I just looked at last month’s U.S. search share statistics, and it was interesting to see overall search query volume look flat year-over-year. I don’t think one data point is enough to shoot off signal flares and declare an emergency (especially given that March’s year-over-year growth was 14%), but that statistic, coupled with flat average time spent on line, is creating an environment where all boats will no longer rise with the tide.

The first macro event that concerned me about life for the non-Google community was Yahoo’s first quarter performance. While they underplayed the positive impact of Panama, it DID have an impact that, without its contribution, paints Yahoo as a player with little or no domestic growth – a pretty scary thing for a company still trading at a sporty growth multiple.

The second event was the Doubleclick acquisition. Here was a company who barely got $1B when they shopped themselves two years early getting $3.1B from Google. The disturbing thing here was not the premium Google was willing to pay, but the fact that Google, often criticized for far-afield attention to things like radio advertising, has moved their attention firmly back to their original major, online advertising, and made a stepwise change in their display advertising capabilities (why it took so long for a move like this was a mystery to me, but, given their dominant market position, the ship had certainly not sailed on the opportunity).

Now we see the latest search stats, summarized as Google gains 1.4% of the search market month-over-month, at the expense of Yahoo and MSN. That’s pretty huge shift for a given month for a mature market like the US, and you worry if the market will reach a tipping point in the next year, accelerating Google’s share gains even faster. I see selected big markets in Europe, where Google’s share is 80+%, and think that life gets tougher, not easier for the other majors in generalized search over the next year.

Does this mean the game is over? Not by any means, but for me, the opportunities exist via:

• Vertical search
• Highly aggressive generalized search plays

In the vertical search markets, we already have good poster children to validate that the entire fractionalizing of the web is relevant to search as well (WebMD and CNET, who I view as a tech product search play, are two examples). I think there are addressable market size constraints in any vertical search play, but that there are a number of markets of size that possess enough of a specialized nature to allow for niche entrants to survive and thrive. Nothing new here as a concept, but I do think that plays like video search are not vertical search plays – I view them as horizontal plays – and they are going to have a hard time thriving as stand-alone offerings in the face of moves/acquisitions/product extensions of generalized search players (Google’s new composite search page being just one thing that changes that landscape).

Does that mean we will see no new entrants in the generalized algorithmic search markets? No, but it means you need a radically different positioning and algorithmic approach to have any shot at scale. It’s not a new UI wrapper on old concepts. It’s bold bets, backed by hard science. Powerset is probably the best example of what I mean…