Here's Why Google Could
Disappear in Five Years: Pro
Published: Friday, 19 Oct
2012 | 12:25 PM ET
By: Cadie Thompson
Technology Editor, CNBC.com
Google may be on its way
out as the dominant player in search, according to one analyst — and could even
"disappear" in as little as five to eight years if the competitive
pressures that ultimately claimed other search giants start to take root.
In the wake of a
surprisingly weak earnings report, Eric Jackson, Ironfire capital founder and
managing member, said Google could easily find itself fending off the woes that
eventually took hold at embattled Yahoo!.
"They could disappear
in five to eight years and disappear in the sense that Yahoo used to be the
king of search. Now, for all intents and purposes, Yahoo has disappeared,"
Jackson said Thursday on CNBC's "Squawk on the Street".
The primary reason Google
may lose its search dominance is because the company is facing the same mobile
problem as Facebook, Jackson said.
"If Facebook saw a
deceleration in their sales and their growth lead to a halving of their stock
price...why wouldn't it also be something that is very negative for Google as
it continues to play out?" he said.
Google reported in its
quarterly earnings, which were released Wednesday, that its cost per click
(CPC) was down 15 percent in the third quarter.
While the company reported
that ad sales had increased, it is likely that CPCs will continue to decrease,
Jackson said.
The reason? Consumers are
searching more and more on mobile devices, yet advertisers aren't as willing to
buy advertisements formatted for mobile devices, because these ads are not as
prominently displayed.
Also, mobile ads tend to
run more cheaply than ads made for desktop computers.
"Obviously, everyone
is focusing on CPC...Profitability is way down for five quarters now, for
Google, quarter after quarter. Paid clicks, the rate of growth is
slowing," Jackson said. "We're facing a scenario, where I think in a
couple of years, we might hit peak search."
The rise of mobile will
lead consumers to want to search in new ways, which may open the door for
others to enter the search space. The number one contender may just be Apple —
one of Google's fiercest competitors, he said.
"I think that there
is a big opportunity right now for someone to step forward and assert
themselves for a new way of getting people information for doing search in a
mobile world," Jackson said.
"I don't think typing
in a blue box is the ideal format for a mobile world. And I think the best
opportunity out there to displace Google in this area is probably Apple's
Siri."
However, Google could
still turn things around, and the company is doing some things to make up for
the decline in CPC.
Google shopping, for
example, has been changed to only show paid results in a way that should
generate a lot of money for the company, Jackson said. This too, however, could
pose a new problem for the search giant.
"The question is, is
that move going to degrade the service, is that sort of the tip of the
iceberg?" he said. "And are we going to start to see paid search
results in other areas of Google and is that going to degrade the experience?"
© 2012 CNBC.com
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