среда, 4 июня 2008 г.

Inside the Googleplex

IN AMERICA a phenomenon might claim to have entered mainstream culture only after it has been satirised on "The Simpsons". Google has had that honour, and in a telling way. Marge Simpson types her name into Google's search engine and is amazed to get 629,000 results. ("And all this time I thought googling 'yourself' meant the other thing.") She then looks up her house on Google Maps, goes to "satellite view" and zooms in. To her horror, she sees Homer lying naked in a hammock outside. "Everyone can see you; get inside," she yells out of the window, and the fumbling proceeds from there.

And that, in a nutshell, sums up Google today: it dominates the internet and guides people everywhere, such as Marge, to the information they want. But it also increasingly frightens some users by making them feel that their privacy has been intruded upon (though Marge, technically, could not have seen Homer in real time, since Google's satellite pictures are not live). And it is making enemies in its own and adjacent industries. The grand moment of Marge googling herself, for example, was instantly available not only through Fox, the firm that created the animated television show, but also on YouTube, a video site owned by Google, after fans uploaded it in violation of copyright.

Google evokes ambivalent feelings. Some users now keep their photos, blogs, videos, calendars, e-mail, news feeds, maps, contacts, social networks, documents, spreadsheets, presentations, and credit-card information--in short, much of their lives--on Google's computers. And Google has plans to add medical records, location-aware services and much else. It may even buy radio spectrum in America so that it can offer all these services over wireless-internet connections.

Google could soon, if it wanted, compile dossiers on specific individuals. This presents "perhaps the most difficult privacy issues in all of human history," says Edward Felten, a privacy expert at Princeton University. Speaking for many, John Battelle, the author of a book on Google and an early admirer, recently wrote on his blog that "I've found myself more and more wary" of Google "out of some primal, lizard-brain fear of giving too much control of my data to one source."

Google itself has been genuinely taken aback by such sentiments. The Silicon Valley company, which trumpeted its corporate motto, "Don't be evil", before its stockmarket listing in 2004, considers itself a force for good in the world, even in defiance of commercial logic. Its founders, Larry Page and Sergey Brin, and Eric Schmidt, its chief executive, have said explicitly and repeatedly that their biggest motivation is not to maximise profits but to improve the world. Too many sermons

Such talk can make outsiders wince. Book and newspaper publishers, media companies such as Viacom, businesses which depend on Google's search rankings and a lengthening queue of others are tired of moralising sermons. Some feel their own livelihoods are threatened and are suing Google. Even some employees (called "Googlers") or former employees ("Xooglers") are cynical. Google is "arrogant" because it feels "invincible", says a Xoogler who left to run a start-up firm. The internal attitude toward customers, rivals and partners is "you can't stop us" and "we will crush you", he says. That "kinder, gentler" image is "mythology" and, he reckons, Google gets away with it only because of its impressively high share price.

That share price has quintupled since 2004, making Google worth $160 billion. The company has not yet had its tenth birthday. Yet Piper Jaffray, an investment bank, expects it to have revenues of $16 billion and profits of $4.3 billion this year. With so much money pouring in sceptics say it is easy to ignore shareholders and talk about doing good instead of doing well. But what happens when earnings fall short of Wall Street expectations or some other disaster strikes? Yahoo! and other rivals have gone through such crises and been humbled. Google has not. Fifty cents at a time

Google's success still comes from one main source: the small text ads placed next to its search results and on other web pages. The advertisers pay only when consumers click on those ads. "All that money comes 50 cents at a time," says Hal Varian, Google's chief economist. For this success to continue, several things need to happen.

First, Google's share of web searches must remain stable. Thanks to its brand, this looks manageable. Google's share has steadily increased over the years. It was about 64% in America in July, according to Hitwise. That is almost three times the volume of its nearest rival, Yahoo!. In parts of Europe, India and Latin America, Google's share is even higher. Only in South Korea, Japan, China, Russia and the Czech Republic does it trail local incumbents.

Second, Google must maintain or improve the efficiency with which it puts ads next to searches. And here its dominance is most impressive. In a recent analysis by Alan Rimm-Kaufman, a marketing consultant, it took a whopping 73% of the budgets of companies that advertise on search engines (versus 21% and 6%, respectively, for Yahoo! and Microsoft). It charged more for each click, thanks to its bigger network of advertisers and more competitive online auctions. And it had far higher "click-through rates", because it made these ads more relevant and useful, so that web users click on them more often.

Perhaps most tellingly, advertisers do better with Google. Mr Rimm-Kaufman found that Google's ads "converted" more often into actual sales, which tended to be larger than those originating from Yahoo! or Microsoft. This is astonishing, given that Yahoo! has just spent a year on an all-out effort, codenamed Panama, to close precisely these gaps.

But even lucrative "pay-per-click" has limits, so Google is moving into other areas. It is trying (pending an antitrust inquiry) to buy DoubleClick, a firm that specialises in the other big online-advertising market, so-called "branded" display or banner ads (for which each view, rather than each click, is charged for). And Google now brokers ads on traditional radio stations, television channels and in newspapers of the dead-tree sort.

Sceptics point out that with each such expansion, Google reduces its profit margins, because it must share more of the revenues with others. If a web surfer clicks on a text ad placed by Google on a third-party blog, for instance, Google must share the revenue with the blogger. If Google places ads in newspapers or on radio stations, it must share the revenues with the publisher or broadcaster.

Yet Google does not look at it that way. Its costs are mostly fixed, so any incremental revenue is profit. It makes good sense for Google to push into television and other markets, says Mr Varian. Even if Google gets only one cent for each viewer (compared with an average of 50 cents for each click on the web), that cent carries no variable cost and is thus pure profit.

The machinery that represents the fixed costs is Google's secret sauce. Google has built, in effect, the world's largest supercomputer. It consists of vast clusters of servers, spread out in enormous datacentres around the world. The details are Google's best-guarded secret. But the result, explains Bill Coughran, a top engineer at Google, is to provide a "cloud" of computing power that is flexible enough "automatically to move load around between datacentres". If, for example, there is unexpected demand for Gmail, Google's e-mail service, the system instantly allocates more processors and storage to it, without the need for human intervention.

This infrastructure means that Google can launch any new service at negligible cost or risk. If it fails, fine; if it succeeds, the cloud makes room for it. Thus Google can redefine its goals almost on a whim. Its official strategy recently became "search, ads, and apps"--the addition being the apps (ie, software applications). Sure enough, after a string of acquisitions, Google now offers a complete alternative to Microsoft's entrenched Office suite of programs, all accessible through any web browser. A new technology, called Google Gears, will make these applications usable even when there is no internet connection. And Google is hawking these applications not only to consumers but also to companies. Ultimately it does so because, thanks to its supercomputer, it can.

With Google's cashflow and infrastructure, the freedom to do anything it fancies gives rise to constant rumours. Often, these are outrageous. It used to be conventional wisdom that Google would build cheap personal computers for poor countries. This turned out to be nonsense, because Google does not want to make hardware. Now there is talk of a "Gphone" handset. This is also unlikely because Google is more interested in software and services, and does not want to alienate allies in the handset industry--including Apple, which shares board directors with Google and uses Google software on its iPhone.

Sometimes the rumours are both outrageous and true. Google is experimenting with new ways of bringing broadband connections to consumers, by blanketing parts of Silicon Valley with Wi-Fi networks. It is planning to enter an auction for valuable radio spectrum in America, and thinking of radically new business models to make money from wireless data and voice networks, perhaps a free service supported by ads. If it goes wrong, how?

Beyond its attempts to expand into new markets, the big question is how Google will respond if its stunning success is interrupted. "It's axiomatic that companies eventually have crises," says Mr Schmidt. And history suggests that "tech companies that are dominant have trouble from within, not from competitors." In Google's case, he says, "I worry about the scaling of the company." Google has been hiring "Nooglers" (new Googlers) at a breathtaking rate. In June 2004 it had 2,292 staff; this June the number had reached 13,786.

Its ability to get all these people has been a competitive weapon, since Google can afford to hire talent pre-emptively, making it unavailable to Microsoft and Yahoo!. Google tends to win talent wars because its brand is sexier and its perks are fantastically lavish. Googlers commute on discreet shuttle buses (equipped with wireless broadband and running on biodiesel, naturally) to and from the head office, or "Googleplex", which is a photogenic playground of lava lamps, volleyball courts, swimming pools, free and good restaurants, massage rooms and so forth.

Yet for some on the inside, it can look different. One former executive, now suing Google over her treatment, says that the firm's personnel department is "collapsing" and that "absolute chaos" reigns. When she was hired, nobody knew when or where she was supposed to work, and the balloons that all Nooglers get delivered to their desks ended up God knows where. She started receiving detailed e-mails "enforcing" Google's outward informality by reminding her that high heels and jewelry were inappropriate. Before the corporate ski trip, it was explained that "if you wear fur, they will kill you."

Google is a paradise only for some, she argues. Employees who predate the IPO resemble aristocracy. Engineers get the most kudos, people with other functions decidedly less so. Bright kids just out of college tend to love it, because the Googleplex in effect replaces their university campus--with a dating scene, a laundry service and no reason to leave at weekends. Older Googlers with families tend to like it less, because "everybody, even young mums, works seven days a week."

Another Xoogler, who held a senior position, says that by trying to create a "Utopia" of untrammelled creativity, Google ended up with "dystopia". As is its wont, Google has composed a rigorous algorithmic approach to hiring, based on grade-point averages, college rankings and endless logic puzzles on whiteboards. This "genetic engineering of their workforce," he says, means that "everybody there is a rocket scientist, so everybody is also insecure" and the back-stabbing and politics are reminiscent of an average university's English department.

Then there is the question of what all these people are supposed to do. "We kind of like the chaos," says Laszlo Bock, the personnel boss. "Creativity comes out of people bumping into each other and not knowing where to go." The most famous expression of this is the "20% time". In theory, all Googlers, down to receptionists, can spend one-fifth of their time exploring any new idea. Good stuff has indeed come out of this, including Google News, Gmail, and even those commuter shuttles and their Wi-Fi systems. But it is not clear that the company as a whole is more innovative as a result, as it claims. It still has only one proven revenue source and most big innovations, such as YouTube, Google Earth and the productivity applications, have come through acquisitions.

In practice, the 20% time works out to be 120% time, says another Xoogler, "since nobody really gets around to those projects for all their other work." The chances of ideas being executed, he adds, "are basically zero." What happens to the many Googlers whose ideas are rejected? Once their share options are fully vested they consider leaving. The same phenomenon changed Microsoft in the 1980s, when allegedly T-shirts popped up saying FYIFV ("Fuck you, I'm fully vested"). Already some are going to even "cooler" start-ups, such as Facebook or Twitter.

This week George Reyes, Google's finance chief, said he would retire. At 53, he is a multi-millionaire. Mr Reyes has maintained the company's policy of not providing guidance to Wall Street on future earnings, although his comments on growth prospects have moved its share price.

The interesint talks

Tucked away inside a 26th-floor suite of a Disney World-area luxury resort, five employees of Boomdash LLC had gathered on a balmy April evening, full of energy and anticipation for what the next day would bring.

Months of strategizing, software programming and market research would culminate in a nearly two-hour presentation and product demonstration to a room full of Boomdash's potential customers.

"It's extraordinary that things have panned out," said a calm and confident Cesar Nerys, Boomdash's founder and chief executive, as he surveyed the enormous suite.

To ward off competitors, the Ann Arbor-based company had kept a low profile, tightly guarding its plans. But now the wraps were about to come off.

The setting -- the annual convention for about 100 independent telephone directory publishers -- was ideal. Boomdash is an Internet search engine and mobile advertising company for local businesses. It plans to work with telephone directory publishers, helping them sell Internet marketing services to their thousands of customers around the country.

The company entered the convention with one customer already on board, Sunshine Pages of Metairie, La. But now it must convince other publishers that they need Boomdash's services, too.

Many small businesses encounter difficulties getting their first few customers, particularly ones like Boomdash that require customers to sign a contract. To make things even more challenging, Boomdash isn't offering major discounts to win business like some new companies do. It wants to show potential investors that it can attract paying customers.

Like other entrepreneurs, Boomdash's three partners -- Nerys, Doug Neal and Jack Horner -- have made a significant investment in their company. Experienced businessmen, they spent a total of about $30,000 of their own money on Boomdash's launch.

Would the publishers see the value of Boomdash's services? Would they be willing to do business with a start-up company? Would Nerys and his team leave the convention in despair or excitement?

The next day arrives all too quickly.

8:30 a.m.: Boomdash's Web site, www.boomdash.com, goes live for the first time. The company issues its first news releases.

10 a.m.: Using a 72-inch flat panel television in the suite, Nerys and Neal, Boomdash's chief operating officer, rehearse the presentation they will make this afternoon.

"The only time I'm nervous is when I'm not prepared," Neal says. "I think I feel pretty good."

Horner, the company's chief technical officer, discovers that a computer bug has infected part of Boomdash's software programs. But no need for panic. The problem can be easily fixed.

Suddenly, the men drop what they are doing, startled by the arrival of an unexpected visitor. A big turkey vulture perches on one of the balcony chairs, peering in the window.

"I think he's saying the competition doesn't stand a chance," Nerys jokes.

2 p.m.: Inside one of the hotel's medium-size meeting rooms, Neal and Horner check the audiovisual equipment and inspect the room's lighting and acoustics. They realize they need to add two more wireless connections for their laptops.

Boomdash's signs adorn the room, with dozens of goodie bags for attendees in one corner and snacks in another. Kim Corcoran, a meeting planner Boomdash hired, has placed a company brochure and news releases on the tables in front of every chair.

Twenty minutes before the presentation, Nerys, Neal and Horner go outside, huddling together to offer some last words of encouragement.

"It's just very exciting to be in this particular moment," says Nerys, a former AT&T executive.

4:16 p.m.: Neal asks everyone to take a seat, and the presentation begins in front of 29 people. Boomdash had mailed 100 invitations, and 35 publishers said they would attend.

Though the publishers face intense competition from Internet companies, the only thing most of them have done is put copies of their print directories online. But using Boomdash's services, publishers can offer their advertisers so-called Web landing pages with interactive features, such as cell phone coupons and a "call us now" button.

Boomdash's technology places these ads on prominent search engines such as Google and analyzes the results, constantly updating keywords to make the ads more effective. Most small businesses lack the time and knowledge to handle Internet ad campaigns by themselves, much less make sure the ads are working.

"This is not a defensive play folks," Nerys tells the publishers. "It's an offensive play. Take your territory back from your poachers."

During the product demonstration, Neal adds a moment of fun by giving everyone instructions on how to receive a cell phone coupon for the hotel's cafe.

Much to the relief of the Boomdash team, several publishers ask questions at the end of the presentation. Then the company holds a drawing, giving away an iPhone, iPod Classic and an iPod Nano. In Boomdash style, cell phone text messages alert the winners.

"When you come with us, we are not going to love you and leave you," Nerys tells his audience. "We look forward to engaging with each and every one of you."

Later, after the attendees have left, Nerys says happily, "Confidence was what I was trying to project. I was in a groove. I was in my zone."

6:20 p.m.: Two potential customers sign up for appointments.

6:48 p.m.: The Boomdash team enters the convention hall for a welcome reception. The company paid thousands of dollars to host the event, which features appetizers like crab cakes and meatballs. With wine and beer in hand, the team mingles with publishers.

9:02 p.m.: After a long day, the Boomdash team heads back to its suite, tired but pleased. "I just want to sit down," Neal says in the elevator.

The Boomdash signs and goodie bags now decorate the suite. Minutes later, a publisher from Michigan and some employees at Sunshine Pages, Boomdash's first customer, arrive for snacks, drinks and socializing.

9:20 p.m.: Nerys pulls out one of the bottles of champagne and toasts Sunshine Pages.

Midnight: An exhausted but hopeful Boomdash team turns in for the night.

Meeting with publishers

After a slow start the next morning, Boomdash gains momentum in the afternoon, meeting with seven publishers. Five others have set up appointments for the next day.

The publishers ask intelligent questions. Some give Boomdash new ideas. One wants a bigger share of the company's revenue.

"This has been a heck of a day," Nerys says in the early evening, breaking open another bottle of champagne. "I know we are going to be able to help these businesses."

The team gathers in the suite for a toast.

"Fabulous day!" Nerys says while the others cheer.

Google's founders discuss Yahoo advertising deal

Google's founders said they are looking forward to working closely with Yahoo in the wake of the abrupt withdrawal of Microsoft's bid for the Sunnyvale Internet company.

"We were a big partner of Yahoo a few years ago," co-founder Sergey Brin said. "It's great to be working with them again."

Brin made his remarks at a press roundtable shortly before Google's annual shareholders meeting this afternoon. Google and Yahoo are considering a deal in which Yahoo would display Google ads on its popular Web properties and share revenue from those ads with Google.

The two companies recently completed a trial run of the arrangement.

"We have had a brilliant test which was two weeks long," said Chief Executive Eric Schmidt.

Microsoft Chief Executive Steve Ballmer cited the test in his May 3 letter as one of his reasons for terminating negotations with Yahoo's board.

"We regard with particular concern your apparent planning to respond to a 'hostile' bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us," he wrote.

When asked whether the test with Yahoo was intended to scuttle Microsoft's bid, Brin said: "We really believe in companies having choices in their destiny. They were under hostile attack and we wanted to make sure they had as

many options as possible."

While antitrust experts believe government regulators would take a close look at a full-fledged deal between Google and Yahoo, Schmidt said any arrangement would be structured to address antitrust concerns.

YouTube's Buried Treasure

Making the most of its riches will take a lot longer than Google expected

In mid-April I spent some time at Google and YouTube. Even this far into Google's remarkable run, there's nothing quite like a sunny spring day at the Googleplex to make a print media guy's shoulders slump; to make that guy feel like a third-term Democratic senator running for reelection in the fall of 1980, just as the implications of the phrase "The Reagan Revolution" were becoming brutally clear. That's not to say everything's golden at Google, which last year took in $16.6 billion in revenue. Its great ad successes--AdSense, which places text ads across several hundred thousand partner sites, and AdWords, which displays text ads beside search results--are both simple, easily automated, and can scale to just about infinity. (Practically anyone can afford such ads and create them with a few snippets of text; you can sell truckloads without a sales force.)

Video ads on YouTube, though, do not yet lend themselves to easy automation. They're also more expensive and still primarily the province of big-name advertisers. Selling to them nearly always requires the participation of an ad agency and calls for more labor-intensive sales methods. There are high-level concerns inside Google that the excitement around YouTube--which continues to increase its share of the Web video universe--isn't readily translating into sales and ad dollars.

"It takes longer to bring in a YouTube dollar than it does to bring in a search dollar," concedes Tim Armstrong, Google's top U.S. ad-sales executive. "Can you make [that process] more efficient? We think "yes.'" He adds: "If you talked to me" about this in early '08, "I'd have been more anxious. But we're making nice progress."

Others wonder. The most successful ad format for Web video sites has been display ads that run near video clips, says Dave Morgan, founder of ad network Tacoda, which placed ads on YouTube before the Google deal. "No one is able to sell [these] display ads well in an automated way," he says. "It requires a human sales force."

Of course, Google and YouTube have a massive human sales force. And, like all big online players, Google has invested serious time and dollars (the $3.1 billion DoubleClick deal, for instance) in beefing up its display-ad capabilities.

YouTubers point out that most of their key ad formats--including the "overlay" format, which places an ad over a small portion of a video without interrupting it--have been available only since August. And, in a corollary to the saying at Google that warns "don't bet against the Internet," I wouldn't bet against Google. But it will take time, and perhaps more than the company first reckoned. (A JPMorgan Chase analyst estimated recently that YouTube will gross around $100 million this year, with the vast majority coming from display ads.)

There is a delicate dance between users' expectations and advertisers' desires for a site as naturally woolly as YouTube. Its tens of millions of users expect a degree of graininess, a lo-fi feel to what they see there. (Interestingly, internal research suggests that ultra-glossy ads on its front page tend to get tuned out.) And the site's free-form format, wherein user-generated videos ranging from the innocuous to the stomach-turning still mingle with copyrighted content, makes many uneasy. "Clients are concerned about adjacency to inappropriate content," says Mohan Renganathan, a vice-president at media buyer MediaVest. YouTube "is a haven for things that are not appropriate" for top brands.

There are also factors within the greater media ecosystem at play. At ad agencies, Web video ads can be subject to tug-of-wars and turf battles between TV buyers and digital buyers. An additional perversity of putting video ads on the Web: It can require agencies to take their most prized assets--the cinematic 30-second TV spot--and recut them for shorter attention spans, if not outright start over from scratch.

There are ways around these issues. YouTube is holding contests in which users upload videos to a sponsor's page and thus, ideally, generate heat and page views for ad messages. (Among others, Toyota has sponsored multiple comedy-related YouTube contests.)

There's nothing wrong with this idea, and others for "safe" advertiser sites within YouTube. But they're not a new notion that will set the world ablaze, and some ad execs sound lukewarm. "On balance, I haven't been impressed" with YouTube, shrugs one digital media buyer. "Because what they're offering is basically another venue for a micro-site"--Web pages within a larger site--"on steroids." (Such micro-sites can be had with a minimum YouTube ad buy of around $200,000.) From what I saw at YouTube, the most interesting new ad format uses an algorithm to select videos from known YouTube contributors--be they cable networks or homegrown stars--to surround an ad on a dedicated advertiser page. This capitalizes on both YouTube's vast programming archive and Google's technical underpinnings.

I'm still not convinced that this can scale to Google-esque proportions, since these still can't be automated as simply and elegantly as AdWords and AdSense. All the video, all the users, and all the data YouTube can claim as the Web's biggest video depository means there's an awful lot of treasure buried there. I'm just not sure how fast Google--or anyone, for that matter--can surface it.

Failed bid for Yahoo gives win to Google

Google Inc. is the big winner after Microsoft Corp. walked out on its bid for slumping Yahoo Inc. this weekend, analysts are saying.

The Internet search and advertising leader is no longer facing a merger of its two biggest competitors, with Yahoo shares expected to plummet today and software giant Microsoft left with an unprofitable online division.

"I think it's hard to analyze the situation and not see Google as a winner, no matter what happened," said Doc Searls, a technology writer and fellow with the Berkman Center for Internet and Society at Harvard University.

A Yahoo/Microsoft deal would have taken Google's top search competitor "out of the market" and started a long integration process, he said. Disgruntled employees would be likely to leave the combined company.

Without the deal, "You basically have a hobbled Yahoo," Mr. Searls said Saturday on the Gillmor Gang, a conference call of technology writers and analysts.

Redmond, Wash.-based Microsoft pulled the plug Saturday on its plans to acquire Sunnyvale, Calif.-based Yahoo after upping its initial offer by $5 billion to $47.5 billion, or $33 per share, according to a letter from Microsoft Chief Executive Officer Steven A. Ballmer to Yahoo CEO Jerry Yang. The Yahoo board had insisted on at least $37 per share, or about $53 billion, the letter said.

Yahoo shares were trading at $19.18 when Microsoft first made its offer three months ago. On Friday, shares closed at $28.67 on the Nasdaq.

Mr. Ballmer cited Yahoo's recent test of Google's search-based advertising technology - suggesting a future partnership - as a reason for forgoing a hostile takeover. He noted that Yahoo might take steps to make itself less attractive in the meantime.

"In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us," Mr. Ballmer said.

Mountain View, Calif.-based Google was used for 67 percent of U.S. Internet searches in March, according to online traffic-tracking firm Hitwise. Yahoo received 20 percent compared with Microsoft's MSN service at nearly 7 percent.

Google also leads U.S. online advertising with a 24 percent market share at the close of 2007, according to market research firm IDC. Together, Microsoft and Yahoo would have represented a 17 percent slice of that market.

Outsourcing some search advertising to Google could be one of Yahoo's best options, analysts say. Some have speculated that the company might acquire Time Warner Inc.'s AOL. Others say Yahoo might be acquired by another firm.

"Nobody expects it to remain an independent entity," Mr. Searls said.

Microsoft recognizes the explosive growth in Internet advertising as opposed to software, said CNET Editor in Chief Dan Farber.

"This search-advertising thing is like printing money," Mr. Farber told the Gillmor Gang. "And I think that's what Microsoft recognizes; there's a transition going on and they were dominant in the old world, and in the new world they absolutely recognize that things are changing. It's about selling ads, it's about subscriptions, it's about social networking."

Microsoft could come back to the table and make another bid if Yahoo fails to rebound.

U tube and ...

Internet search firm Google Inc launched an India-specific version of its free video hosting site YouTube on Wednesday, aiming to be a traffic generator for everyone from media companies seeking new markets to small-time music bands seeking global glory.

Like its other offerings, the localised site (http://www.youtube.co.in) will differentiate content using its search technologies to throw up content relevant to India, which is the 20th in the series of country-specific YouTube sites that Google has launched. The global YouTube site already has 5 million Indian users.

It is not clear yet how YouTube will make money from its site which has established itself as the leading global hub for amateur videos.

For the moment it is experimenting with revenue-sharing with established media companies like Rajshri Films and UTV on a trial basis, while also carrying out in-house experiments on unobtrusive overlay advertisements on the videos. Revenue sharing is not available now for amateurs.

The challenge for Google is to evolve a mechanism to perfect revenue-sharing and payments, like it has done for its search-based ads and content for its Blogger.com site.

"Once we get to a point where we are comfortable, we'll get there in a heartbeat," Sakina Arsiwala, YouTube's Mumbai-bred International Manager, told Hindustan Times in an interview.

YouTube, which is a company acquired by Google, is building volumes, while Google's own video site (http://video.google.com) is focused on video search, Arsiwala said.

To help protect the copyrights of established media players and at the same time track users in a manner that could generate advertisement-friendly data, Google has developed audio and video "fingerprinting" technologies that can catch intellectual property thieves.

YouTube is for video streaming, not downloads, and has not evolved digital rights management (DRM) technologies that could help content generators make money by selling their videos through YouTube.

Google and microsoft and yahoo )) thats fun!

Google executives convened an emergency meeting last night to discuss the implications of a possible revived deal between Yahoo! and Microsoft.

The pair are understood to be negotiating a deal concerning the control of advertisements that are displayed next to internet search results, a market that is dominated by Google. The joint venture could be sealed in the next few days.

Speaking at the Google Zeitgeist conference in Hertfordshire, hosted by the internet company's founders Larry Page and Sergey Brin, Eric Schmidt, the chief executive, said: "After this press conference the three of us will meet and decide what our response is."

The three companies are fighting over online advertising, which is thought to be worth about $40 billion a year and is expected to double by 2010.

Over the past few days, Microsoft contacted Yahoo! about acquiring part of the internet company, but said that it had not ruled out a full takeover for the whole group. It is thought that Microsoft also wants to take a minority, passive stake in Yahoo!.

The renewed talks were triggered by Carl Icahn, the billionaire activist shareholder, who last week threatened to try to dismisss ten of Yahoo!'s directors and replace them with his own nominated executives. Mr Icahn is trying to use his 4 per cent shareholding in Yahoo! to force it to reopen talks with Microsoft.

At the end of January, Microsoft approached Yahoo! with a hostile takeover approach valuing the group at more than $40 billion. Two weeks ago, it raised its offer to $47.5billion. Both were rejected by Yahoo! as too low.

Mr Brin said yesterday that he would give Jerry Yang, the chief executive of Yahoo!, refuge within Google if investors were to push him out. Mr Schmidt and Google's co-founders added that they believed that Google was recession resilient, saying that search advertising was attractive to advertisers. Mr Brin added that Google had not yet ruled out a tie-up with Yahoo! Google recently ran a small trial of its technology on Yahoo!'s site in the US which was widely seen as offering Mr Yang a way to escape a Microsoft takeover.

Yahoo! failed to return calls yesterday and Microsoft could not be reached. Mr Icahn failed to return calls.

Microsoft seeking for Yahoo

Microsoft said Sunday it has restarted its pursuit of Yahoo, a move likely to set off yet another round of high-profile negotiations and speculation, but this time with a real deadline facing Yahoo directors.

Two weeks after dropping its offer of up to $47.5 billion for the Internet giant in a deal Yahoo's board never warmed to, Microsoft now proposes an unspecified transaction short of a full-blown buyout. Unconfirmed reports say the deal may involve the search business.

The company first began its pursuit of Yahoo in February as a way to quickly narrow the gap with Google in the business of Internet search and online advertising.

While Microsoft said it had moved on from its Yahoo bid, billionaire financier Carl Icahn's actions last week again shifted the playing field. Icahn bought 4.4 percent of Yahoo and announced a slate of candidates to replace board of directors at the company's July 3 stockholder meeting.

In light of those developments, Microsoft said in a statement, the company "is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business.

"Microsoft is considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo."

Microsoft gave no additional details on the nature of the transaction.

Reports citing unnamed sources at Microsoft and Yahoo suggest the transaction could involve the purchase of Yahoo's Internet search business.

In a statement later, Yahoo said it wasn't interested in selling the entire company but was open to any transactions in the best interests of its investors.

People familiar with the matter told The Wall Street Journal the plan would show ads sold by Microsoft that would appear alongside Web search results delivered to Yahoo users.

Yahoo has been exploring the outsourcing of its U.S. search advertising to Google, an arrangement that raised antitrust concerns and was one of the key factors cited by Microsoft Chief Executive Steve Ballmer when he withdrew his offer earlier this month.

Google has continued to widen its already huge lead over both Yahoo and Microsoft in U.S. Internet search. In March, Google had 59.8 percent of the market, according to comScore. Combined, Yahoo and Microsoft would have 31 percent, though both companies' shares are declining.

Google has an even more dominant share in some other markets, such as Europe, where more than 79 percent of March searches were performed using Google. Yahoo and Microsoft had less than 4 percent, combined.

Internet search is important because the majority of online advertising revenue comes through targeted text ads sold next to search results.

Microsoft previously raised the idea of a partnership or purchase focused only on Yahoo's search business. Former Yahoo CEO Terry Semel confirmed two years ago that Microsoft had proposed buying a stake in Yahoo's search operation.

At the time, Semel was widely quoted as saying, "I will not sell a piece of search. It is like selling your right arm while keeping your left. It does not make any sense."

One analyst said things have changed. "It actually could be a clever move," said Jeffrey Lindsay, an analyst at Sanford C. Bernstein. "It could be a face-saving way out for both sides."

Microsoft's move to restart a deal comes as little surprise to observers who saw Ballmer's withdrawal of the bid as a negotiating tactic.

Yahoo's shares did not tumble precipitously in the days and weeks after Microsoft withdrew its bid, indicating the market expected Microsoft to return to the table.

Yahoo shares closed Friday at $27.66, down only 3.5 percent from their level on the day before Microsoft yanked its bid.

Icahn, in a letter to Yahoo Chairman Roy Bostock, said he would not need to continue his effort to replace Yahoo's board with one amenable to a Microsoft takeover if Yahoo moved "expeditiously to negotiate a merger with Microsoft."

While Microsoft said Sunday it is not currently looking to acquire Yahoo outright, the company "reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo or discussions with shareholders of Yahoo or Microsoft or with other third parties."

They are still fighting

SOFTWARE giant Microsoft has proposed a new deal to internet search engine Yahoo, which earlier this month drove away its $47.5 billion (£24.27 billion) takeover offer.

While it has not ruled out another tilt at full acquisition, Microsoft said the new deal did not involve buying all of Yahoo "at this time".

The proposal being discussed is understood to involve Yahoo carrying search advertisements from Microsoft.

That could scupper talks between Yahoo and arch-rival Google for a similar partnership, which began as Yahoo chief Jerry Yang sought to fend off Microsoft. Details of those talks are sketchy but they are thought to be aimed at boosting each other's share of the $41 billion web search and advertising market

Billionaire investor Carl Icahn last week pressured Yahoo to revive talks with Microsoft, threatening an assault on the company's board to force its hand.

AHA and Yahoo

A Vancouver marketing and communications firm has started work on what could grow into a major contract with Yahoo Inc.

"We're working with Yahoo on internal communications through a time of change and some confusion," said Betsy Henning, who along with Brenda Alling owns Alling Henning Associates Inc.

The Sunnyvale, Calif., Internet search company is facing rumors about talks with Google, an unsolicited takeover bid from Microsoft Corp., and intense scrutiny from shareholders.

"We're helping the management team communicate effectively with employees about what is going on, and also helping address employees' fear and anxiety," Henning said. "We're trying to keep people's energy, attention and focus on creating value at the company and getting their work done. It will go beyond written materials and be more like a campaign. We use e-mail, newsletters, printed pieces, posters and events."

Refining project

Alling Henning Associates Inc., which goes by AHA!, met with Yahoo about a week ago, Henning said, and has so far helped to edit speeches and communications to employees.

The full scope of AHA!'s work with Yahoo has not yet been determined, she said. "We are putting together proposals for the bigger campaign, and we'll be meeting with them over the next couple of weeks to refine a plan."

AHA!, headquartered at 415 W. Sixth St., will not reveal the financial details of the arrangement. The firm employs about 35 people.

Microsoft and on line shops

Attention shoppers: There may be bargains available at Microsoft 's search engine.

In an attempt to undercut Google 's standing as the most popular guide to the Web, Microsoft announced yesterday that it was offering cash incentives for people who use the company's often-overlooked search engine.

Live Search Cashback offers discounts to consumers who do their Internet shopping using the Microsoft engine. Typing "video cameras" into Live Search and then selecting a model, for example, a user can see merchants offering discounts from 2 to 9 percent.

In a speech announcing the rebates, Microsoft Chairman Bill Gates predicted that the program would attract more consumers to Microsoft's search engine and potentially change the economics of Internet search.

"I think years from now you may look back and say, "Wow, search started to get a fair bit more competitive,' " he said.

Microsoft is engaged in an epic struggle to catch up to Google, a relative upstart that has gained a preeminent role in Internet services.

The source of Google's fortune is its search engine, which earns money by placing ads around the search results. Of the $20 billion spent on Internet advertising last year, about 40 percent was spent on advertisements accompanying search results. Google has garnered the lion's share of that money, and its mastery of the field has powered its rapid ascent. As a result, Google essentially operates as an Internet guide for most users.

Microsoft's competing search engine, known as Live Search, lags far behind the market shares of Google and even Yahoo .

The rebate plan is a reflection of the company's desire to reinvigorate it, but analysts were split on whether the program could provide Live Search with a significant boost.

"It's definitely unique at the moment, and it will definitely cause people to take another look at Microsoft," said Danny Sullivan, editor in chief of SearchEngineLand.com, an industry publication. "But I don't think there's any guarantee that this is a game changer."

He added that the process to enroll for rebates was "awkward and confusing."

The software maker has offered similar incentives for people to use its search engine but not on the scale revealed yesterday. For example, Microsoft offered large companies software and services credits for every employee who used Live Search in the workplace.

But other analysts said the incentive could lead flocks of consumers to Live Search for the bargains.

"Retail history has shown that consumers react favorably to coupons, rebates and sales," according to a report from IDC analysts Rachel Happe and Susan Feldman. "Our bet is that the next time you look for a product online you'll check out Live.com to see if you can get it for less on Live."

The IDC analysts also said that Microsoft's move portended "a reduction in margins for search advertising."

The program is part of Microsoft's plan to "innovate and disrupt" in the search industry, according to a memo Sunday from Microsoft executive Kevin Johnson , and, indeed, if elements of the cash-back plan are adopted more widely in the industry, it would change the Internet advertising business in fundamental ways.

The company's cash-back program includes more than 10 million products from more than 700 merchants, Microsoft said. Microsoft also announced a service to make it easier for searchers to find the best travel deals on the Web.

While most search advertisers pay each time a user clicks on their ad, participating merchants will pay Microsoft a fee each time a customer completes a sale through Live Search Cashback. The fee will be a percentage of the retail price, and when the purchase is complete, Microsoft will return the fee to the consumer in the form of a cash rebate, the company said. The rebates to the customer, in effect, come from the advertisers.

"Our goal is to make Live Search the most rewarding commercial search destination on the Web," Gates said

Brin says that! They are grown ups now

IT'S official: the guys who founded Google have grown up.

That was the pronouncement from Google chief executive Eric Schmidt, hired in 2001 to provide mature, traditional business savvy to the internet-search company founded by whiz kids Larry Page and Sergey Brin.

``The boys have grown up,'' Schmidt told a news conference before the company's annual meeting.

Now billionaires, the two who formed the company, which has the motto Don't Be Evil, were seen as ``brilliant young founders'', Schmidt said.

``They now function in the company as the senior executives with the kind of skills and experience we wish he had five years ago.''

Page, 35, and Brin, born in the Soviet Union 34 years ago, made history in their 20s when they set up the Google search engine.

``Now we don't have to have the same kind of arguments,'' said Schmidt, who at 53 qualifies as an old man by the standards of the youthful Google campus. ``In fact, they really are running the companies that they founded at the scale and with the insights that you would expect of people who are no longer young founders but are mature business leaders.''

Brin and Page ranked at 32 and 33 on Forbes' 2008 list of billionaires, with more than $US18 billion ($19.08 billion) each, but they downplayed the effects of overwhelming wealth.

``I don't think at a certain scale it matters, but I do have a pretty good toy budget now,'' Brin said when asked about how vast wealth had changed his life. ``I just got a new monitor.'' Page mentioned an even more modest benefit: ``I don't have to do laundry.''

Both Page and Brin got married over the past year but closely guard their personal lives. At the news conference, both said their work lives had certainly changed. ``One thing is that we have 10 or 20,000 people to help us,'' Brin said.

Microsoft VS Yahoo

Microsoft on Sunday afternoon said it has restarted its pursuit of Yahoo. The company issued a statement:

"In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business. Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo! Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties."

Microsoft dropped its offer for Yahoo on May 3 after offering up to $47.5 billion to acquire the Internet giant in a deal that Yahoo's board of directors never warmed to. The company first began its pursuit of Yahoo in February as a way to quickly catch up with Google in the business of Internet search and online advertising.

Last week, billionaire financier Carl Ichan disclosed that he had purchased 59 million shares and options of Yahoo, taking about a 4.4 percent stake in the company, and forwarded a slate of candidates to replace the current board of directors at the company's July 3 stockholder meeting.

"It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis," Ichan wrote in a letter to Yahoo Chairman Roy Bostock.

Microsoft provided no additional details on the nature of its new alternative transaction. Yahoo has been exploring the outsourcing of its U.S. search advertising to Google _ an arrangement that raised antitrust concerns and was one of the key factors cited by Microsoft CEO Steve Ballmer when he withdrew his offer three weeks ago.

Ichan, too, cautioned Yahoo's board against pursuing any "strategic alternatives" that would "impede a future Microsoft merger" without allowing shareholders to weigh in, at the least.

Yahoo's shares did not tumble precipitously in the days and weeks after Microsoft withdrew its bid, indicating the market's expectation that Microsoft would come back to the table. This despite repeated statements from Microsoft that the company had moved on.

Judging from this afternoon's statement, the company clearly has not. While Microsoft highlighted this undefined alternative transaction _ and said it has been proposed to Yahoo _ it also noted that an outright acquisition is still possible "depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties."

Translation: If Ichan successfully replaces Yahoo's board with a slate amenable to an acquisition, Microsoft could still be a buyer.

Microsoft concluded its short message Sunday with this caution: "There of course can be no assurance that any transaction will result from these discussions."

Yahoo had not issued a statement in response at press time.

Early indications are that the alternative transaction could involve the purchase of Yahoo's search business.

Kara Swisher, Wall Street Journal technology columnist, quoted unnamed sources at both companies saying as much.

Google has continued to widen its already huge lead over both Yahoo and Microsoft in U.S. Internet search. In March, Google had 59.8 percent of the market, according to comScore. The company has an even more dominant share in some other markets, such as Europe, where more than 79 percent of March searches were performed using Google. Yahoo and Microsoft had less than 4 percent, combined.

Internet search is important because the majority of online advertising revenue currently comes through advertising sold next to search results.

From GB

The launch of Freeesat adds to the growing popularity of additional services from traditional broadcasters in the UK. iPlayer, the BBC's online video catch up service, has seen its UK Internet traffic more than treble since it was officially launched over Christmas, and the website is now the 35th most visited in the UK. Similarly, searches for ITV's recently re-launched ITV Catch Up service have nearly trebled over the last month.

Freesat appeals to an older demographic than Sky

There were 79% more searches for the term 'freesat' than the term 'sky' during the week ending May 10th. "This is to be expected for a new product that has received a lot of media attention - over a fifth of Internet traffic to Freesat's website came from news and media sites during its launch period," commented Robin Goad, Hitwise's Director of Research. "Last week Sky's homepage still received 250% more internet visits than, but the type of�visitor was�quite different. While Sky's website's core audience is people in cities aged between 25 and 44, Freesat is proving more popular with older, more rural viewers."

Two thirds of visitors to www.sky.com are aged 45 or under, whereas for Freesat the comparable figure is 43%. Freesat appeals to an older audience: 43% of visitors to its website last week were aged 55 and over, compared with just 20% for Sky. Freesat also appeals more to people living in rural areas such as the South West, but is less popular than Sky in larger cities, particularly in London and the North West.


Electronics retailers and manufacturers receive Freesat boost�

The interest in Freesat also helped boost traffic to electronics retailers and manufacturers last week. 35% of people visiting the Freesat website chose to visit a retailer afterwards, while a further 10% went to electronics manufacturers' websites. Argos received the most traffic of any retailer from Freesat, accounting for 16% of all downstream visits from The site that received the second largest amount of traffic from www.freesat.co.uk was Humax the British electronics manufacturer that is producing one of the Freesat set top boxes. Freesat accounted for 44% of Humax's traffic last week, helping increase visit to the site by 467%.

A team sponsor emerges from the Sunshine State

The students in Team Biodiesel reached Christmas break knowing their project had survived a stressful beginning. They were not sure it would survive the year.

Still, in the first week of January, the Marquette seniors began e-mailing each other about ordering chemicals and equipment for the machine they were building. In four months, they'd scaled down the project's size and ambition: from a reactor making biodiesel for the university to a mini-version making fuel for one instructor, their adviser.

The smaller version was the focus of their final proposal.

Almost 1,300 miles away, a 52-year-old businessman sat at his computer in Clearwater, Fla., and typed in a Google search. Biodiesel projects and universities.

Bill Gehrs, president of Florida Biodiesel Inc., once designed satellite and cable television systems. Gehrs now sold fuel systems. He'd

started out running the business from his home, selling biodiesel reactors that he put together in his living room.

His Internet search pulled up the primitive Web site that adviser Mark Polczynski had created for the Marquette students back in October. Gehrs noticed that the project differed from those at other schools. He saw no corporate sponsor listed.

"Hello," he wrote in a one-sentence e-mail, "I am interested in speaking with Dr. Polczynski regarding possibly sponsoring the Biodiesel Micro-Brewery class." Within a few hours the two men were chatting by phone. Polczynski said his students planned to build a reactor. Gehrs suggested a change. He would donate a reactor if the students would build a controller to automate it.

The systems Gehrs sold had to be manually operated. The user turned valves at a few stages in the six-hour process. Although turning valves wasn't hard or time-consuming, Gehrs recognized the value of convenience. "This is a very important step for the company," he said, "and for the industry."

For the students, too. Push-button biodiesel had been their vision, but they'd been sidetracked by paperwork and problems.

Now, a search on the Internet promised to rescue their project.

A few days later, the students sat around a speaker phone listening to the voice of their new partner. Gehrs and the team signed no contract. The students sent the Florida businessman a brief letter outlining the work they would do and what they would need. The arrangement was, in Polczynski's words, "a handshake deal."

And a virtual handshake at that.

Gehrs asked the students where he should ship their new reactor. Jamie Formea and Nick Klosinski were grinning. They would not have to order the machine piece by piece, worrying about cost overruns. They could not believe their luck.

But luck, their adviser believed, had nothing to do with it. This was the power of the Web. The ability to create Web sites has become, Polczynski said, "a core competence" required of all entrepreneurs and innovators.

It was the Web that had led Polczynski to a man who made flutes in County Mayo, Ireland. And after he began working as Webmaster for the flute maker, it was the Web that connected them with a company in Pakistan that now supplies half-built instruments for less than the raw materials once cost.

The Irish flute maker and the firm in Pakistan forged their deal without ever meeting. Just like Polczynski's engineering students and their sponsor in Florida.

When the students and their new partner had finished the conference call, Jamie thought of a question they had yet to resolve.

"Where are we going to put this thing?"


Before the reactor arrived and before the students found a place to put it, Gehrs asked them to investigate a new technology called ultrasonic cavitation. The technique, which involves using high-frequency sound to stir chemicals vigorously, could speed up the biodiesel process tenfold.

Jamie's first reaction was: Wow, something with a cool name like that is probably going to be way too expensive.

Team members priced equipment and soon realized that yes, the technology was out of reach given their $2,000 budget. They moved on.

Their new partner made another suggestion, this time one that would save money. Instead of using expensive valves to operate the reactor, why not use sprinkler valves? The students had their doubts.

Sprinkler valves are made to open and shut when water passes through. But they might gum up when confronted by a viscous liquid such as oil or glycerin.

The customer didn't think so, and it was his money. In one sense it was a relief, one decision the students would not have to make. They would give the sprinkler valves a shot.

"If these do work, he's got a hell of a product here," said Billy Daniels. "Twenty-dollar valves could be pretty sweet."

Or a disaster.


Jamie's life, already busy and complicated, was about to hit overdrive. In addition to the senior project, he was carrying a full course load. He was working two part-time jobs: 15 to 20 hours a week with Marquette's Student Safety Programs and 10 to 15 hours a week at Miller Brewing Co. A few days before Christmas, he'd gotten engaged to his girlfriend, Jess, an undergraduate at the University of Illinois.

Now he was responsible for the most crucial task of the project: writing the computer code that would allow customers to push a button and make biodiesel.

A local company, Rockwell Automation Inc., had donated a programmable logic controller -- essentially a micro-computer. The controller was like a baby. It would have to be told what to do every step of the way. Guiding it would be Jamie's code.

Gehrs sent the students the sequence of steps to make biodiesel, and Jamie began translating those steps into commands. The code he used was called ladder logic. Each line was like a rung on a ladder.

Something as simple as pushing the start button required meticulous instructions. Jamie's code needed to tell the controller: 1) there is a "start" button; 2) when "start" has been pressed, turn the heater on; 3) open the recirculation valve; 4) wait two seconds; 5) start the pump to recirculate the oil.

Why the two-second wait? Each valve was essentially a doorway that had to be opened and closed at just the right time. If the valve hesitated just a fraction of a second when you pressed "start," the controller would not know to stop the pump, and a surge of oil would rush straight into a closed valve.

Jamie's code grew into a tall ladder. By the time he finished, it would have 52 rungs.


In mid-February, boxes arrived at the engineering department. The biodiesel reactor from Florida. Now they needed a place to build it.

Members of the engineering department suggested the basement of a building on N. 17th St. called the Academic Services Facility, formerly the old Children's Hospital. Jamie was given a key.

The team gathered the boxes, loaded them on a dolly and wheeled their project across Wisconsin Ave. and up a driveway that didn't look as if it led to much of anything.

The door had no sign. A dim stairway led to the basement. In a hallway at the foot of the stairs lay a large rat trap smeared with a dark brown substance, and not surprisingly it was the first thing the students saw. Near the trap lay a mound of what appeared to be animal droppings.

Jamie stared down. "Holy . . . "

They proceeded down a short hallway to a door that opened into a vast airplane-hangar of a room ringed overhead by a dark tangle of industrial pipes. "Welding lab," read an ancient sign, and on the floor lay sheets of steel pocked with practice welds. A large, orange robotic arm sat at one end of the room, a horizontal band saw at another.

The place looked like a time capsule from past engineering projects. A spool of wire. Abandoned computer monitors. A chalkboard on which someone had written two columns for planning purposes: "To do" and "To get."

"This is friggin' awesome," Jamie said.

"Gentlemen," Billy said, "I think we've struck gold."

For three hours on a Saturday they swept the floor and cleaned the tables. They brought in tool chests, Mountain Dew, a small television. The air compressor chugged and hissed. Most days, a smell like old fish drifted through the room.

Within a few weeks, the students had named their noisy, sour-smelling workshop.

Aims by Google

NOT satisfied with its estimated two-thirds share of the $600 million-plus annual search and directories advertising market, internet search giant Google is launching an attack on the online display advertising dollar.

And it is not just by trying to get a bigger share of display advertising budgets (the money that advertisers spend on video, pop-ups and banner ads). That is slow going, given 97 or 98 per cent of Google's worldwide revenues are still derived from paid search ads, as opposed to video ads placed on its YouTube website, for example.

Rather, the company is attempting to stimulate growth by trying to persuade entire categories of advertisers that in these uncertain times, a larger share of their online advertising budgets should be devoted to paid search advertising at the cost of display.

For a company whose entire business model is based largely on a faceless internet interface -- the AdWords online auction system advertisers use to bid for the most relevant search keywords -- Google is about to get pretty personal.

It is loading up industry-specific sales teams with research and sending them out to talk to local advertisers, starting with some of the online display industry's cornerstone clients: the big information and technology companies.

According to Yuri Narciss, who heads Google's technology sales team, the biggest Australian IT advertisers are underspending on search.

In fact, Google claims many of them are underspending on all forms of internet advertising -- display, classified and search advertising -- with some devoting just 5 per cent of their total mass media measured advertising budget to online (based on an analysis of Nielsen's AdEx data). The internet (including display, classified and search advertising) generates just over 10 per cent of the $12 billion Australian advertising industry.

``My key objective is that the internet and AdWords become one of their main communication channels,'' says Narciss, who recently arrived in Australia and previously worked for Google in Europe.

``In some of the more progressive (online markets), 30 per cent of advertising budgets are going online and 40 to 50 per cent of that is going to paid search,'' Narciss says.

If it seems counter-intuitive that big IT advertisers are under-spending online, it is. The IT category is one of the biggest categories of advertisers on the internet in Australia.

But Google maintains the vast bulk of small IT companies who spend more than the average are generating a lot of that activity.

Meanwhile, IT is not the only sector to be targeted. A sales team numbering about 40 staff is looking to do the same thing across the travel, retail, automotive and local (or classified) advertising sectors, as well as IT.

It's more competition for publishers such as Ninemsn, Fairfax and News Digital Media, who have rolled out industry-specific websites in areas such as technology specifically to create more display inventory in these categories. It's also more competition for mainstream media such as the television networks.

The argument Google is making to advertisers is persuasive: for the cost of buying one 30-second TV spot, you might be able to own your favourite keyword terms on Google for a month. In a tight market, the question becomes: which one is most likely to boost sales?

It's ironic that the only thing that might cruel this pitch is the relatively underdone state of the local e-commerce market. Once a potential buyer clicks on a Google search ad and goes through to an advertiser's website, they may not be able to perform the key thing paid search advertising promises: the ability to drive sales.

Google 's getting smarter and smarter!

Internet search engines are getting smarter, thanks to a technological race among various leaders in the business such as Google, Microsoft and Yahoo, and smaller firms which are trying to make a name for themselves.

The latest technology update on the search horizon is 'artificial intelligence'--a science used to make intelligent machines using computer programmes.

A search using artificial intelligence would take all words keyed in together to come up with an appropriate answer-- unlike particular keyword-based results thrown up by popular search engines currently available.

Sobha Renaissance IT (SRIT), an arm of Sobha Developers, has developed a search called "Icognue", which works on an artificial intelligence-based algorithm. Yahoo has built a specific search facility on its www.yahoo.in Website, which the company says incorporates elements of artificial intelligence.

Increasing revenues from search engines are driving players in this industry to come up with newer solutions. It is estimated that by 2010, revenues from Internet search would garner as much as Rs 40,000 crore ($10 billion).

"Currently, artificial intelligence is not being used by most Internet search providers," says Syed Yasin, the brain behind Icognue. Industry experts say current search offerings of companies like Google will be history when a technology like Latent Metonymical Analysis and Indexing, an algorithm that uses mathematical techniques for search queries.

"Using artificial intelligence in every search query made by the user would be the future of Internet search," Tapan Bhat, vice president, Yahoo.

Companies are resorting to newer technologies to differentiate and grab market-share from Google, which has cornered over 60 per cent of search-oriented Internet usage globally.

Newer search facilities include knowing the content of a web page as the mouse courses through the result instead of clicking on to the web page. However, they admit there is a long way to go. As Yasin puts it, "We have started gathering and indexing encyclopedia portals on the web for now but we have to increase this to the whole world of the worldwide web to be a force to reckon with."

MICROSOFT steps back

MICROSOFT says it will end its attempt to create an online library of the world's books as part of a strategic revamp in its battle with internet search king Google.

Live Search Books and Live Search Academics projects are being cancelled and the websites will be taken down next week, Microsoft search senior vice-president Satya Nadella say in an online posting.

``This also means we are winding down our digitisation initiatives, including our library scanning and our in-copyright book programs,'' Nadella writes.

``Based on our experience, we foresee that the best way for a search engine to make book content available will be by crawling content repositories created by book publishers and libraries.''

Microsoft launched its online library projects after Google embarked on an ambitious and controversial campaign to make all written works available free online in digital format.

``Microsoft has been chasing Google pretty aggressively and that is just foolish on their behalf,'' Silicon Valley analyst Rob Enderle says.

``Microsoft is understanding that chasing Google is just stupid, and discontinuing efforts that don't make sense for them is smart.''

Analysts say Google's undisputed position as king of online search and advertising frees it to devote riches to building a global online library in keeping with its stated mission of indexing the world's information.

They argue that Microsoft, a distant third in online search, cannot afford to waste online search division resources on a questionably profitable, legally troublesome and labour intensive campaign to digitise books.

Publishers and authors have lashed out at Google for what they see as copyright violations.

``For a while Microsoft was doing everything Google did,'' analyst Matt Rosoff of independent firm Directions on Microsoft says.

``They got into books because Google did. Google has taken flak and Microsoft looked at the minuses and pluses and said is was a business they needed to be in right now.''

Microsoft's abandonment of its online book project comes as it revamps a solo strategy for wresting market share from Google.

Microsoft announced this week that it would reward US Live Search shoppers with cash for purchases, essentially trying to buy the market share it failed to win with its bid to take over Yahoo.

Under the program, shoppers using Microsoft's internet search service will have percentages of purchases refunded.

``Given the evolution of the web and our strategy, we believe the next generation of search is about the development of an underlying, sustainable business model for the search engine, consumer, and content partner,'' Nadella writes.

Microsoft says its strategy includes honing search services in categories such as travel, which have high potential for money-making advertising.

``I hope this means they will be competing more intelligently instead of reacting tactically to Google,'' Enderle says of Microsoft.

Google jumps

Getting people to click on paid advertisements is crucial for Internet search companies and in that department Google just jumped even further ahead of its main competitor, Yahoo.

The number of clicks on Mountain View, Calif.-based Google's Web site increased nearly 20 percent in April compared with a year ago, according to several analysts who Thursday cited data from the research firm comScore.

That was Google's biggest such increase since November, when comScore said its ad-click count rose 27 percent, according to a report by UBS Investment Research.

Clicks on Sunnyvale, Calif.-based Yahoo, which already is far behind Google in ad clicks, fell 4 percent in April.

Google shares rose $14.76, or 2.6 percent, to $583 at the close of trading. Yahoo's stock price fell 9 cents, or 0.3 percent, to close at $27.07.

A Google spokesman said the company doesn't comment on comScore figures, and Yahoo executives did not immediately respond to a request for comment.

Analysts tend to be cautious about comScore data, which they say doesn't track all Internet searches and sometimes can be misleading. Last month, for example, Google reported ad revenue to the federal government that turned out to be much higher than what analysts relying on comScore data had predicted.

Still, comScore generally remains highly regarded. Just two weeks ago, it drew great attention when it found Google had become the nation's most popular Web site by surpassing Yahoo in the number of unique monthly visitors. Some analysts were impressed Thursday by its latest ad-click data.

"It's a much stronger figure than we expected," said Susquehanna Financial Group analyst Marianne Wolk, who owns no Google or Yahoo stock.

Google's ad clicks actually dropped 2.5 percent from March this year. But Wolk discounted the significance of that, because March tends to be unusually busy for advertising. She also noted that Google has been trying in recent months to eliminate less meaningful clicks on ads, such as those that occur when a person accidentally causes an ad to pop up.

Gene Munster, an analyst with Piper Jaffray, who also owns no Google or Yahoo stock, concurred that the April ad-click data bodes well for Google's bottom line.

"The news is good for Google," Munster said. He noted that Google saw a big improvement in its April ad clicks compared with March and February, when the increases were about 3 percent from a year earlier.

"Google continues to be the oxygen of the Internet, people need it and interact with it every day and the company benefits as a result."

About HP

Microsoft Corp.'s Internet search engine will become the default search program on all personal computers sold in the U.S. and Canada by Hewlett-Packard Co., the world's biggest maker of the machines.

The Windows Live Search tool bar will be installed on PCs starting in January, Redmond, Wash.-based Microsoft said in a statement. The software also will direct users to Hewlett-Packard sites, such as photo service Snapfish.

Microsoft's search engine, the third most popular, will replace Yahoo as the default on HP machines.

The agreement is meant to help Microsoft get its sponsored links in front of more users and take market share from Google and Yahoo. Microsoft scrapped a $47.5 billion (U.S.) bid for Yahoo on May 3.

Google handled 61.6 per cent of U.S. search queries in April. Yahoo had 20.4 per cent and Microsoft had 9.1 per cent.

Winning more search users may help Microsoft fuel growth in Web advertising sales, which topped $40 billion last year. Google's dominance in search requests translates directly into higher ad rates.

The deal with HP will deliver a "very high" volume of search queries, a Microsoft executive said.