Although I thought the article was very perceptive, it's a wierd feeling to think about google being given a run for their money. Currently the popular perspective (which, of course, does not necessarily translate to "accurate perspective") is that google is a bastion impervious to seige. The points made are valid, though. Google is absolutely a general-purpose search, and when looking for something specific one is probably more likely to achieve effecient results with a more specialized tool. I don't expect Google to be blind to this fact, though. The author of the article (or at least his prime interview, VC Gus Tai) believes that Google would drown if they tried to enter the specialization arena, but I think the possibility is there for an entrance by the search-giant. What if they were to extract context from the keywords entered and offer an option to narrow search results to one of a set of more "vertical" flavours?
If Google wants to dominate one or more vertical markets, they have the wherewithal to purchase a promising company that already services said vertical.
That is what I believe is the Achilles' heel of this analysis.
I wonder why Google doesn't pursue search verticals more aggressively (Google Base seems to be some meager attempt). Judging from the techtalks coming out of Google, they research a lot of things like uncovering structure from text.
This is like nuclear war vs. guerilla warfare. It's awfully hard, maybe impossible, to be good at both. The Afghans would be crazy to engage the U.S. in nuclear war, but no one knows their caves like they do. Same thing in search. How could Google possibly know all the nuances of 30,000 different industries? There's plenty of business for everyone. The guerillas will just have to choose their niche; that's about the only way they can compete now.
You're right Google can't know the nuances of every business, but exactly because they are so good at generic search, they can leverage their technology to deliver better results in niches too.
Here is an example: MSDN library search versus Google site search on MSDN library site. Google is better, presumably because they take into account all external sites linking to MSDN. Never mind they don't know specifics about site format or contents.
That's what the Long tail concept is all about - ability to build big companies that automatically serve a broad range of niches. It is also one of the big changes internet brought to business.
edit: And Google lets you narrow your search by industry, etc.
As with other "hidden" features of Google, I found it by simply "telling" Google what I was looking for: "jobs"