Can there be another Google?

Internet search is reaching an important pivot point, where market leaders are rewarded by Wall Street, laggards are punished, and start-ups try to fill niches left empty by the major players.

Though the market has seen a few leaders come and go over the last decade–anyone remember AltaVista?–few would doubt that a distinct top tier has emerged, occupied by Google, Yahoo, AOL and MSN.

Wall Street has certainly noticed, and it’s rewarded the two standout companies–Google and Yahoo. As of the end of trading Monday, Google shares were up about 130 percent over the last year to $405.85, while Yahoo shares were up 4 percent to $40.47.

Google also is getting the bulk of business. Its search traffic rose nearly 30 percent to 83.3 million unique users in October from the year before. Yahoo search saw a 12 percent rise to 52.3 million unique users, according to Nielsen/NetRatings.

It’s a case study straight out of business school: When a market gets to a certain point, the leader gets the biggest reward on Wall Street. The runner-up does OK too. But investors start losing interest in the little guys. InfoSpace’s share price, for example, has dropped about 45 percent in the past year to $26.29, while Mamma.com and LookSmart shares have fallen more than 60 percent to $2.46 and $4.09, respectively.

Though there’s still plenty of growing to do–indeed, some analysts estimate search advertising in the United States could grow nearly 80 percent in the next five years to $7.5 billion–the leaders are clearly established. Now they’re building from their base into areas like Internet telephony and wireless access, and girding for a protracted market share battle.

Full article: CNET News.com