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Last Updated: Friday, 21 October 2005, 06:43 GMT 07:43 UK
Has the Google juggernaut got a roadmap?
Analysis
By Tim Weber
Business editor, BBC News website

Google founders Larry Page and Sergey Brin
Google's founders have global ambitions
As internet search engine Google reports record quarterly profits, BBC News investigates what the secretive internet giant's strategy could be.

Google is wealthy. Very wealthy.

After two share offerings the firm has $7.6bn (4.2bn) cash in the bank, and a stock market value of more than $54bn.

During the first nine months of the year, Google earned a cool $1.5bn (845m) before taxes.

Not bad for a company that celebrated its seventh birthday just a few days ago.

Google's technology may be based on rocket science algorithms, but the secret of its success is simple: Provide the best search engine in the digital world, and surround the results with cleverly selected ads that meet the needs of the user.

The Google cash register

Not long ago, online advertising was considered a turn-off and in decline.

GOOGLE IN NUMBERS
HQ: Mountain View, California
Staff: 4,989 (Sept '05)
Pre-tax profit: $1.5bn (Jan-Sept '05)
Cash in bank: $7.6bn
Top search engine in Europe
80% of all European search page views
41% of all US search page views
Europe: 120m users each month
UK: 16.6m unique users

Google's adverts, however, manage to strike the right balance between useful and unobtrusive.

Search on Google for "France holiday hotels" and your results page will be surrounded by "sponsored links", little adverts that just happen to be exactly what you are looking for.

Click on one of them and the Google cash register rings, to the tune of about 50 US cents a click say analysts, although some keywords are much more expensive.

Most of the money is generated by Google's own website, but plenty comes through partners like AOL which - for a share of the revenue - display Google's sponsored links on their websites.

"Ads actually do have value if you can figure out the right ones to show," says Google's chief executive Eric Schmidt.

Google everywhere, part 1

But apart from advertising, what is Google really up to?

The company is notorious for keeping its cards close to its chest.

Observers are left to judge Google's strategy by analysing the dizzying array of services and tools launched over the past few years.

Amongst the offerings: a browser toolbar, an integrated desktop search, webmail service Gmail, image editor Picasa, internet telephony Google Talk, an online RSS Reader, Blogger, News, price comparison service Froogle, Maps, satellite images, automated alerts, online translation, and specialised search services for images, video, local information and more.

An online payment system is in the works, and a recently announced alliance with Sun Microsystems could get Google into the market for free office software.

It does not take a degree in conspiracy theory to wonder whether all this shapes up to a new all-encompassing, self-contained computer architecture.

Google everywhere, part 2

Google's international ambitions certainly don't lack in scale.

So far its services can be obtained in 109 languages, and most countries in the world have the benefit of a dedicated Google home page.

Google's headquarters at Mountain View, California
Google is preparing to extend its headquarters

"Three-and-a-half years ago we didn't exist in Europe, we had one guy in California who was looking after Europe," says Nikesh Arora, Google board member and the man in charge of the firm's European operations.

Still, Google is "not happy with the speed of rolling out the internationalisation of our products", he says.

So does Google want to be the next Microsoft? The conspiracy theories don't wash with Mr Arora.

Google, he says, simply stays true to the mission statement postulated by founders Larry Page and Sergey Brin: "Organising the world's information and making it universally accessible and useful."

Oh - and "don't do evil".

Evolving - or just clueless?

So how long will it take to get the world sorted?

Nikesh Arora, Google's chief of European operations
We are just seven years old, but we have to grow up very quickly
Nikesh Arora, Google's man in charge of the firm's European operations

"Three hundred years", says Google boss Eric Schmidt, citing a little internal math exercise conducted by the firm's whiz kids.

But where is the focus?

Why does Google roll out so many diverse tools where one user interface hardly resembles the other?

Mr Arora admits that "not everything is tied down together yet," but insists that "slowly and steadily we bring things together".

All of Google's tools and services, says Mr Arora, have just two purposes:

They help users to

  • find and organise whatever information is out there, and
  • allow them to share the information with others.

    Google's internal culture may explain the haphazard approach of getting there.

    Whoever comes up with a "smart idea" writes it up, says Mr Arora, and if it strikes a chord, Google's engineers sign up and commit a certain amount of their time.

    "There is no grand unification theory, but it's a democratic evolution of our offering," says Mr Arora.

    "And once we got a great product, we will find a business model to go with it."

    In most cases, this model revolves around selling adverts.

    This is not just about creating sales leads, says Mr Arora. "If your company doesn't show up in a search for a product you offer, you have missed an opportunity to build your brand."

    Making enemies

    As Google extends its reach across the world, it cannot avoid treading on a few toes.

    Google is a threat to Microsoft just as Microsoft was a threat to IBM
    Jim Steele, president of salesforce.com

    Publishers and authors have sued Google to stop its ambitious project of scanning and indexing millions of books. They worry about the potential for copyright infringement.

    In the UK and Germany, Google had to drop its Gmail brand in the face of rival claims to the trademark.

    In China, Google first got into trouble with the country's critics over allegations that it co-operated with China's censorship of the internet, and then with the Beijing government itself over how to describe Taiwan on its online maps.

    Privacy advocates fret over the mountains of "transactional and personal data" piling up in Google's vast databases.

    And whenever Google tweaks its search algorithm, the engineers in Mountain View, California, have to brace themselves for howls of outrage from thousands of small online retailers who drop off the first page of search results.

    Fighting Yahoo and Microsoft

    And then there are the two other gorillas of the online world, Yahoo and Microsoft.

    The rivalry with Yahoo is obvious; both firms are in the paid-links search business.

    Yahoo has bought a string of competitors to forge a service to rival Google's. Its most important acquisition was Overture, the company that invented the concept of search-driven online ads.

    Coupled with a fresh emphasis on exclusive content, Yahoo hopes to draw punters away from Google.

    Microsoft, meanwhile, is wary of what Google might do beyond the search business.

    "Google is a threat to Microsoft just as Microsoft was a threat to IBM," says Jim Steele, president of salesforce.com, an on-demand software company.

    Some of Google's projects have indeed the potential to undermine several of Microsoft's key revenue streams.

    Microsoft's bosses are clearly worried. Chief executive Steve Ballmer was recently quoted as saying that he would love to "kill Google", while company founder Bill Gates keeps repeating the mantra of putting Google out of business by developing a better search engine.

    Google's response is a hefty investment in its search business.

    The firm just announced plans for a massive extension of its "Googleplex" headquarter.

    "We understand the challenge and do our best to compete," says Mr Arora. "We dedicate 70% of our [research and development budget] on search, about 2,000 engineers are working on nothing else," he says.

    One click away

    But Google has a simple problem.

    If its engineers fall behind, its rivals are just one click away.

    "If consumers see a perceptible quality difference [with rival search engines], they will disappear," admits Mr Arora.

    And suddenly all of Google's little tools make perfect sense.

    Microsoft relies on computer users being too sedate to download rival web browsers.

    Google, for its part, hopes that its useful desktop tools will be sticky enough to keep people within the virtual Googleplex.

    But with both Yahoo and Microsoft giving chase, Google must hurry to merge its disparate tools.

    "We are just seven years old, but we have to grow up very quickly," says Mr Arora.




  • SEE ALSO
    Ads fuel soaring Google profits
    20 Oct 05 |  Business
    Google is sued by book publishers
    19 Oct 05 |  Business
    Google drops Gmail address in UK
    19 Oct 05 |  Business
    China angry at Google map change
    19 Oct 05 |  Asia-Pacific
    Defending Google's licence to print
    10 Oct 05 |  Technology
    Google pauses online books plan
    12 Aug 05 |  Technology

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