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Last Updated: Friday, 20 January 2006, 19:00 GMT
The world according to Google
By Charles Miller
BBC Money Programme

In the 18 months since its stock market flotation, Google has been transformed from a company that prided itself on being simple and effective, into a multi-headed high tech beast which wants to get involved in everything.

Money Programme reporter Rajan Datar dives into the Google business
The World According to Google
BBC Two: Friday 20 January 1900 GMT
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According to Marissa Mayer, vice president of search products at the company's Silicon Valley headquarters, Google likes to release new products "early and often".

And that means, she cheerfully admits, that nine out of ten ideas will fail.

"We want to try things out, lots of things. Our goal is to fail fast, get the product out, and see what users like."

Already Google's original internet search tool sits alongside Google Maps, internet-based phone calls, email, photo storage, a searchable satellite view of the globe, and (here's one that might "fail fast") Google Ride Finder, which shows the live position of individual taxis in 15 American cities.

Google is sensitive to the charge of losing focus on its core activity.

'Anti-portal' stance

There's a history here, because when Google emerged in the late 1990s to challenge existing web portals like Yahoo and Lycos, its success was based on the idea of doing one thing well, "like a pencil", as they always said.

"If you make a list of all the things that a portal is," says Google-watcher John Battelle, "today, Google checks every one of those boxes.

Lots of organisations have recognised that information is a key asset

"But when you say to them 'you're a portal now', they get very upset, because they built the whole company on the idea of being anti-portal."

Google justifies its vast new range of services by explaining they all still fit the original company mission statement, to "organise the world's information."

If you count video footage, conversations and the last email you wrote as "information", then, arguably they do, but only in the geeky sense of information as data, rather than what most people understand by it.

And in that sense, there really is not anything you can send over the internet that is not information.

Dangerous strategy

If Google is in danger of over-diversifying its product range, its source of income remains largely one-dimensional - and therefore potentially vulnerable.

Google makes its money from advertising.

Google logo

If you run a Google search, the chances are you will find a list of what it coyly calls 'Sponsored Links' - that is adverts - to the right of the search results.

They are from hundreds of thousands of companies, which have picked particular words as triggers for their ads to appear, hoping for instance that if you search for 'France holidays' you will be a likely customer for their particular brand of French package holidays.

Only if you click on the advert does the advertiser have to pay Google, which is good news for advertisers, because they are only paying for motivated customers to visit their website.

Google UK's David MacDonald says that for advertisers the system is "a magic money-making machine", because of the measurable returns they get for what they pay Google.

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Indeed, so scientific is the pay-per-click system these days that Google even offers advertisers suggested mis-spelling of search terms to add to the list of words that trigger an advert's appearance.

One of the hardest spellings for British Google users, apparently, is "Britney Spears" - also one of the most popular searches.

So Google now offers a comprehensive list of more than 1000 ways in which her name has been misspelt (most likely mistakes: brittany spears, brittney spears, britany spears; least likely: brinthey spears, brirrany spears, buttney spears, grittney spears, prietny spears - all of which were typed by more than one person within 3 months.)

Potential risks

Google's ad system earned the company $1.5bn during the July to September quarter of 2005, almost double what it made a year earlier.

(Google's final results for 2005 will be announced on January 31st.)

Ad income has given Google the resources to bring out products like Google Earth and Google Desktop, which have, as yet, no detectable source of income.

And ad income is the power behind Google's stock, whose apparently unstoppable rise makes the financial community's initial scepticism now look humiliatingly wrong.

At the last count, Google was worth around $140bn, almost five times its value at flotation, and comfortably more than the likes of Coca-Cola and Time Warner.

Google's energy and speed of change show how determined it is to avoid resting on its laurels.

"While the outside world sees a success, those of us inside know the many different challenges and possible failure points and risks," observes Ms Mayer.

Google's canny founders are also all too aware that Silicon Valley has seen many high tech companies, from Netscape to Pets.com, which in their heyday appeared to be unbeatable, but are now all but forgotten.

The World according to Google. BBC Two at 1900 UK time on Friday 20 January, and here on the Money Programme website, where additional interviews and other broadcast material will be made available.

The BBC is not responsible for the content of external internet sites


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