Venture capitalists are betting that the explosion of smartphones means the time is ripe to compete with Google, which has dominated the search market for a decade, according to The New York Times.
Entrepreneurs and investors are so confident of the opportunity to best Google in the mobile search category that they’ve sunk hundreds of millions of dollars into mobile search start-ups, reasoning that the way people use mobile phones is far different than desktops or laptops, according to the Times.
Unlike computers, users carry mobile phones everywhere, "giving search companies lots of contextual clues — like location — for what they might want," such as nearby movie theaters, links to buy tickets and the option to call a cab, the newspaper said.
As of October, 64 percent of American adults owned a smartphone, with 7 percent of that figure — mostly younger adults, minorities and those with lower-incomes — classified as "smartphone-dependent," meaning they rely on their smartphone for Internet access, according to Pew Research.
This year, American smartphone users are projected to spend 81 percent of their time on the mobile Internet compared with just 19 percent on the Web, according to the Times.
Bobby Lo, founder of the San Francisco-based start-up Vurb, said there has yet to be a "great solution" for mobile search.
In January, Bloomberg reported
that Google’s fourth-quarter sales and profits fell short of expectations in part due to competitors trying to lure away users and advertisers on tablets and smartphones.
While Google has introduced services geared at mobile users, its share of global mobile advertising revenue fell to 41 percent in 2014, according to Bloomberg, a 7 percent dip from 2013. Facebook’s share rose to 18 percent from 17 percent.
"Mobile is a big concern of investors," analyst Robert Peck said. "What happens to Google’s dominance as it gets more competition as the world goes mobile?"
In 2014, 27 search companies were financed by venture capitalists, down slightly from 33 in 2013, according to the Times, noting that they represent the two most active years on record.
Each of the start-ups has a unique niche to offers more specific, detailed information than Google.
"If you ask 100 people whether search is broken or not, 99 would say Google is perfect, it’s everything I need," John Lilly, a partner at Greylock Partners, which has backed a search start-up called Jack Mobile, told the Times. "But if you ask them, 'How are you going to figure out what you want to watch on TV tonight or where are you going to dinner?' they would say Google wouldn’t know that, that’s not search."
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