New Google Finance: poised for accelerated take-up

Update: as SeekingAlpha has syndicated a slightly different, revised version of this post, I have replaced my original with that updated text below.

The new Google (GOOG) Finance overcomes the primary limitation of the old Google Finance and continues to capitalize on its primary benefit. We should expect the defection of Yahoo! (YHOO) Finance users to accelerate after this latest redesign. As finance ad spend flows online this will be a core battleground for both portals.

At the Google Finance launch in March this year Yahoo! looked likely to maintain its ascendancy, as the switching costs of transferring a portfolio were sufficiently considerable to dissuade many users. Forrester's Charlene Li commented at the time: "Most mainstream financial site users will stick with their current sources for now, primarily because it’s simply a pain to have to re-enter your detailed portfolio information again."

Yahoo!'s portfolio lock-in has now been obviated by Google's redesign, with a portfolio import feature, undermining Yahoo!'s historical first-mover advantage and making this more of a straight fight over features and interface - two areas in which Google excels.

The existing primary benefit of the Google solution remains the predictive "search by company name" feature and the move away from ticker look-up tables. Whilst experienced investors are habituated to tickers and look-up tables, younger investors are unlikely to tolerate these cumbersome work-arounds if Google offers them a feasible alternative.

The Street reports: "Google Finance counted only 579,000 unique users in October, compared with 13.7 million for market leader Yahoo! Finance," according to researcher Nielsen Net Ratings.

Take-up of Google's alternative looks likely to accelerate after this redesign, given both the elimination of Yahoo!'s portfolio lock-in and, of course, Google's natural advantage in attracting new users via its dominance of the search market - 60.3% of US searches to Yahoo!'s 22.6%, says Hitwise.

Recent Jupiter research tells us that by 2011 just four ad categories - media and entertainment, finance, travel and autos - will account for of the US's $11.5 billion online spend, with finance in second place behind only media and entertainment. Google moving to capture both existing, but most importantly future, searchers of key financial data looks like a smart move to take market share away from Yahoo! in a key and growing advertising vertical. Google's redesign looks likely to widen the gap between Sunnyvale and Mountain View.

However, the one respect in which Google falls down is in tailoring its service to a non-US audience. Almost all UK private investors, for example, need access to Unit Trust data [a type of UK mutual fund], an area Google's new site fails to satisfy. Yahoo! still has the upper hand in delivering data on a country-specific level and finance - like the unexpectedly fragmented social networking market that has found Brazil dominated by Orkut, Singapore by Friendster, Ireland by Bebo and South Korea by Cyworld - may yet prove for Yahoo! that local knowledge is the key to success.