google AdSense based, so the ability is already there to include an Apple advertising widget to generate third party income. Creating their own search search widget to further harness search traffic and resultant income would not be difficult to achieve.

This ability to harness channels is already taking shape with the iAd platform for the iPhone and iPad apps. AppleInsider (very slow link at time of publishing) suggests revenue from iAd could generate add another 8% to their share price. The combination of factors here is the perfect example of what could be done with a search engine.

This joining of the dots [the iPad/iPhone, editorial approval and distribution of apps with the app store and the aderving capabilities of iAd] could be replicated across more of Apple’s products to make a very strong ‘funnel’ to populate their own search engine. Analysis from Trefis suggests that the iAd could earn Apple $2bn in gross ad revenue. If that is pure mobile related income, what could be generated from a search engine?

For the sake of balance, the potential revenue from iAd was based on rate estimates from AdMob which were challenged by BusinessInsider.com as being way too high in this current economy.

4. Brand Loyalty

If we were comparing just traffic, Apple would be a niche player. But the brand loyalty of Apple is huge, with new disciples being made with every new iPad sale. Not only could Apple be harnessing its various strands of user connections but it could also be building on the relationship and trust Apple has with its consumers. Can you tell me any other site that gets people so excited when it goes DOWN? This has to be a strong card for Apple to play.

Looking at the list of 100 global brands for 2009, Apple was ranked 20th best Global brand by Interbrand. Google was 7th, Microsoft was 3rd. Yahoo was not featured.

5. Ad Serving

I believe this is important enough to warrant its own point. You may recall back in 2007 that all the main search engines acquired their own ad-serving products. Google acquired Doubleclick for $3.1bn, Microsoft bought aQantive for $6bn which included the Atlas ad server. Yahoo moved to purchase Blue Lithium an ad network with proprietary technology and took full ownership of Right Media.

These deals were to connect the supply chain between ads, advertisers and the sites themselves. Again, as we have seen with the purchase of Quattro Wireless that became iAd, Apple have connected the parts to manage the supply chain to in app advertising. I am not an expert in ad serving but I would expect that once you have a good ad server, there shouldn’t be too much work to make it connect to web pages, rather than mobile devices.

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So, I believe Apple have many of the key elements in place to create their own search engine play. Consumers with Apple devices are already searching. Whilst Apple will be getting third party revenue from Google AdSense it will be a lot smaller than if Apple had its own direct stream.

To me it seems a logical extension, to join the dots. But for the purpose of balance, here are a few reasons why not.

i. Mobile is the future, why invest in old technology?

A recent ‘future internet’ prediction from Mary Meeker of Morgan Stanely pointed firmly to a future Internet dominated by mobile access, so why bother investing in parts that may be redundant in five years? Well, people still search – they are just doing it from more platforms, of which Apple has the bases covered. Even if in time the search function is packaged as a dedicated app, a search engine will need to be built.

ii. Apple is making so much money, why bother?

Yup, Apple is making a lot of money. The share price is at an all time high, with expectation building for it to reach $300 per share.  With many of the components already in place, it shouldn’t have to be a huge investment to create a search engine upon which ads can be served and income can be generated.

iii. Build or Buy?

Search engines aren’t easy to build from scratch, and the skills required probably aren’t working in Cupertino right now. So an acquisition may be worth looking at. AOL has gone from being the world’s largest ISP to a ‘niche’ player in the market. With a market cap of $3bn compared to Apple’s $247bn this could be a an easy purchase, but AOL don’t have a search engine of their own. Ask Jeeves? Since Jeeves handed all but the front page over to Google it has slowly lost its relevance. With the growth in ‘personal content’ (aka user reviews and UGC) is there a new role for a ‘human edited search engine’? Ask Steve anyone?

iv. Shareholder Sentiment

The challenge with creating a search engine to compete with Google is the comparison with Google. Both Yahoo and Microsoft achieve great revenue from their search products which if they weren’t compared to Google would be huge news. Instead, because of Google’s success at better monetising the search arena, Yahoo and Microsoft get unfavourably compared against Google, which doesn’t always work well for shareholder sentiment. Should Apple decide to go down the search route, they may get more negative reaction than positive. As a golden stock right now, they may not be keen to jeopardize this.

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So, these were just my thoughts. It seems to be me that Apple are in prime position to create a new revenue stream from search. They have many of the component parts already in place, and cash to build or buy what they don’t have. If we look at the ‘big three’ search engines (Google, Microsoft, Yahoo) it seems to me that Yahoo is the most vulnerable. It has been slow to cement strategic investments and lacks the hardware/software/services route to connect with customers that Microsoft has and Google is rapidly building. Could we see iSearch as a potential search player?

OK, the Google Android ‘phone has been around for over a year now and has seen limited success but with real potential. As a die hard iPhone lover I had shunned an Android until I felt I really should understand where this is heading.

In the past week we have seen announcements that some major US carriers are going to be offering Android Smart ‘phones before Christmas. This news just adds to the reasons why we need to be paying very close attention to Google Android. If you pay attention to the Google share price (it has almost doubled in six months) you will see that some of the fuel for this growth in share price is the Android roll out.

So, here are my five reasons you need to pay attention:

1. Network Access. Verizon Wireless, the largest US carrier will start selling two Android handsets before Christmas, one HTC, one Motorla. Good news for these handsets, bad news for Apple, RIM (Blackberry) in the handset department. Bad news also for Microsoft whose outdated Windows Mobile is being shunned in favour of Google. Bearing in mind the choices Verizon no doubt had, and regardless of how many Android handsets are sold this Christmas, this deal should be seen as a strong endorsement for the future of Android.

(The iPhone is still available only on AT&T in the USA. The Verizon deal offers a very real alternative to those people looking for a s,art ‘phone but not necessarily a Blackberry. The deal with Orange (and soon Orange & T-Mobile) in the UK means this is less of a threat on this side of the pond)

2. The Google Android Operating System is free to handset manufacturers. In this market, free is a very good incentive for handset manufacturers to try your software. Remember, Windows Mobile is outdated (and probably costs a lot of money), and the iPhone software is and will remain exclusive to Apple. If handset manufacturers and carriers are looking for the iPhone killer, they have the potential to gain one with little upfront investment or risk.

3. Android is Open Source. iPhone is not. Whilst both systems have app stores, the open source structure offers a greater ability to really see where this can go. I feel it is important also as the Android system, its apps, and the app market (on the ‘phone is atrocious) is not as polished as the iPhone. By making this open source it puts the power and responsibility for growth into the hands of a much larger connected audience which could see step change improvements as we move forward.

To quote Scott Morrison, WSJ

Mobile apps are critical for two reasons. Yankee Group estimates the U.S. mobile app market will reach $4.2 billion in 2013; meanwhile, consumers are likely to be drawn to the mobile phone platform that boasts the greatest number of apps. However, it becomes a chicken-or-egg debate because developers will turn their attention to Android as more people buy those phones, but consumers might be reluctant to buy Android phones without a robust set of apps.

4. Android is Hardware Agnostic. In part because of its open source nature, the operating system can be tweaked to deliver the right customer experience for each carrier and the ability to run on different ‘phones. If we look at two other options, the iPhone and the Blackberry – you can only use the iphone system on the iphone or the ipod touch. If you don’t like the iphone then tough, and in the States, if you like the iPhone but not AT&T – tough. The Blackberry is similar – whilst there are umpteen different Blackberry styles, its still a Blackberry. Android can appear on any network (subject to contracts) and on (virtually) any ‘phone type. Of course, the handset choice is limited at this stage but that’s because of the audience size – as Android increases in popularity so the investment in hardware will follow from manufacturers.

5. It connects seamlessly with your Google accounts. If you look at any of the major search engines over the past 10 years, they have all worked to grow the reasons to stay on the site, not leave it. With Google this has been the investments with iGoogle, Maps, YouTube, Docs etc. So Google are taking this strategy mobile, giving you the ability to use Google as you would on a computer. This in itself is nothing new, nor is it fully harnessed (I don’t get the same experience on Google Finance, for example, as I do on the computer) but with the sheer size of Google users (and growth) this starts to become an attractive option, to have all of your ‘stuff’ in one place. Android needs to work hard to ensure there are additional benefits or greater harmony between computer and ‘phone (vs. a Google app on the iPhone or Blackberry) for it to become a true killer. I believe this is a strong point moving forward, but one that needs to work right now.

The Future’s Bright The Future’s Android

There are many reasons not to like Android right now, not least the lack of polish, the small number of users and the lack of apps. BUT the reason you need to pay attention is that these will be fixed. The Verizon deal is big news as it paves the way for much quicker potential growth. If growth kicks off, then in will come more manufacturers, more developers and more money. Once this happens we will see a snowball effect with growth coming quicker and quicker.

Make no mistake, Google are in this to make money. It is no accident there is a search button the handset – they want to be your partner in mobile surfing and mobile searching. If you watch their video for Android 1.6 you will see they focus on your ability to search.Their investment now will pay dividends in a few years. If I was a betting man, I’d say those are going to be big dividends.

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Google announced today the launch of the Chrome Operating System, an extension of the Chrome browser initially intended for the fast selling netbooks.

The announcement is a major one by any definition. However, it can also be seen as the culmination of a master plan which over time had many significant milestones. The offering of Gmail, Calendar, the purchasing of Writely, the introduction of Google Gears, then Chrome & Android.

Like the Mighty Morphin’ Power Rangers – each element of the Google Aresenal was powerful in its own right. But stick them all together into an operating system and the total is much more powerful than the sum of its parts.One can be confident the operating system won’t end with mobiles and netbooks.

This same game plan needs to be watched in the social media space. Take Gmail, Calendar, Picassa, YouTube, add a Jaiku purchase then launch Google Wave and Google are well on their way to another behemoth.

The next issue to watch after that is when the subscription model kicks in. Others have already noticed the quiet decrease of services offered free from Google Apps, and an increase in the promotion of ‘premium packages’.  Google’s game plan here is to become the essential partner for so many services before switching on a premium model. If that happens [even at a few dollars a month] we could see the next billion come easily for Google.

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I compare the search results of Google vs. Bing on three terms that I find poorly represented on Google: Hotels, Sheet Music and Feng Shui.

A new article from Techcrunch this morning highlighted a basic but effective mashup of Bing vs. Google. If you read the Techcrunch article you will get a good overview of the comparisons. Naturally, I searched for myself. On Google I own the whole front page with relevant links (the blog, econsultancy profile, brand republic profile etc.) – on Bing there are very similar results, with the addition of jamieriddell.net which I hadn’t registered (I rectified that) so not much to learn from there.

I then looked at three areas in which I don’t get good results, namely hotels, sheet music and Feng Shui.

So lets look for a Hotel in Edinburgh.

To be fair, these results are neck and neck. Both results have sponsored ads, map links (more from Google) and then a list of hotel specific websites, leaving little room for aggregators on either platform.

Sheet Music. I am just starting to learn the piano so I want to find some sheet music. Like Pink Floyd Sheet Music.

For this, Google offers many links to different sites whereas Bing offers fewer links focusing on a handful of websites. The first three natural Google ranks were spammy, offering me further links with little content.  The first link on Bing is totally spammy, but follows with three quality sites offering exactly what I want. I would pick Bing as the winner here for quality of content delivered.

Feng Shui. I have been given a money tree and want to know where I should place that in my room. I tried these searches yesterday. So I searched for, “where do I place a money tree in my room?”

The Google results were just spam filled. Not even one answer to this direct question, including results for real estate less than half way down the page. Bing wins marginally for having slightly better content linked but there wasn’t much in it. For reference I aske dhtat question on Mahalo, Yahoo Answers and Twitter and couldn’t get the answer. I resorted to buying a book!

So, not entirely conclusive at this early stage but Bing has the potential to make me switch if it weren’t for the Google hooks of Gmail, Analytics etc.

How have you found it?

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Today it was the turn of the XBOX to take the limelight with two big announcements.

1. The Beatles will be on Rock Band.

That’s right, The Beatles have officially licensed select songs to play on Microsoft’s XBOX 360 platform. This move will surely move the platform and the game into a much wider audience than the traditional ‘hard rock’ slant the game has had to date.  The game is already for pre-order on Amazon UK.

2. XBOX live will open up to allow connections with Facebook and Twitter bringing the gaming experience to a much greater level of interaction. This is important news as all the games consoles have been fighting to become part of the consumer’s daily life, not just game playing. This announcement offers great opportunity to bring the worlds of gaming, and the living room, to the worlds of social networks.

I speculate that both announcements are very important footholds in the evolution of the XBOX 360. I for one will be dusting off my XBOX and seeing what it can do.

Please excuse the formatting on this post. Sometimes WordPress just won’t do what you want it to…

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These are my links for May 26th through May 28th:

• The Forrester Blog For Interactive Marketing Professionals – Microsoft announced today its Bing search engine, a "decision engine" that will replace live.com worldwide as of June 3. A distant third place in the search engine game, Microsoft hopes that this engine will help it gain more searcher share by delivering results and content more relevant to how users actually search. What makes Bing different from existing search engines?
• Micropayments for content and services | Contenture – Every time a Contenture user visits your web site, you make money. Your slice of every visitor's monthly payment is based on how many visits they made to your site divided by the total number of visits they made to all Contenture sites.
• Mozilla Labs Jetpack | Exploring new ways to extend and personalize the Web – Jetpack is a newly formed experiment in using open Web technologies to enhance the browser, with the goal of allowing anyone who can build a Web site to participate in making the Web a better place to work, communicate and play
• Linkbait Writing Services | Unique linkbait writing services to help your website grow and get more traffic. – At Linkbait Writing Services, we are determined to bring your website or blog more traffic by creating quality linkbait articles. Our small team of writers strive to create linkbait articles that will not only help you reach the front page of social bookmarking sites like Digg and Stumble Upon, but also bring you traffic for the lifetime of your blog. Save your time for marketing your blog and interaction with your readers and let us take care of the time consuming task of building linkbait articles.
• WordPress Designers – Premium WordPress Themes – WordPress Designers is a small team of talented developers and creative designers. We pride ourselves on our intimate knowledge or WordPress and our ability to push it to its limits. Since discovering the WordPress platform several years ago, we have strived to learn as much as we could about it so that we could bring you some of the most creative and well coded themes on the market.
• Outlaw Design Blog » 34 Brilliant Ads on Semi Trucks – a great post showing loads of advertising designs on lorries
• ConceptShare: – ConceptShare is a simple, cost-effective tool for gathering feedback from team members and clients.
• 5 Basic Rules for Creating an Effective About Page — Des Walsh dot Com – This short list of basic rules for creating an effective About page has been prompted by my frustration with the number of blogs and other websites that either do not have an About page or, more commonly in my experience, do not put their About page to work effectively in the interests of their business.
• Small Screen Blog: All about mobile – (by MoFuse) – If you believe that mobile is a strong medium to reach your customers – you need to be thinking about how your brand will evolve on the mobile web. Today you have a few interesting options and they are not mutually exclusive.
  As consumers wake up to the idea that they can actually reach the internet on their phone, we are about to see an explosion of new mobile devices; ITouch, Kindle, “netbooks” and even Sony Playstation Portable already are rapidly changing the ‘connection’ landscape.
• D u s t y T u n e s | Let your music collection see the light…. – Dusty Tunes automatically creates your own personal web page with a list of all the music in your iTunes library (although you can cheat). It will organise it all into a nice list and provide you with links so you can share it with your friends, on blogs, forums, websites, digg, facebook or simply keep it as a personal reference. You can come back at any time and update your page with all your latest tracks.
• WordPress › SEO Ultimate « WordPress Plugins – SEO Ultimate was developed with WordPress plugin "best practices" in mind:

  * Integration with WordPress's contextual help system
  * Internationalization support
  * Nonce security
  * An uninstall routine
  * Integration with the new WordPress 2.7 menu

• Privacy Policy Plugin For WordPress – At the end of February, 2008, Google started requiring AdSense publishers to display a privacy policy on all sites that displayed AdSense ads or search boxes. Since many WordPress blogs are monetized with AdSense, I decided to write a plugin that would automate the creation of AdSense-compliant privacy policies for WordPress users. Thus the Privacy Policy Plugin for WordPress was born.
• WordPress › CMS Navigation « WordPress Plugins – Do you want to use WordPress to create a full website, with easy navigation and menus? This plugin will let you add essential navigation functions to your template.
• WordPress › WordPress Navigation List Plugin NAVT « WordPress Plugins – The WordPress Navigation Tool (NAVT) plugin is a powerful tool designed to provide you with complete control over the creation, styling and contents of your web site's navigation.
• Why Twitter beats RSS: Context + Content = Added Value – broadstuff – Twitter

These are my links for May 8th through May 11th:

• google-email-uploader – Google Code – The Google Email Uploader is a desktop utility for Microsoft Windows that uploads email and contacts from other desktop email programs (like Microsoft Outlook) into your Google Apps mailbox. The Email Uploader preserves information such as sent dates and sender/recipient data, as well as the folder structure used by the other email program. The Google Email Uploader requires a Google Apps account.The Email Uploader is Apache 2.0 licensed open source software, and is governed by the terms of the included license file. This means you may modify the tool to better suit your needs.
• .PST Import Tool for Entourage – Official Microsoft software to import .pst files directly into Entourage on the Mac.
• Import .PST files – Entourage doesn’t provide direct support for PST files, as this is a Windows Outlook file format. Entourage won’t be able to read your PST files directly, but there are tools and methods available to import PST files into Entourage.
• Best practices for scalable, high performance systems « Wille Faler’s Buzzword Bingo – So here goes, 8 tips for making your system high performant and scalable:
• Aerial Photography: Airview Image & Stock Photo Service: Australia – Airviewonline is the stock image library of Airview Aerial Photography. Through this easy to use site, you will be able to search, purchase and download from a vast collection of aerial images. Currently the library contains 10331 aerial photos, and many more photos of Australia, New Zealand and elsewhere are being added daily. Check back regularly to see where the Airview team have been recentl
• Connecting the Dots: Twitter GMail Gadget Useful Elsewhere -
• 10 Firefox Add-ons for Web Designers | 10 Volt Media Blog – With a plethora of add-ons and extensions, created for developers by developers, Firefox becomes much more than just a browser and turns into an essential part of your toolbox.
• wordpress mail plugins – wordpress plug ins that help mail content
• Tweets From Space: NASA Turns To Twitter And YouTube To Reconnect With The Public – NASA has recently been making a big push in using modern consumer technology, the web, and social sites to reach a broader audience. Yesterday it launched a collection of very impressive Photosynth galleries of the ISS and Mars Rover
• Google Does TV Ads, To Push Chrome Browser In Commercials – It’s a first for Google. The company has never directly advertised one of its products on television in the US, though they have been mentioned in conjunction with ads from Google partners, such as T-Mobile pushing its “G1 with Google” Android phone.
• Setup your Own URL Redirection Service with Google Short Links – TinyURL Clone – You can consider setting up your own URL shortening service that will run on your own domain (or web server) and the short URLs will therefore resolve throughout the lifespan of your site.
• Stupeflix – Video creation made easy – Welcome – create videos from still photos in minutes
• Download Free Repeat Patterns – free repeat patterns – good for backgrounds etc.
• Twitter Search To Crawl Links & Add Ranking Algorithm – Cool changes coming to Twitter Search from News.com reports Twitter will be improving Twitter Search to index content beyond Twitter.com by crawling links within Twitter posts and also by adding a ranking algorithm to the search results.
• Twitter Search to dive deeper, rank results | Webware – CNET – Twitter Search will become a lot more useful soon, the microblogging site’s new vice president of operations said Wednesday night.

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There have been a lot of rumours about  how Apple, with its mighty war chest is planning to buy Twitter . The latest rumours include a price tag of $700m which is no small amount of beans. But if you put the money element to one side (they can clearly afford it) I don’t see why Apple would want to buy Twitter.

I offer 5 reasons why I think Apple won’t buy Twitter.

1. Twitter is not in their business model. They make hardware and software and they make damn good devices. Buying a chip maker is a logical business move – buying a micro blogging platform with no visible business model is not. Don’t forget Apple is a public company so they can’t just buy on a whim.

2. Apple are not in the portal space. If Apple owned its own search engine or portal (I don’t consider Mobile Me to be there yet) then adding on Twitter would be a logical extension. Apple has huge brand love so a portal would be a good move but would need to be in place before a big leap to tweeting. (I have always thought they should buy Ask Jeeves and make something of it…)

3. Twitter still does not have a business model – how can a public company possibly judge the real value of twitter over the hype when there is no real projection of income (that we as the public have seen). There is a real danger of paying way too much for the business – Google continues to be dogged about the YouTube value.

4. Apple does not have a history of such purchases and does not need Twitter to grow its core business. Microsoft, on the other hand does. I would suggest Microsoft has deeper pockets than Apple.

5. Apple is a very strong brand and takes a lot of effort to maintain the brand experience. This is why the machines are sealed, this is why all apps have to be approved. Anything that works with Apple or represents Apple must enhance the brand. Buying Twitter which is a collection of people saying whatever they want, has the potential to be a massive headache to Apple should things go wrong or innapropriate content appear.

So I just don’t see it. Apple do have a habit of suprising us all, but I would suggest their mooted tablet development would have more potential ‘wow’ factor and logical business extension than buying Twitter.

What do you think?

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