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Google looks to its next decade

WASHINGTON, Jan 22, 2011 – Google, which prides itself on helping people navigate the Internet, is facing a tangled Web as it weaves its own future.

While more profitable than ever — with nearly $30 billion in revenue last year — Google is under pressure from new rivals such as Facebook and Twitter for the attention of Web surfers, advertising dollars and engineering talent.

In naming co-founder Larry Page, 37, to be chief executive, analysts said Google is seeking to return to its startup roots and ensure its place amid a constantly evolving Internet landscape.

Outgoing CEO Eric Schmidt, 55, was brought in to run Google in 2001, when it was battling other, now defunct search engines, while Page and fellow co-founder Sergey Brin were just a few years removed from Stanford University.

Schmidt, who has jokingly referred to himself as the "adult supervision" at Google, is widely credited with helping build the company into the technology titan it is today alongside the likes of Apple and Microsoft.

And while Schmidt is expected to remain an influential voice at Google as executive chairman, the Mountain View, California-based company is turning to Page to stay ahead of its competitors over the next decade.

BGC Partners analyst Colin Gillis said Google experienced tremendous growth under Schmidt, becoming a search and advertising powerhouse, but the company also arguably experienced a number of missteps and missed opportunities.

"A case can also be made that the company has not built any new material revenue streams, was late to building for the mobile market, has no effective social solutions, overbuilt its headcount and placed itself in the crosshairs of government regulators," Gillis said.

Danny Sullivan, editor-in-chief of technology blog SearchEngineLand.com, said Google\’s biggest challenges now are to "prove that they\’ve got their Mojo back and that nobody needs to fear them."

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"You have investors and others saying \’Gosh, Facebook seems to be doing so well. Why aren\’t you the hot new thing?\’" Sullivan said.

"And nobody\’s made a movie about Google yet," he added in a reference to "The Social Network," the Oscar-nominated film about the birth of Facebook.

Sullivan said "social networking in particular is seen as hot and Google is seen as a company that ought to be doing something there."

At the same time, he said, Google\’s critics "neglect the fact that they actually have successful products and quite a range of them."

The other major issue for Google is "they are engendering a lot of fear in various places: people wondering about privacy, whether they\’re favoring themselves… governments investigating them for anti-trust claims," Sullivan added.

Wedbush Securities social media analyst Lou Kerner dismissed claims Google does not have a social strategy and said the company is well-placed in the booming mobile telephone market with its Android mobile operating system.

"Facebook is the world\’s biggest social network and Google is not going to come up with another social network," he said. "But they already have a massive social presence.

"YouTube is the third biggest website in the world and massively social… Email is still the primary social communication media and Google is the fastest growing email provider in the world.

"And they\’ve got the largest blogging platform in the world so they are already a massive player in social," he added.

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In a conference call with financial analysts after the surprise announcement that Page would replace Schmidt in April, co-founder Brin indicated the company would be putting more effort into the social arena.

"We\’ve touched just one percent of the capabilities that could be deployed in that realm," said Brin, who will be in charge of strategic projects and new products in the new management structure.

BGC\’s Gillis said Google has had scant success with products it has developed on its own, such as Google Buzz, Google Wave and Google TV but acquisitions such as Android, YouTube and DoubleClick have flourished.

He said he will be looking to see whether Page, the CEO, "can better increase the integration of Google\’s technology with business models to generate new revenue."

Wedbush\’s Kerner said the new management structure could prove more nimble than the troika of Schmidt, Page and Brin, which has been in place for the last decade.

"What I do think Facebook has shown Google is that they\’re moving too slow," Kerner said. "Facebook is moving at the speed of light and Google isn\’t.

"Having three people running the company, making the decisions, was slowing it down," he added.

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