Gord Hotchkiss recently interviewed Matt Cutts in a discussion that focused on personalization and the future of SEO. Kevin Newcomb also comments on this in Search Engine Watch. I also think that personalization will have a significant affect on SEO. I suspect that there will be many other methods implemented by Google to improve their results.
We need to bear in mind that they win (in fact, and search engine wins) by having the most relevant search results. More relevant search results equates to more search market share, and this equates to more advertising revenue. This means they will do everything they can to provide each user better search results, and personalization is a step in that direction.
It will indeed make things harder for people to implement weak content sites, and then use some linking scheme to get it ranked. Poor quality sites will be far more easily identified. Sites that offer a poor quality user experience will have trouble getting much traffic regardless of the linking scheme they may implement.
I don't believe that SEO is dead, but SEO in a vaccum will be dead at some point in the not too distant future. Smart SEOs have already begun moving towards a more holistic web marketing approach. One facet of this is the whole notion of Social Media Optimization, but there are other aspects including old fashioned PR and media relations.
This will be increasingly viewed as part of a bigger picture, that includes developing a matching content strategy. Your web marketing strategy will match up with a content plan with the needs of your prospective customers and your web promotional plan by necessity. It will be the best way to build your web business for the future. And I bet more and more SEOs will be calling themselves Web Marketers in the near future.
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