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March 10, 2009

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Stever Robbins

I'd never heard of Wolfram's "alpha" before, but the sensationalistic headlines, in my humble opinion, show a total misunderstading of Google's business model.

Google is in the advertising business, not the search business. Search is one of many distribution channels they have for that advertising. It lets them offer targeted ads, because what people search for can be used to target ads to people who might want to buy a product or service.

They've also figured out that if they give away products that involve high information content (mail, word processors, spreadsheets, etc.), targeted ads can be delivered unobtrusively in the margins, deduced from the information a person is working with.

It makes sense for Google to develop better programs in the information-processing space than Microsoft and give them away for free, since that drives eyeballs to Google's ads. You'll notice Google isn't building the G-Box 360; there's no information content there to be analyzed and monetized.

The Google phone gets you more deeply involved with your Google platform on mobile devices. My guess is that it's a just-in-case move, anticipating the possibility that mobile devices will develop into a big chunk of the information processing market (and thus advertising eyeballs).

Alpha may be able to answer factual questions directly, but it's not necessarily even in the same space as Google. Factual questions aren't likely to be very good at generating enough context to do good ad targeting. If I ask, "what is the tensile strength of steel," you don't have much information to use to target ads. You don't know why I want that information.

When I Google, however, I am typing in words associated with the actual information I need. I type in broader phrases, loaded with context. If I'm searching for "steel for skyscraper construction," it's easier for Google to find a host of relevant ads based on the query words and on the content of the top pages matching the query.

It's the very fuzziness of Google's search that makes it a good business for monetizing with ads.

Bob Kerns

That's a great point.

Wolfram Alpha, based on Doug Lenat's comments, is definitely not in the same space as Google-the-search-engine -- that is, it's not search. But if we assume they anticipate being advertising-driven based on query content, they're going to have to approach it very differently than Google.

I do see one advantage they have which may be to their advantage. People would come to their site for more focused questions, generally of higher value. If someone is looking for tensile strength of steel at a particular cost point in large quantity, and come to the Wolfram Alpha site as a result, they're more likely to be involved in high-value transactions.

So they may be able to charge higher advertising rates to a more select market, even if their keyword targeting is less effective.

In the end, however good their technology, and the adoption of their technology, it will come down to monetization.

After all, why don't we see newspapers scrambling to be the best, most reliable news sources, and raking in the money? Instead, we see old established papers in markets with little competition on the verge of going out of business, because neither their paper nor electronic versions can sufficiently monetize their content.

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