Google Empire Moves From Creating to RecreatingBy Sam DiazWashington Post Staff WriterTuesday, November 13, 2007; D01Earlier this year, Google quietly added a new feature to its maps program, a tool that allows users to customize driving directions by clicking and dragging on a map to create a detour. A few months later, the developers of Gmail, Google's free e-mail program, unveiled an upgrade to allow messages to synchronize with other e-mail systems.The alterations to these popular programs are minuscule compared with two larger recent news events: Google's announcement of a partnership, called Android, to make it easier to navigate the Web on cellphones, and its introduction of OpenSocial, a cooperative effort to make it easier for developers to create tools for social networking sites such as MySpace.These efforts are indicative of a recent shift in Google's strategy. Instead of creating new products, Google's developers and engineers are being called on to improve existing products and technologies. Google is hoping that by easing access to the Internet, users will spend more time there, ultimately creating new revenue opportunities.If there is one common theme to Google's latest moves, it's that the company wants all Internet users to do everything online, and store everything they do online, from sharing digital pictures to creating spreadsheets. Google and others call this "cloud computing," to reflect that computers everywhere -- whether in a cybercafe or on a mobile device -- can tap into a database that hovers in the technical atmosphere. For users, it's an opportunity to have access to everything, everywhere. For Google, it's a chance to gather more data about what people are doing and send them advertisements that conform to that."The cloud is where things are going," said Sam Schillace, the engineering director who oversees Google Docs, the company's word-processing and spreadsheet service. "It doesn't make any sense even now to say that all of my documents are on my phone. My phone is just the thing that I use to interact with the cloud, where my data is stored."Being involved in so many business areas could prove risky for Google because it concentrates so much personal and behavioral information in one corporate set of hands, said analyst Jennifer Simpson of the Yankee Group research firm."Google is trying to make itself into a ubiquitous brand where it's everywhere on the Web," she said. This would allow the company to target advertising based on informationusers store in their calendars or what they write in their word-processing document and save online. "For the average consumer, increasingly it could be seen as infringing upon their lives in some way."Yet many of the products Google has released in recent years have yet to make their markagainst the competition.Its Gmail program, for example, has consistently trailed Yahoo and MSN in users since its 2004 launch, according to research firm ComScore Media Metrix. Likewise, its instant-messaging program and its Orkut social networking site don't break ComScore's worldwide top 10 in those categories. And its Google Finance program doesn't even rank among its peers.But some of Google's products are also growing at rates others are not, indicating that they have a chance to gain traction and eventually surpass the competition. For example, the number of U.S. visitors to Gmail in September increased 93 percent over the previousyear, while the leader in free e-mail, Yahoo, grew by 7 percent and No. 2 Microsoft was flat.Roger Kay, an analyst with Endpoint Technology Associates, said the company has matured both financially and technologically, giving it the flexibility to wait for its programs to gain ground gradually.But Kay also said Google, which dominates online search and advertising, could run into the same business dilemma as Microsoft. Microsoft had two blockbuster cash cows: the Windows operating system for computers and the Office software package that includes Word, Excel and PowerPoint. But now Microsoft is trying to figure out how it will evolve, Kay said."They generated huge amounts of cash, but then they had the other business problem of 'What do you do for an Act II?' " Kay said. Google has "an opportunity as a big company with a lot of retained earnings to invest in businesses for the long haul."But Google, with all its ventures -- including Android, which lays the foundation for many other programs for cellphones -- could also become a gateway for many other kindsof consumer technologies, Kay said.Android, for example, allows Google to expand into cellphones in a way that makes it a common link for many new programs offered on the mobile Web and that in turn could allow the company to sell more ads, he said."It's all of the forces coming together with Google as the nexus," Kay said. "They're certainly poised to absorb the lion's share of all advertising revenue available."This is a view shared by strategists at Google. Marissa Mayer, vice president of search products and user experience, said the company's core assets -- search, ads and applications -- will feed one another to keep the business model growing.Better search makes for stronger applications, which translates to more users and eventually a stronger advertising business, she said."These are multiyear plays," she said. "We're in these businesses for the long term."But trying to be everything to everyone means also having to please everyone, and that's a tough microscope to live under, said Simpson, the Yankee Group analyst.Google is a well-known and recognizable brand in technology but not the first. Others who once dominated in their fields -- Yahoo and AOL, for example -- have struggled to redefine themselves and keep up with the newcomer's dominance."The first person to come along and do it better than Google could cause them to lose" the dominance, she said. "That's why they're interested in keeping their hands in so many
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