Is Apple Building A Search Engine?

We’ve received multiple (if thin) reports that Apple is working on a search engine of some sort.

At first glance, the rumors make sense. Apple’s Safari browser has 6-7% market share, and currently uses Google as the search engine for both the standard and iPhone/iPod versions (unlike other browsers, you don’t have a choice). They also have a suite of personal productivity tools through Mobile Me that bring some hard core users to their servers daily. All of that traffic and usage equates to a lot of searches, which can be monetized heavily.

Also, Apple can’t be super pleased with Google’s competition to the iPhone with Android. Google CEO Eric Schmidt, who’s also on Apple’s board of directors, sits out of discussions involving Apple’s mobile strategy, and rumor is he may leave the board.

But one important fact that isn’t checking out – if Apple were building a search engine, they’d be hiring search experts and engineers. We’ve talked to a ton of them at all the big companies, and while some of them heard the same rumors, none have lost search employees to Apple, or heard of any specific hirings.

That alone almost certainly rules out a full on search competitor. You can’t do it without people who know what they’re doing.

Apple also loves the fees they receive regularly from Google for search marketing dollars earned from Safari. They obviously aren’t in the advertising business today, so even if they did launch a search engine they’d still heavily rely on Google or its competitors for the advertising piece. So why invest all that capital into search?

The answer is they’re not. But the rumors persist, and we believe they have a nugget of truth. Here’s what we think is really going on: Apple doesn’t like the search experience on its mobile devices, and may be building a radically different user experience which is much more visual than exists today. It will likely still be powered by Google results, but Apple may present it in a very different way that suits mobile users much better.

Stay tuned for more. There are pieces of this we are still putting together.