Chomp Deal Fixes Major Apple Blind Spot

The first Apple news leak of the post-Steve Jobs era came courtesy of TechCrunch last week when it reported that Apple acquired Chomp, a startup search and discovery software company, in hopes of shoring up its App Store search capabilities.

The acquisition makes sense as Apple users have criticized the App Store’s simplistic title-based search engine for its inability to help them find the needles in a haystack of more than 555,000 apps. Chomp’s technology will address that shortcoming as the search software has a proprietary algorithm that learns the functions and topics of apps, as well as has ties to Facebook and Twitter for sharing app reviews, the company claims.

Following TechCrunch’s initial report, 9to5 Mac reported Apple paid $50 million for Chomp. Apple confirmed to Macworld that it acquired the company.

Then the Apple rumor mill kicked in. Industry watchers speculated about what will happen to Verizon’s Android market, which uses Chomp to power searches. The late Jobs harbored a lot of animosity toward Android for what he perceived as blatant copying of the iPhone.

“Apple isn’t good at sharing, which would suggest that Chomp relationship is at risk at Verizon,” says tech analyst Rob Enderle. “Apple hates Android with a passion and will move to kill any technology that comes from them to help that platform at their earliest opportunity.”

More importantly, though, Chomp can help solve a huge Apple blind spot. The App Store’s existing search capabilities are woefully inefficient. Apple needs to do a better job of matching users with apps, Enderle says, particularly on the iPad where the match rate is about a tenth of the iPhone.

“This suggests they were under-penetrating with that platform,” he says.

Consequently, many users have relied on Apple’s Top 25 lists to find apps rather than using the search tool. This led to some app developers attempting to game Apple’s ranking system, which has become the **** App Store’s dirty little secret http://www.cio.com/article/551914/Apple_App_Store_s_Dirty_Little_Secret ***. Developers, for instance, would spend their marketing dollars to purchase their own apps in order to get it on a Top 25 list.

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Shades of Siri Acquisition

The Chomp acquisition shares similarities with Apple’s Siri purchase a couple of years ago. Both Chomp and Siri are startups that developed exciting mobile technologies, which will or are being used to optimize an existing flagship product for Apple. In other words, these acquisitions follow Jobs’ focus on only a handful of products.

Are more acquisitions like these in the works? Or will Apple open up its product portfolio with a different class of acquisitions? Earlier this month, Apple CEO Tim Cook told shareholders and investors that Apple was holding “too big a hoard” — nearly $100 billion in cash.

“Staying focused in the face of massive competition and the likely collapse of their stock price if they bring out one product that misses expectations will likely force a diversification strategy similar to what happened the last time Steve Jobs left,” Enderle says. “They are likely to buy firms that sell to businesses and technologies to allow them to expand into other areas instead. I think the latter path will weaken them, but it is the more common one for someone with Cook’s background.”

Tom Kaneshige covers Apple and Networking for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Tom at tkaneshige@cio.com