Google's Eric Schmidt: Google Big on Mobile and Wimax

Google CEO Eric Schmidt, interviewed in Germany, offered several insights into the future as Google sees it. Here are some standout items from that interview. Schmidt quotes are in italics:

There is still a lot of revenue in search - as we get the technology better or as we can do more targeted ads. There is no limit for search marketing. People assume that there is a limit, but we have many more ideas about technology.

.... mobile will be a larger business than the PC-Web. But it will take a few years.

On Google's investment in the Wimax initiative to bring broadband outside of the phone carriers: We are concerned that the carriers in the United States might close off the network.

MySpace did not monetize as well as we thought. We have a lot of traffic, a lot of page views, but it is harder than we thought to get our ad network to work with social networks.

On the Yahoo Search talks:

It is true that we have been talking with Yahoo, but we don't have a deal to announce.

On Businesses in Germany who are upset with some Google approaches:

We are always trying to look from the perspectives of the end-users and if they are served well, we are not looking at it from the publisher perspective.

As Google continues to drive online innovation and activity more than any other company, Schmidt remains a key global player - in fact arguably the most important global player - in the entire industry.

Google's Eric Schmidt On Google's Future

Maria Bartiromo at CNBC has a detailed interview with Google CEO, Eric Schmidt. The full transcript is here and below. I've noted some items below in quotes.

As we've noted here before, monetizing video and social media is very difficult. Schmidt confirms that is an ongoing challenge at Google:

... the whole social networking space has been harder for us tomonetize--that
is, develop advertising businesses again--than some of theother--than some of
the other spaces that we're in. It has to do what peopleare doing. When you
think about it, you're in a social network, you'relooking at people's photos,
you're figuring out where your friends are.You're not as likely to be purchasing
a new car at the same time or purchasingclothes or purchasing a book or what
have--whatever business that you're in.So the development of the advertising
tools and techniques, literally theplatform, has been more difficult than we
have thought. But we're working onit, and we're hopeful.

Regarding the explosive Mobile market, which clearly is a major focus for Google:

.... most people in most developed countries have a roughly 100percent coverage of mobile phones. So it really is a tremendous phenomenon. Over the next three or four years, there'll be more than another billion or somobile phones added. Eventually our numbers indicate that there'll be five or so billion mobile phones in a world of six billion or so. People, this is aphenomenon. It's an unprecedented reach, even greater than, for example,television, or even electricity in some cases. So that's a platform that we can exploit. Our mobile phone, both search traffic as well as advertising is growing very rapidly, and we think people will do more and more interesting things in mobile phones. And, I mean, small phones, big phones, big screens, things that don't look like a phone, things which are mobile.

Here is the full, unaltered transcript of that interview:

Maria Bartiromo, host: Eric, thanks so much for joining us.

Dr. Eric Schmidt, Google CEO: Thank you for having me on again.

Bartiromo: Let's begin with this debate that seems to be brewing on Wall
Street about growth. So the company grew 46 percent in the third quarter, 40
percent in the fourth quarter, 30 percent in the next quarter, and then
sequentially 1 1/2 percent when you look quarter to quarter. How insulated
would you say is Google to the economic slowdown or recession?

Schmidt: Well, the numbers you're using are year over year, quarter over quarter in the US. Globally, of course, we had good growth, and the US numbers are masked by the fact that, a year ago, we had a very strong quarterly growth of that quarter. So the real growth rate in the US is good, although overall growth rates are slowing, as they have for years. Just because of the scale and size of what we operate. The business has continued to be good.

Bartiromo: OK, because when you get to a certain size, it's really hard to
sort of grind down more market share when you've already got 70 percent or get
that much bigger, given the fact that the company is getting--you're a large
business.

Schmidt: But we have--we have multiple ways in which we grow. Of course, more people use the Internet, more people are using electronic commerce on the Internet, more people are clicking on the ads, and also our ad technology is getting much, much better. And it's really any one of those will push us over the top in any given quarter; sometimes they all come together. We don't seem to be very sensitive to macroeconomics, at least right now. We don't seem to be very sensitive to things like recession. But we're very sensitive to how quickly do we bring in the new product improvement or something like that.

Bartiromo: The comScore data took everybody's estimates down, and this whole
debate about whether it was accurate or not. How can you ensure that the
growth occurs, even if people pull in their spending, if perhaps advertisers
slow down on the budgets? I mean, is it fair to say that the hypergrowth of
2004 to '07 is--has been seen?

Schmidt: Well, as I said, if you think about it over a five- or six- or seven-year period, growth rates are slowing, as they have to. So I don't think it's a big shift. It's not, you know, today it was one way and tomorrow it's another. In our case, we focus on quality, and we have a very simple
model. If we show fewer ads that are more targeted, those ads are worth more. So we're in this strange situation where we show a smaller number of ads and we make more money because we show better ads. And that's the secret of Google.

Bartiromo: Yes, that's what Mary Meeker was saying. She's saying, `Look, it
could be that they're actually benefiting from a recession because they're
monetizing the ads better.'

Schmidt: There's been--you you know, if you were running a business today, you would be looking very carefully at where is your marketing spend going? And we think that you'll choose to put your marketing spend on the thing that's most measurable, the thing that's most, you know--because you can always defer a branding campaign that may or may not work, but you want to get those customers and those leads right now, and that's what we do.

Bartiromo: Let's talk about DoubleClick. You acquired the company. How's
the integration going?

Schmidt: Well, it just started. It started about three weeks ago. And what we're doing is we're taking their products and our products and integrating them so that people have better tools, advertisers have more, literally, ads, and publishers have more spots that they can publish
information into. So it's the combination of all that that we've been waiting for so long, and it's under way. It takes six months to get all the products together.

Bartiromo: So you think that the integration process will take about six
months?

Schmidt: It's on the order of that. And, of course, at Google, everything is a try. We try this, we try that, we see what works. The early indications are that we'll be largely complete within that period.

Bartiromo: It's no secret that Google owns search, but what about the display
ads? Is it--is it fair to say that's sort of up for grabs? You know, you've got DoubleClick, Microsoft has aQuantis. It's up for--up for grabs, that part of the business.

Schmidt: Well, it's fair to say that that Google is not the leader in display ads, but our customers want to be able to purchase text ads and display ads and other advertising in one purchasing bundle, and the combination of the tools that we're developing, plus the DoubleClick integration acquisition and so forth, allows us to offer a single product for those advertisers. So we think that will help us with our display ads competitiveness. We think our technology is better. And so really now it's a question of earning those customers' respect and knowledge.

Bartiromo: So how do you ensure that that was actually the right acquisition
and not just go it alone, do it on your own?

Schmidt: Well, we had tried that. But the customers really liked the
DoubleClick product, and in our surveys we concluded that in one of
these--this was one of those cases where another company had simply built a
better product, which is why we went forward with the acquisition.

Bartiromo: Tell me what you're doing with Yahoo! in terms of testing. On
the earnings call last time, you said you're setting up ads there. How's it
going? What's involved?

Schmidt: Well, the long and short of it is that we did a test for about
two weeks, which has since ended, where Yahoo! took a small percentage of
their ads and replaced them by ours. We did this as part of a commercial
conversation, which I obviously cannot go into, but it's one of the strategic
options that we believe Yahoo! is considering at this time.

Bartiromo: Now, of course, after that, I guess the Department of Justice
announces that it's, you know, doing an inquiry about this. Have you heard
from the Department of Justice on this?

Schmidt: Well, again, without going into the specifics, you should
expect that in all of these possible transactions, all of the regulatory
bodies will be reviewing them. If there were an acquisition of Yahoo!, for
example, the Department of Justice would also be doing a review. And the
anti-trust laws allow the government--and I think properly so--to look at both
commercial deals as well as acquisitions.

Bartiromo: What kind of a combination would you like to see with Yahoo!?
What kind of a partnership would you like to see?

Schmidt: Oh, well, we actually enjoyed working with Yahoo!. We also
compete with them. They're a well run and, I think, impressive company.
We've primarily been concerned about the possibility of a Microsoft
acquisition of Yahoo! because of Microsoft's history and because of the
assets that Yahoo! has are quite valuable. And we actually think that in the
wrong hands, they could be used in the wrong way.

Bartiromo: What do you mean, Microsoft's history?

Schmidt: I think people are aware of the anti-trust trial from 10 years
ago. Microsoft has a long history in that area.

Bartiromo: Yeah, you can bet, I guess, who tipped off the DOJ about the phone
call that was made, Steve Ballmer or somebody from that side. So what do we know about Microsoft and Yahoo!? Tell me this. I mean, I know that, you know, we're waiting on possible news from Microsoft, possibly, a hostile--we don't know what's going to happen next. But what kind of a challenge would Microsoft/Yahoo! be for Google?

Schmidt: Well, today we actually do not know what's going on. We read
in the press that there's discussions and we'll see what they decide to do.
If they go ahead and the merger's ultimately successful, it would be possible
for Microsoft to integrate some of the properties and essentially eliminate
consumer choice, particularly in electronic mail, instant messaging, the
things where they have 80 or 90 percent market share, and that's a sweet spot
for Microsoft in its ability to eliminate choice.

Bartiromo: Mm-hmm. And, of course, Google has been getting all these new
killer apps, whether it's Gmail or Maps or, you know, spreadsheets.
Ultimately is the game to compete direct, head on, with Microsoft?

Schmidt: Well, Google is actually trying to be an innovator, and we're
always concerned about competition. We have found that if we can simply
invent a brand-new product that really solves a problem that really does
matter to you, we can get your business, we can get your attention, we can get
your traffic and your customers or what have you. We're trying in a new thing
called cloud computing to offer very powerful Web services that do the common
things--e-mail, word processing and so forth--where the data's kept in the
cloud, it's kept by somebody else, it's managed by professionals. You don't
need to worry about where you keep all that information. We like that model a
lot. We're getting traction. It is a competitive threat to other companies,
but we think it's a technological breakthrough.

Bartiromo: How will you respond if Microsoft goes hostile?

Schmidt: Well, a lot will depend on whether their strategy is
successful. In the short term, we have pointed out the possibility of a bad
outcome, but it really depends on what happens in the hostile.

Bartiromo: Do you have any sense of how these things go? I mean, can they go
in the open market, buy the stock, and then just create a proxy battle?

Schmidt: All I know is what I've read in the press, which is that
essentially you replace the board and you force--you force the deal.

Bartiromo: Let me ask you about YouTube and MySpace. YouTube has these
phenomenal growth rates. What do you think is behind that?

Schmidt: Video is powerful. And it's amazing. You know, we started off
with Mentos and the other sort of fun videos, and now people, because they
have so many digital cameras, are essentially uploading everything.
Furthermore, we're beginning to see glimpses of significant professional
content on YouTube. People are using it--because there's such a large reach,
they're learning how to reach that audience. We're working but have not yet
in my view gotten a breakthrough around monetization. So while we have lots
and lots of traffic and we have lots and lots of interesting and creative
people and all sorts of controversies--we're blocked in countries, so on and
so on--I don't think we've quite figured out the perfect solution of how to
make money, and we're working on that. That's our highest priority this year.

Bartiromo: Which is a huge priority, clearly. A lot of people feel like this
is an amazing opportunity for you. So, as far as monetizing that business on
YouTube, do you think that takes a year? Does it take the next five years?
What's your time frame on that?

Schmidt: We believe the best products are coming out this year. And
they're new products. They're not announced. They're not just putting
in-line ads in the things that people are trying. But we have a number--and,
of course, Google is an innovative place. The Yahoo! team are trying various
new forms of advertising, ones which are much more participative, much more
creative, much more--much more interesting in and of themselves. Google
believes that advertising itself has value. The ads literally are valuable to
consumers. Not just to the advertisers, but the consumers.

Bartiromo: They want to look at them.

Schmidt: When they're targeted. When they're the right ad for what
you're doing or what you care about.

Bartiromo: Mm-hmm. But, you know, it gets me to MySpace. Some people feel
like, when you look at the MySpace part of the business, that's really where
people are looking at, or feeling a bit of an economic downturn. Let me ask
you about that. The deal involving revenue promises, is that going to impact
margins in the coming two years?

Schmidt: Not materially in that sense. We have pointed out, and I'll
repeat again, that the whole social networking space has been harder for us to
monetize--that is, develop advertising businesses again--than some of the
other--than some of the other spaces that we're in. It has to do what people
are doing. When you think about it, you're in a social network, you're
looking at people's photos, you're figuring out where your friends are.
You're not as likely to be purchasing a new car at the same time or purchasing
clothes or purchasing a book or what have--whatever business that you're in.
So the development of the advertising tools and techniques, literally the
platform, has been more difficult than we have thought. But we're working on
it, and we're hopeful.

Bartiromo: You've got $12 billion in cash right now?

Schmidt: A little more than that.

Bartiromo: What are your plans for that money? A lot of people say, `Look,
the company's doing well. Growth is still continuing very strongly, global in
particular. Why not pay a dividend out? Why not buy back stock?

Schmidt: We love watching that cash sit in a well-managed bank and not
get lost.

Bartiromo: So you could categorically rule out, no dividend coming?

Schmidt: Well, first this: We never rule anything out. But right now
we're happy to let the cash accumulate. The cash represents a strategic
option for the future. As you know, we had the luxury of entering the
wireless auction. And we did not win the auction, but our financial resources
allowed us to credibly and seriously enter an auction for 4.65 billion.
Couldn't have done that without the cash.

Bartiromo: What did you get out of that, though, Eric?

Schmidt: Well, from a corporate perspective, we participated in
something important. From a consumer perspective, we know that our
participation helped in making sure that the networks remained open. So
consumers get choices. What's better than that?

Bartiromo: Yeah, and the FCC was happy about that. Mobile. A lot of people say mobility is where it's at. You've said, actually, I've heard you on conference calls saying that this is one of the big priorities for the company. How do you envision this? Tell me what you're looking for.

Schmidt: First place, everyone I know, everyone you know carries a
mobile phone. And it's true in every country.

Bartiromo: And I'm not carrying my PC, by the way.

Schmidt: And most people in most developed countries have a roughly 100
percent coverage of mobile phones. So it really is a tremendous phenomenon.
Over the next three or four years, there'll be more than another billion or so
mobile phones added. Eventually our numbers indicate that there'll be five or
so billion mobile phones in a world of six billion or so. People, this is a
phenomenon. It's an unprecedented reach, even greater than, for example,
television, or even electricity in some cases. So that's a platform that we
can exploit. Our mobile phone, both search traffic as well as advertising is
growing very rapidly, and we think people will do more and more interesting
things in mobile phones. And, I mean, small phones, big phones, big screens,
things that don't look like a phone, things which are mobile.

Furthermore, the telecommunications industry is helping because they're
deploying billions of dollars of literally excess data capacity so these
things will have fast networks wherever I go. One of the greatest things for
me is whenever I fly somewhere, I open up and I open up my iPhone or my
BlackBerry, and, boom, there's everything in my world as I've landed in a
country I've never been in. It's a remarkable achievement.

Bartiromo: Yeah. What needs to happen before we actually get to that world
that you're talking about? In other words, do we need to see the providers
create different screens? I mean, do you need a larger screen to access some
of this data? How do we get there?

Schmidt: Well, one of the problems is we haven't figured out a way to
change finger sizes. We just haven't...

Bartiromo: Right.

Schmidt: There's no solution to that.

Bartiromo: Right.

Schmidt: We'd like to, but we haven't done it. And people don't like to
kind of go like this. So you need a certain size screen. But there's other
technology. For example, the processors in the phones have gotten faster.
The batteries have gotten longer last--longer lasting. The screens have
gotten brighter. The whole device has gotten lighter. So all of that has
been happening while people have been talking about this. We know that these
things are working now. We know because we measure it that there's been a
huge increase in maps, Google Maps, hugely successful. These phones have
GPSes in them. So when I want to go to the equivalent of a Starbucks, I just
type "Starbucks," it says it's over there. For me, that's just a huge--a huge
improvement. And that service is available almost everywhere in the world.

Bartiromo: That's amazing. Let's--that transitions right to the rest of the
world. Global has been really the hot spot for Google. Tell me how you keep
that going. Where are the biggest opportunities for Google right now outside
of the United States?

Dr. Schmidt: Well, first place, the Internet is growing faster outside the
United States than in the United States. Also advertising online growth rates
are higher outside the United States than they are in the United States.
You've got--and of course you have a weak dollar strategy--because the US has
a very weak dollar--so that also helps. For all of those reasons, revenue
outside of the United States should grow dramatically over the next while, and
that's great.

In our case, the biggest difference--and, in fact, perhaps the only
difference--between people in the US and other people is language. Other than
that, simple rule: Everybody wants the same thing. They want fashion, they
want information, they want products, they want e-commerce, they want it now,
they want to have fun, they want to use credit cards or debit cards. So we
work very hard to make that true globally. I think most of the large,
successful US corporations, the ones that you certainly cover all day, all are
going to see that kind of growth if they'll well positioned internationally.

Bartiromo: So when you look around the world, what's the most important, sort
of richest area for you right here?

Schmidt: Well, for us, of course, Europe has been our stronghold for a
long time. And Europe is just very, very strong for Google. They have
relatively higher market share, they're very sophisticated consumers, and a
very mature advertising rate. If you look at the global advertising market,
it's the United States, Japan, China, Britain, France and Europe--and Great
Britain. Those are the sort of the big five or six. Well, of course, we're
doing very well in Europe, we're doing well in Japan, and we've been in the
process of entering China for a while, and we're growing there nicely.

Bartiromo: What's happening there, though? You're number one in every market
except a handful in Asia. How do you break in, and really with a solid
foothold.

Schmidt: Well, in each case, they're different. In China, of course,
there's all the issues of regulation and censorship. We delayed our entry for
good reasons, and as a result we're not number one there. In some of the
other countries, it's because we didn't get the language right. It turns out
Asian languages often have what you and I would think of are nonsensical ways
in which words are put together. So, for example, all the words in Thai are
put into one very long sentence. They don't have word breaks. So developing
the technology to do that right and then search and index against it took us a
little while longer. We've now addressed that, so we think we should do well
now.

Bartiromo: Fascinating. So what's the biggest challenge that you're facing
today?

Schmidt: In Google's case, I think it's internal. It's the ability to
manage the creative process, deal with the complexity in what is a relatively
large company, in terms of people, who's doing what. We have 50 development
centers all around the world, people in different time zones, `Are you doing
that? Are you doing that? Do I work with you? How do I check in my code?'
Those sorts of things.

Bartiromo: And for a long time, people were saying, `Look, you know, Google
has this incredible campus, and, you know, spending money, and really
showering employees, making sure that people are happy there.' Are you
beginning a new process of managing employee growth right now and managing
expenses more aggressively than you have in the past?

Schmidt: Well, certainly not our benefits, per se. Every day I turn
around, there's some new benefit that we've come up with for our employees.
It's part of our culture; we're happy to do that. And, of course, we have
gross margins to afford it. So higher gross margins is one of the
explanations. We have slowed our head count growth for a couple of reasons,
but the biggest reason is it began to feel like we really didn't have a good
sense of what people were doing. The systems in the company, literally who's
doing what, what are they doing, seemed to lag our ability to hire these great
people. So we slowed it a little bit. But we're still going to hire some
number of thousand people this year.

Bartiromo: Let me--let me go back to something on the DoubleClick
acquisition. Are you seeing any pushback from some of the advertisers who
say, `Look'--the ad agencies who say, `We're already spending a ton of money
on Google. Why do we need to spend more on all this other stuff away from
search?' How are you going to get them to devote more money to display, to
audio, to print and TV ventures, which are--and everything else you're--and
the display ads, obviously.

Schmidt: Because we earn it. Because you can measure it. We never want
people to give us--give us money that we don't earn and that we can't prove
that they--that they--that it really provides value. That's not a good
business for us. So as we enter these markets, we hope to say, `We have the
tools that can show you that if you put this display ad out there, you really
will get the sale.' And we have ideas, we have new research in how to do that
in a closed loop way that is phenomenal. So our innovation model is in very
category of ads, not just text ads, to show real return, real sales, and we
think we can do that. And if we do that, we'll get the business. And if we
can't do it, we shouldn't get the business.

Bartiromo: Right, because it's so measurable. That's why you don't really
see a real dry up in the advertising during a recession.

Schmidt: Which is...

Bartiromo: Would you agree with that?

Schmidt: That's our hope. Our hope is that, again, in a recession,
people would say, `Look, I'm going to put my money where I know my money's
being well spent.' Now, we don't know that we're in a recession, but if we
were, we hope that's what will happen.

Bartiromo: Now, earlier you said, `Look, growth levels have to slow,
obviously.' What's appropriate then? I mean, when you say--I mean, investors
are saying, `Look, is this company insulated? Is it not insulated?' So you
say of course growth levels have to slow. To what?

Schmidt: Well, we don't know, but obviously, we don't plan to a growth
level, we plan to an innovation level. Our idea is you just keep inventing
new stuff, and it grows as quickly as it can. And there's some capacity with
which we can deliver these to customers and that they can adopt them. And, of
course, they have to do work. They have to learn how to use new tools, we
have to talk to them, there's a lot of selling and marketing involved. It
just doesn't happen automatically. Here's a new idea. People have to be
comfortable with it. But once they are, we've found that growth rate is
quite...(unintelligible).

Bartiromo: As a steward of technology and innovation your entire career, what
would you say is the most innovative thing out there? What's the next big
thing, from your standpoint?

Schmidt: I've always thought that the scariest piece of innovation is
knowledge understanding and language translation. I don't understand how it
works, but to watch a computer--literally watch it--read something in English,
dissect what it's about, translate it into a language that I don't speak and
having that other person say, `Wow, that's incredible,' to me, that's magic.
And it isn't magic, it's just very good computer science, very good artificial
intelligence, very good physics. And that's where we are. So the things that
are most impressive to me are the things where the computer does something
that nobody could do, literally translate things 100 language in parallel,
summarize something for me, take me to something which I didn't know I was
interested in but knows that I cared about it. And we're right on the cusp of
that.

Bartiromo: Eric, your stock went from $750 to $450 in a very short period of
time. What do you think happened?

Schmidt: I don't know. We don't really focus on short-term movement of
the stock price. We said, since the company went public, that we're in this
for the long term, and we want shareholders to be with us. These short-term
fluctuations in outlook and so forth are not something that we focus on. We
don't talk about it. We're really focused on this huge opportunity before us,
which is automating the trillion-dollar industry that is advertising. We
won't get all of that, for sure, but we should be able to get a significant
part of that over the lifetime, certainly of my service to the company. And
our goal is to build this into an institution that lasts for many, many years
and is the greatest innovator in technology in this space.

Bartiromo: So the biggest priorities right now, continuing to access that
potential huge, huge advertising market. What else?

Schmidt: Well, our number one priority is end-user--end-user happiness.
Literally, are people happy with the results that they get using Google
search? So it's literally search, and every day we bring out new improvements
and indices that are--taxonomies that are understanding of language, more
content, bigger--all of the things that make Google such a great search
experience. That's our number-one priority, even more important, for example,
than advertising. The way we pay for it, of course, is by improving our
advertising solutions, as you described. That's what we do in the core.

Our next big play is in this applications phase, where we think people spend a
lot of time online with information, and we can help them, whether it's their
e-mail, which is an easy one to understand, but what about their personal
data? What about their spreadsheets and their calendar, keeping it all there?
And we can help them search. We can solve the problem of `how do I live in
this digital lifestyle?' If we do that right, they can do it on mobile phones
as well as at home, in their office and on a Mac and on a PC, and it all works
great.

Bartiromo: This is all fantastic for the consumer. It's free, they've got
access to all this stuff, they don't have to pay for it. What about...

Schmidt: It's a pretty good model.

Bartiromo: Yeah.

Schmidt: It works pretty well.

Bartiromo: What about the corporate customer? I understand that there are
tests going on right now. What are you hearing from that customer?

Schmidt: We're working with the corporate customers to do the same thing
inside their networks as we do with consumers. Now, corporate customers are
not the same thing as consumer customers. Corporate customers have a much
higher need for reliability, so we'll sign an agreement that guarantees a
certain level of service. But then we charge for it. So that's a case where
people are willing to pay for something which is free without the level of
reliability. They also have other needs. They need greater security, for all
the obvious reasons. And they also need better integration with all of the
other services that their companies have. This is a long process. It's not a
fast process. But it's very deeply valuable. And those customers we will
have for 20 or 30 or 40 years as they build into our model. We like that
model. It's an enterprise play. It's a business that I've been in for a long
time, and one which will ultimately be very, very lucrative through Google.

Bartiromo: Do you ever look back and think about what has happened to the
company? I mean, you, for a long time, have been really one of the most
admired companies out there, and then one of the sexy, sort of big growers out
there. And then as the company got bigger and bigger, people started to get
afraid of Google, they way they were afraid of Microsoft at one point as well.
Do you worry that that's the perception or that perception could take hold at
some point?

Schmidt: We do worry about perception because we want to make sure that
we are--that our perception is consistent with the way we way we behave.
Google runs on a set of principles, and every company has their own
principles. Ours are about doing no evil, it's about trying to serve the end
user. Larry Page, our--one of our founders, wrote a very thoughtful memo
about what it's like to be a big company. So, for example, he authored the
rule that we'll never trap people's data. So if you become dissatisfied with
us, we will make it easy for you to go to our competitor. Most companies
don't do that. So we're trying to find that balance between the structure of
a company and the need for predictability and so forth with our real mission,
which is to serve you as an end user. And if you're not happy with us,
keeping you trapped, that's a mistake. We want you to have another choice.

Bartiromo: Final question. Eric, let's face it. Microsoft wants Yahoo!.
How much of a disadvantage do you think Google is at if these two players get
together, what...(unintelligible)...two and third player in the market?

Schmidt: Well, a lot of people debate this. There's a big debate within
the company. People say, on the one hand, that we stay focused, which, of
course, we're very focused, while they're doing their maneuver. On the other
hand, people are concerned about the history, as I mentioned, and the
possibility of merger. So I don't think we really know yet. We debate it all
the time.

Bartiromo: Eric, would you like to add anything else?

Schmidt: No, I'm fine. Thank you very much.

Bartiromo: Thanks so much for joining us.

Google vs. Microsoft, Yahoo edition

As Microsoft´s merger with Yahoo becomes increasingly likely, Google is continuing to make their concerns public. Speaking in Beijing, China, Google CEO Eric Schmidt said:

"We are concerned that there are things Microsoft could do that would be bad for the Internet,"

Schmidt did not elaborate on this concern, which has also been expressed by Google in many other venues. Clearly however Google worries that the combined Yahoo Microsoft might use Microsoftś browser and operating system dominance to route traffic to their own sites and searches and away from Google, which is still the search engine of choice for the overwhelming majority of internet users.

Reuters Report

Disclosure: Long on YHOO

Portability of Applications and Widgets

Talk about portable widgets is not new. After all, 2007 has been proclaimed "Year of the Widget" by Newsweek. Though what I intend to discuss here is more about portability aspects and efforts in this direction rather than about widgets themselves. One of the early entrants in the market was Knofabulator (remember anyone?) which was bought by Yahoo. Then it seemed that they didn't know what to do with it and rebranded it but added no extra functionalities. A few days back it was in the news that Yahoo was releasing version 4.5 of its Konfabulator widget. The new version includes things like HTML and Flash support as well as a better user interface. However, Yahoo widgets are still only for desktops like Vista or XP. However, with Google releasing widgets for Mac a few days back, as well as Mac having widget support and Microsoft supporting widgets in Vista, Yahoo may find itself facing tough competition in a comparatively small market. Such widgets are important if we see them in the light of what is expected of applications in future. Application virtualization is gaining ground and also to be noted is the following vision of Google's CEO, Eric Schmidt.

Netvibes is a company which had initially announced a widget platform to make widgets that can work on Vista, Google, Mac, and even Yahoo widgets. It is called Universal Widget API and has the aim of "build your module once, deploy everywhere". Other companies in this space are Musestorm and Clearspring. Musestorm enables non-programmers to develop rich media widgets and Clearspring specializes in distributing widgets as well as analytics and API. The next step, of course, would be for these applications or widgets to run on mobile as well. For instance, I am sure Google's Android which is to be released next year with Open Handset Alliance will soon be integrated with their Web ToolKit so that applications can run over mobile, computer, and web. And won't that be cool?

25 Most Powerful People In Business

Fortune Magazine has come out with a list of the 25 most powerful people in business. At the top of the list is Apple's, Steve Jobs. Also in the top five are Eric Schmidt, Larry Page, and Sergey Brin of Google.

Other tech giants on the list include of course Bill Gates of Microsoft, John Chambers of Cisco, Mark Hurd of HP, and media mogul cum social networking giant by virtue of MySpace, Rupert Murdoch of NewsCorp. Complete list.

How to beat Google

Forbes has an interesting article on how companies can beat Google (Nasdaq: GOOG) when it comes to recruiting talent.

By Brian Caulfield

Let's just call the Googleplex what it really is: the ultimate recruiting tool. Employees are shuttled to Google's Mountain View, Calif., headquarters for free. Once they arrive, they're treated to massages and free gourmet meals. Plus, they're surrounded by thousands of young, type-A employees from the best schools.

Oh, and then there's the ultimate status symbol: Google's soaring stock price.

Google (nasdaq: GOOG - news - people ) has been grabbing talent at a ferocious pace. It's on track to double its head count to 20,000 from 10,000 at the end of last year. It employs swarms of contract recruiters to scour top engineering schools for fresh-faced newbies and raid competitors for hoary veterans. Read the glowing press clips and you'd think that Google has an insurmountable edge in the war for tech talent. The stakes can't be much higher: Even if it never capitalizes on the ideas all those brilliant new hires generate, Google locks them away from would-be competitors.

But if you talk to people who have worked inside Google's recruiting operation--or people who have competed against it--they'll tell you that the Silicon Valley's ultimate hiring machine can be beat. The trick: use Google's consensus-driven decision-making process--and exacting standards--against it. "Hiring over there is a protracted battle, to say the least," says one recruiter.

To understand how to beat Google, you first need to know its history. Early on, the company faced a dilemma. While the company's co-founders, Larry Page and Sergey Brin, are Stanford-educated computer scientists--in other words, they are quite bright--as the smartest companies get bigger, they tend to get dumber. Call it reversion to the mean.

So, Google created a process designed to keep Google chock full of brainiacs. The result: an exacting, consensus-driven process. New hires are vetted extensively to ensure that they are not only smart enough, but that they'd fit in with Google's culture.

That makes speed Google's biggest vulnerability, recruiters say. While a Google hire might have to endure round after round of interviews, a savvy company can pluck off a candidate at the manager level and below by hitting him with an offer--and giving him or her just a few days to respond.

Tough standards are Google's other vulnerability. The company targets graduates of top schools who have top grades: that all but rules out, say, Microsoft Founder Bill Gates or Apple Chief Executive Steve Jobs, neither of whom have a college degree.

Moreover, candidates on the cusp will get less lucrative offers from Google than candidates from elite schools with the top grades that Google targets. That makes a brilliant student from an out-of-the-way school a soft target.

Another weakness: A single objection will almost always sink a candidate's chances of ever getting hired at Google, those familiar with the company say. That gives a competitor a shot at grabbing a socially awkward but otherwise brilliant young engineer.

The most daunting problem for Google, however, is a math problem. While Google Chief Executive Eric Schmidt asserts that Google's growth is accelerating as it grows larger, that pace may slow down: Google disappointed Wall Street after admitting it "overspent" on new hires during its latest quarter.

Moreover, recruiters are already pointing to Microsoft and Cisco (nasdaq: CSCO - news - people ) when talking about the future of Google. The two mega-cap tech companies cranked out millionaires in their earlier days, but their share prices have been sedate for years now. Google may only hire geniuses, but it doesn't take a genius to figure out that Google is just too big to make its newest employees as rich as their peers.

Viacom - Lawsuit Business Model (Part II)

After, Eric Schmidt said that Google will vigorously fight Viacom's $1B lawsuit against YouTube, Sumner Redstone changed his tune saying, "The Google people are intelligent people. They can live peacefully with companies like Viacom." Why would Google even want to engage into an agreement on a dying businees model that will eventually kill Viacom? In fact Schmidt went on to say that, "Viacom is a company built on lawsuits ... look at their history". Schmidt also pointed to the fact that Viacom was currently being run by a former general counsel of the company, Philippe Dauman. Redstone confirmed to reporters of such when asked of Schmidts' comments, "We have engaged in a lot of litigation at Viacom, of which I have been a primary mover."

Why is litigation the cornerstone of Viacom's business model you ask? Simple, Viacom is getting squeezed by content producers and distributors. The traditional distrubtion channel for Viacom's product is shrinking. Users' are moving to more targeted and personalized mediums on the internet eg. YouTube. Technology has lowered the cost of production of content and there is more choice that ever and more competition for eyeballs. Viacom's is still operating under an old production and distribution structure which is bleeding the company. So the easiest thing to do is to blank others for your problems. Frankly, Viacom should be happy that users' are keeping its products alive by putting it on YouTube and introducing it to new audiences, who might end up watching it on TV thanks to YouTube.

See orginal post Viacom - Lawsuit Business Model (Part I)