Why Little Search Engines Can't
Analysts caution that it's too early to say for sure that the search market is splitting into two camps, although that's where the evidence points. "There was clearly a bifurcation in the first quarter in the performance of search companies," says Derek Brown, an analyst at Pacific Growth Equities.
"It's still a little early in the cycle to pinpoint exactly what seems to be changing. But perception is that bigger players are growing disproportionately," says Brown, whose firm has no banking relationship with either company.
Google and Yahoo! have clear advantages: Their brands are the strongest. In the minds of Internet users and large advertisers, they are synonymous with search. Their networks of affiliates are extensive and growing. And each new feature that Yahoo! and Google add to search puts them another pace ahead of smaller companies that may need to ramp up costs to catch up.
While Google and Yahoo! have increasingly dominated the search-advertising market, the sector is still in an early growth phase. Normally, a market isn't winnowed down to two or three giants until it reaches a more mature phase in which growth has slowed considerably.On Thursday alone, FindWhat fell 22%, and
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