2 thoughts:
1) I worked on the search engine and Larry has been saying this for years. I worked on search quality back in 2005 and even back then he was talking about indexing everything and indexing it in seconds instead of hours.
2) Search is won on the margins. Yahoo and Google do equally well on most queries, but users decide which engine is better based on how it performs over all of the types of searches they have to do. So when you take the 80/100 searches you do that are not real time and use unique keywords and you know what you're looking for Y! and G come out the same. It's on those other 20/100 that Google wins users.
Update: Hey, you're the guy who launched Google Transit! I could use your advice ( See http://www.ridecell.com/gt/about/ ). Can I email you?
I think indexing everything in seconds could definitely be a competitive advantage. I haven't tried Yahoo in years and back then it did much worse than Google. If it has improved this much, it makes sense that the competition is at the margins.
On the other hand, TechCrunch/Twitter et al's idea of real time search seems to be limited to indexing Twitter and Facebook updates as they happen. The arguments they present amount to "Someone tweeted about a plane crash from the crashed plane". I don't think indexing such tweets is going to be Google's edge in search. OTOH I can think of using such information to generate Google Alerts being very useful for some people.
2) Search is won on the margins. Yahoo and Google do equally well on most queries, but users decide which engine is better based on how it performs over all of the types of searches they have to do. So when you take the 80/100 searches you do that are not real time and use unique keywords and you know what you're looking for Y! and G come out the same. It's on those other 20/100 that Google wins users.