Apple Search Engine: Eight Reasons Why It’s Inevitable

Photo Courtesy: Wikimedia Commons

There’s been lots of speculation over the last few years around Apple building or buying a search engine. Despite the late Apple CEO Steve Jobs’ repeated denials– in 2010 he explicitly said Apple would never take on Google in search — Apple is in fact already wading in.

Apple Siri is voice search, place and simple. And Apple can’t and won’t stop there.  Expect Apple to build and/or buy the rest of the pieces it needs to have a full front and back end search solution, just in time for the next round of search wars to heat up in the next 18 months.

Here are eight reasons I believe Apple has a full throttle search plan on the horizon.

• Now that it has Siri, Apple has a compelling front end.  With Siri plus a search tool utilizing the Apple iPhone’s camera, it’s easy to imagine a visual search front end, too.  The more products Apple ties to Siri and other such features, the more Apple controls its ecosystem.  And the income it generates.

• Apple isn’t the kind of company that partners wells. It goes solo. Apple search would reduce Apple’s reliance on other companies.

• Apple and Google are at war.  This is true no matter who started it — Jobs told interviewers at a 2010 D8 conference that Google made the decision to target Apple and not the other way around, and that it wouldn’t block Google search from its products. So? Why would it? Apple can build or buy incredible technology. It sees the revenue Google enjoys. It bought Siri. It will likely build a visual search front end, to boot, that will go head to head with Google Goggles. The search wars are soon to escalate as Google brings vocal and visual search to the fore, and Apple won’t take that lying down.

• And then there’s mapping. Apple has purchased several companies that do mapping, which seems to be a potential shot at Google and Google Maps, as they are all tightly integrated with Google search. Over the last three years Apple has acquired Placebase, Poly9 and, most recently, C3 Technologies. Historically, Apple hasn’t always kept its acquisitions intact. But it doesn’t burn up money either.  The C3 purchase alone was $267 million.

• Each percentage point of search is worth between five and 10 billion in market cap, depending on the analysts you read. Based on overall Safari usage, and assuming that Apple would strong-arm their own search into the next update for Safari and Apple iOS, Apple search gets intensely profitable. And quick. With a combination of mobile and desktop — that’s just about eight percent of search — this would be an instant $63 billion dollar increase over its current market cap. And Safari would give an Apple search ecosystem a captive market.

• Using the same numbers as above, an Apple search engine would instantly add over a billion dollars in yearly revenue. Each percentage point of search is worth well over $100 million  in yearly revenue. This would be a  three to four percent revenue increase.

• The search biz is highly profitable. It’s going to get geometrically more so as mobile use grows and visual and vocal search grows.  Apple rarely goes into a market segment that isn’t grossly profitable already, so this fits right in.

• Apple already owns iAds. Apple could, would and should leverage that technology. It’s not compelling on its own, but it’s another piece of the puzzle. Advertisers greatly prefer traditional search engine placement over spending on mobile apps, at least based on where they’re spending their money now. Mobile represented only eight percent of Google’s revenue in Q3 of 2011.