Monday, January 10, 2005

Desktop Search - Precedent is FREE!!!

If you are an information worker your data is voluminous and it resides on your PC. At any given time there is a significant requirement to search for content in files, emails, contacts, calendars, web pages etc. Until recently desktop search was a slow and laborious process due to the weak search capabilities of the Windows OS. Ironic that one can find information on the Internet in less than a minute, yet it is near impossible to find an email from 6 months ago using search capabilities from outlook.

Lucky for us the leading search engine companies are falling all over themselves to create free programs that efficiently search all content on the hard drive. Google, AskJeeves, Yahoo, MSN and Hotbot have all released or announced plans to release desktop search tools over the past few months and they are all FREE!!!!. How does it work? How can thes tools search through all the data (multi GB) on the desktop and display results in only a few seconds.? These solutions memorize the contents of the hard drive in advance. In simplest terms, a desktop search program works by pre-scanning files on your computer—e-mail messages, Web pages in your browser's cache, spreadsheets, etc.—and compiling a list of the words and phrases it finds. This index of your hard disk's contents get stored as a compact file or folder that's optimized for fast access.

The many emerging technologies (startups) in the space have not had liquidity events commensurate to the customer pain or the complexity of the technology. Liquidity events associated with Tukaroo, Copernic and Lookout acquired by AskJeeves, and Microsoft resulted in less than adequate returns. The technology leader in the space is startup X1 ( X1 is the fastest and most efficient desktop search tool I have reviewed. So much so that the much anticipated search tool from Yahoo! is based on technology OEM from X1.

But, will X1 have a successful liquidity event?

A market with significant customer pent-up demand, strong customer willingness to pay, relatively inelastic price demand and complex technology will result in no significant returns for vendors. While consumers I am certain are willing to pay the customary $29.95 for an annual subscription to use consumer software. That is a $3B potential market that will not be realized.

Good for consumers . . . confusing for investors . . detrimental for vendors!!!

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Blogger Dan Housman said...

I'm not sure there is no opportunity in the big market to find files. I agree that the "free" model tends to suggest that there is not a lot of money to be had directly. In the case of the big brands (google, microsoft, aol, yahoo!) they all have a lot at stake going into the blending of killer web apps and the desktop.

The area we ( are focused on in our little patch of land is organization and context to view desktop information. It is a similar problem but not exactly search since the idea is that you should put your socks in the sock drawer and not search a thirty story building for "socks" and then try to figure out which sock you wanted or were yours.

I think there is plenty of money in this business still although we are going to release a free version. Our money will come and does come for creating better context. In our case that will be adapters to business applications like CRM. It will be fun.

January 26, 2005 at 6:21 AM  

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