Traditional search engines have at their core three components. First the crawl ( or spider) which gathers every possible page on the web. Second is the Index, the massive database created by that crawl. And, the third comprises the user interface, which take the index and make it available in an intelligent fashion to the end user.
Early search engines lacked sematic abilities. They didn’t index the full document…just the document’s Title. Then, out came WebCrawler which ranked results according to the most references (or links), and indexed the full text of the document.
Digital Equipment Corp. developed AltaVista to show how their hardware could hold huge databases ( the entire internet). Yahoo was a directory, not textual search. Excite and Lycos competed for a piece of the search landscape. Most of the traffic came to these 1st generation search engines by making deals to having their link/results on a competitors/Portal homepage. Initially, portals and web directories were the big thing. A search engine was just part of the portal.
When Page & Brin developed Google (in the year 1999) , it was the most sophisticated and relevant natural results on the web. Although, they were desperate to generate revenue. They vehemently disliked the idea of placing banners on the homepage, or selling any kind of advertising that could be thought of skewing the organic results. Hence, they were desperate for funding as their seed money was rapidly dwindling.
Goto (Overture) started out as a commercial search engine only. Pay-per-click only. And they became the defacto paid results for Yahoo and MSN Search. Bruce Clay has a great Search Engine Relationship chart that has this illustrated, and has evolved throughout the years as the Search industry has evolved.
GOTO was very profitable, and able to scale rapidly. Google was scrambling for a revenue generating idea, and out sprang AdWords ( in the year 2000). Basically, they just copied GOTO, and made a new & improved version of GOTO. Adwords was “self-serve”. If an advertiser had a credit card, and 5 minutes, they could be on the search results pages. It caught on like wildfire. The rest is history.
In March 2001, Walt Mossberg of WSJ announnced Google is the best search engine. It was an authority endorsement for Google. Google had built a better and more relevant search engine than everyone else’s.
Google became the SE that powered organic search for AOL and Ask Jeeves. They got a deal to power the backend for Yahoo as the natural results. With a clickable icon that said, “Powered by Google”. The Google icon was on Netscape. Google was generating a high amount of searches. The early growth was grass roots. No tradeshows. No advertisements. No PR.
The big deals are still happening…
News Corporation’s Fox Interactive Media and Google announced on Aug, 7, 2006 a multi-year search technology and services agreement whereby Google will be the exclusive search and keyword targeted advertising sales provider for Fox Interactive Media’s growing network of web properties including MySpace.com.
Google knows how to continue to build their product offering by organizing their engineers into small, agile product development teams that have cranked out plenty for us to increase our productivity.
As we all know, Google is now the 900 pound gorilla:

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you forgot a big part of google’s history way back before they were called google. Larry Page and Sergy Brin start what was called Back Rub, this was created to check which web sites had the most links pointing to them. To read more go to the following url Googles History
Thanks David. You’re right. Here’s the actual BackRub Thesis Paper.
Thanks for the link to the thesis page. I never read it before It looks very interesting. I’ll read it when I get a chance.