The Next Google Revisited

Last year, I posted about the “next Google” phenomenon sweeping the nation, specifically comparisons between 37signals and the search giant. This year, the landscape hasn’t changed all that much. Companies are still hotly competing to get a piece of the search market, start-ups and established technology firms (e.g., Microsoft and Yahoo) alike.

37signals are still going strong and have released their CRM-lite application, newly named Highrise. I personally think it is their best release yet and could potentially absorb/cannibalize some of their other offerings. While I get why they prefer to keep project management separate from contact management, there is enough overlap between services so that some core data elements should be shared. Just as Apple engineers have resisted the all-in-one approach of Microsoft Outlook, instead offering siloed apps like Address Book, Mail and iCal, they nonetheless enable sharing of elements common between these applications. It’s proven to be a successful strategy in balancing usability and functionality.

Interestingly, if one were to ignore the numerous and obvious differences between the two companies, it could be argued that Google and 37signals have actually moved closer to one another in terms of service offering over the past year. With the Google Apps< launch, they too want to provide the tools to help you manage your business in a hosted, web-based model. And why not? Google already provides services for email (Gmail), calendaring (Google Calendar), and instant messaging and VoIP (Google Talk) not to mention “Microsoft Office killers” Docs & Spreadsheets and Page Creator. The Google Apps offering rolls these services up into a complete package in three flavors: small business, enterprise and education. And from a technical perspective, most importantly both companies have embraced APIs, enabling third-parties to deliver “mash-ups” of theirs and other services. This is almost a given in today’s 2.0 world and arguably one of the key drivers behind the success of hosted services.

Google’s move signals a couple of things.

First, hosted application services for business and not just the consumer space have arrived in a very big way and definitely threaten Microsoft’s desktop dominance. If nothing else, both the live.com initiative and recent Tellme acquisition confirm this. This is not to say that hurdles don’t still exist. While bandwidth and availability concerns have largely been overcome by large capital investments in infrastructure, other factors such as data portability, privacy policies, and security still remain stubborn obstacles for hosted solutions. With Google in particular, given its transparent goal and not-so-transparent methods to index the world, there is still a strong distrust of the company’s motivations and a nagging fear around the vulnerability of hosted (implicitly shared) corporate data.

Second, as Miquel Helft points out in his January 1st New York Times article, in its effort to go after communication and collaboration, be it for small to medium-sized businesses or large enterprises, Google risks losing ground in the search arena. No doubt just as AltaVista and Webcrawler were once default, now abandoned search options, so too Google’s reign is constantly threatened by innovation just a click and a bookmark away. That is, of course, unless the search business has changed so dramatically in the past seven years so that new barriers to entry will thwart a dramatic shift in market share.

Given the current climate, one wonders how steep of a climb a start-up like Powerset (one of the latest entrants in the “next Google” sweepstakes) will have, or if search is in fact the fastest way to claim the title for keeps, as last year’s front-runner, Wikipedia, seems to believe.