SAN FRANCISCO (CNN/Money) -
I'll never forget the moment back in 1999 when a colleague looked at me and asked, "What's with these Internet company names? Why can't they name themselves something that tells what they do?"
I wonder what her reaction would be to last week's news that Ask Jeeves purchased a company called Tukaroo, a very small, privately held desktop search company.
Although the San Jose company's name doesn't indicate what it does, the purchase says a great deal about where the next wave of search will likely break: on the desktop.
Investors' focus right now is mainly on the Web search market and the battles breaking out between Ask Jeeves, Google, Microsoft, Yahoo, and others. But later this year, you'll see interest shift to the emerging market for desktop search.
"We'll have to see if all the search players decide to buy companies with cute little names," Jupiter Research analyst Gary Stein says with a laugh.
Why the change?
What's precipitating the shift? The rumored revamp of Microsoft's Web search offerings and entry into the desktop search market.
These two moves strike fear into the leading Web players, which see Microsoft leveraging its ownership of the desktop to make other search products obsolete. Why use separate tools to search the Web and the desktop, goes the argument, if the desktop tool can search both and offer highly relevant results?
"The Microsoft threat in that arena is very great," says Greg Sterling, an analyst with the Kelsey Group. "If done well, it would do Google one better."
"We don't have much to share right now," says a Microsoft representative. "We have a lot of work to do and will share more details with regards to local file search later. We're heavily investing in building our own search technology, which will be offered to consumers later this year."
As a result, look for more announcements like Ask Jeeves's -- major search players buying or launching their own desktop search technology. Possible candidates for acquisition include Copernic, DtSearch, and 80-20 Software. Lycos launched its own desktop search tool last month.
Google and Yahoo! representatives would not comment on future product launches or acquisitions, but "you can assume the large players are interested," says Sue Feldman, an analyst with IDC.
What can investors do?
How should investors treat this new search territory? As a defensive maneuver against Microsoft or as a potential revenue stream?
Given the brouhaha that erupted over Google's plans to serve ads based on the content of Gmail messages, I can't imagine what would happen if ads were served based on desktop file searches. So I'm inclined to warn investors not to expect much from these desktop forays in terms of revenue growth.
"It may just be an application that you have to have," Feldman says.
"If anything, these are secondary revenue opportunities," says Jupiter's Stein.
The real revenue opportunities exist in enterprise desktop search, the province of such firms as Autonomy, Fast Search & Transfer, and Verity.
These search services typically go for "at least $250,000, and sometimes several million dollars," Feldman says.
The technology required to launch search in the networked corporate desktop environment, however, is quite complex -- even for Web search firms.
Google has shown signs of interest in this market with its enterprise search appliance, but that's geared more toward small and midsize businesses that want to add search capabilities to their sites.
Investors should be on the lookout for more desktop search announcements in the coming months. Though the new products won't necessarily add more cash to search companies' coffers, they'll act as a strong defensive move against any search encroachment by Microsoft.
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