• by Laurie Petersen , May 8, 2007

The future of search is transcending algorithms and a little square search box. It's about personalization, and connecting people with what they want, and then acting upon it for them.

Esther Dyson, chairman of EDventure Holdings, weighed in yesterday on the future of search, the wisdom--or not--of Microsoft buying Yahoo, and the opportunities in emerging markets.

Delivering the keynote Q&A at the Search Insider Summit in Bonita Springs, Fl., questioner David Vise, senior commentator for Breakingviews.com and author of The Google Story, channeled Microsoft's Bill Gates to draw out Dyson's opinions. It was as if Bill was interviewing Esther, and it worked.

"I don't think buying Yahoo would fix anything," Dyson said, encouraging Microsoft to stop obsessing about Google and to focus on where it can excel. In her opinion, that means exploiting the health care and education markets. Earlier this year, Microsoft acquired an EDventure-backed medical search engine, Medstory.

"You are not Steve Jobs," she told 'Gates'. "Try another direction."

Dyson also recommended that Microsoft buy or partner with Nicholas Negroponte's Laptop for Every Child initiative, create a loyal customer base, and sell it things. "Let's get all those kids online, give them decent health care," and you'll have a devoted installed base of buyers for future Microsoft products, she said.

As for the future of search, Dyson said, "I don't see the quality of search improving very much. Search is like telling a dog, 'Go Fetch,' I want something to 'Go Fetch and Reserve' [as in the right hotel room.] "Search is a task half-done."

What's needed, she said, is switching from a "search and fetch" mentality to a "deliver, act and transact" perspective based on personalization.

The real winner, Dyson said, will be a custom-built tool that understands the nuance of an individual, his or her phrasing, and specific likes and dislikes. This tool will incorporate both domain knowledge and user knowledge.

"You can sit in a room and make a better algorithm, but you can't build something for humans without understanding how humans behave," she said.

Another trend, she said, is attachment of the online to the real world, as in cell phones that know where you are.

Be more transparent with users about what you are doing, and why, and they will reward you by participating, she continued. Don't create a nine-page disclosure statement on behavioral targeting. Create one page that people understand, and get their buy-in.

"Openness and transparency are not just telling people. It's making them understand," Dyson said. "You either terrify people or you bore them [with your disclosure copy]. Make them your ally. Get them to understand your motivations, and that's how you'll win."

How far away are we from game-changers and life-changers? It's going to happen in islands. Purpose-oriented applications like Orbitz, Zillow or Netflix point in a direction, she noted.

As an investor in a search engine that has 60% of Russia's market share in search, Dyson also sees opportunities outside the U.S.--particularly in China.

"China is the biggest thing happening in the world today," she said. "Make sure your kids are studying Chinese in school."

As for the Google/DoubleClick deal, she feels it was a more sensible acquisition for Google than for Microsoft "because they know what to do with it."