Just Googling It Is Striking Fear Into Companies

Wal-Mart, the nation's largest retailer, strikes fear into the hearts of its
competitors and suppliers. Makers of goods from diapers to DVD's must cater
to its whims. But there is one company that even Wal-Mart eyes warily these
days: Google, a seven-year-old business in a seemingly distant industry.

"We watch Google very closely at Wal-Mart," said Jim Breyer, a member of
Wal-Mart's board.

In Google, Wal-Mart sees both a technology pioneer and the seed of a threat,
said Mr. Breyer, who is also a partner in a venture capital firm. The worry
is that by making information available everywhere, Google might soon be
able to tell Wal-Mart shoppers if better bargains are available nearby.

Wal-Mart is scarcely alone in its concern. As Google increasingly becomes
the starting point for finding information and buying products and services,
companies that even a year ago did not see themselves as competing with
Google are beginning to view the company with some angst - mixed with

Google's recent moves have stirred concern in industries from book
publishing to telecommunications. Businesses already feeling the Google
effect include advertising, software and the news media. Apart from
retailing, Google's disruptive presence may soon be felt in real estate and
auto sales.

Google, the reigning giant of Web search, could extend its economic reach in
the next few years as more people get high-speed Internet service and
cellphones become full-fledged search tools, according to analysts. And
ever-smarter software, they say, will cull and organize larger and larger
digital storehouses of news, images, real estate listings and traffic
reports, delivering results that are more like the advice of a trusted human

Such advances, predicts Esther Dyson, a technology consultant, will bring "a
huge reduction in inefficiency everywhere." That, in turn, would be an
unsettling force for all sorts of industries and workers. But it would also
reward consumers with lower prices and open up opportunities for new

Google, then, may turn out to have a more far-reaching impact than earlier
Web winners like Amazon and eBay. "Google is the realization of everything
that we thought the Internet was going to be about but really wasn't until
Google," said David B. Yoffie, a professor at Harvard Business School.

Google, to be sure, is but one company at the forefront of the continuing
spread of Internet technology. It has many competitors, and it could
stumble. In the search market alone, Google faces formidable rivals like
Microsoft and Yahoo.

Microsoft, in particular, is pushing hard to catch Google in Internet
search. "This is hyper-competition, make no mistake," said Bill Gates,
Microsoft's chief executive. "The magic moment will come when our search is
demonstrably better than Google's," he said, suggesting that this could
happen in a year or so.

Still, apart from its front-runner status, Google is also remarkable for its
pace of innovation and for how broadly it seems to interpret its mission to
"organize the world's information and make it universally accessible and

The company's current lineup of offerings includes: software for searching
personal computer files; an e-mail service; maps; satellite images; instant
messaging; blogging tools; a service for posting and sharing digital photos;
and specialized searches for news, video, shopping and local information.
Google's most controversial venture, Google Print, is a project to copy and
catalog millions of books; it faces lawsuits by some publishers and authors
who say it violates copyright law.

Google, which tends to keep its plans secret, certainly has the wealth to
fund ambitious ventures. Its revenues are growing by nearly 100 percent a
year, and its profits are rising even faster. Its executives speak of the
company's outlook only in broad strokes, but they suggest all but unlimited
horizons. "We believe that search networks as industries remain in their
nascent stages of growth with great forward potential," Eric Schmidt,
Google's chief executive, told analysts last month.

Among the many projects being developed and debated inside Google is a real
estate service, according to a person who has attended meetings on the
proposal. The concept, the person said, would be to improve the capabilities
of its satellite imaging, maps and local search and combine them with
property listings.

The service, this person said, could make house hunting far more efficient,
requiring potential buyers to visit fewer real estate agents and houses. If
successful, it would be another magnet for the text ads that appear next to
search results, the source of most of Google's revenue.

In telecommunications, the company has made a number of moves that have
grabbed the attention of industry executives. It has been buying fiber-optic
cable capacity in the United States and has invested in a company delivering
high-speed Internet access over power lines. And it is participating in an
experiment to provide free wireless Internet access in San Francisco.

That has led to speculation that the company wants to build a national free
GoogleNet, paid for mostly by advertising. And Google executives seem to
delight in dropping tantalizing, if vague, hints. "We focus on access to the
information as much as the search itself because you need both," Mr. Schmidt
said in an analysts' conference call last month.

Telecommunications executives are skeptical that Google could seriously eat
into their business anytime soon. For one thing, they say, it will be
difficult and expensive to build a national network. Still, they monitor
Google's every move. "Google is certainly a potential competitor," said Bill
Smith, the chief technology officer of BellSouth, the Atlanta-based regional
phone company.

The No. 1 rival to phone companies in the Internet access business, Mr.
Smith noted, is the cable television operators. "But do I discount Google?
Absolutely not," he said. "You'd be a fool to do that these days."

In retailing, Google has no interest in stocking and selling merchandise.
Its potential impact is more subtle, yet still significant. Every store is a
collection of goods, some items more profitable than others. But the
less-profitable items may bring people into stores, where they also buy the
high-margin offerings - one shelf, in effect, subsidizes another.

Search engines, combined with other technologies, have the potential to
drive comparison shopping down to the shelf-by-shelf level. Cellphone
makers, for example, are looking at the concept of a "shopping phone" with a
camera that can read product bar codes. The phone could connect to databases
and search services and, aided by satellite technology, reveal that the
flat-screen TV model in front of you is $200 cheaper at a store five miles

"We see this huge power moving to the edge - to consumers - in this Google
environment," said Lou Steinberg, chief technology officer of Symbol
Technologies, which supplies bar-code scanners to retailers.

Such services could lead to lower prices for consumers, but also relentless
competition that threatens to break up existing businesses.

A newspaper or a magazine can be seen as a media store - a collection of
news, entertainment and advertising delivered in a package. A tool like
Google News allows a reader or an advertiser to pick and choose, breaking up
the package by splitting the articles from the ads. And Google's ads, tucked
to the side of its search-engine results, are often a more efficient sales
generator than print ads.

"Google represents a challenge to newspapers, to be sure," said Gary B.
Pruitt, chief executive of the McClatchy Company, a chain of 12 newspapers
including The Star Tribune in Minneapolis and The News & Observer in
Raleigh, N.C. "Google is attacking the advertising base of newspapers."

At the same time, Google and search technology are becoming crucial to the
health of newspapers as more readers migrate to the Web. As one path to the
future, Mr. Pruitt speaks of his newspapers prospering by tailoring search
for local businesses, but also partnering with search engines to attract

Within industries, the influence of Internet search is often uneven. For
example, search engines are being embraced by car companies, yet they pose a
challenge to car dealers.

George E. Murphy, senior vice president of global marketing for Chrysler,
said Chrysler buys ads on 3,000 keywords a day on the big search sites:
Google, Yahoo, Microsoft's MSN and AOL, whose search is supplied by Google.
If a person types in one of those keywords, the search results are
accompanied by a sponsored link to a Chrysler site.

Chrysler refines its approach based on what search words attract clicks, and
studies its site traffic for clues on converting browsers to buyers. "We've
got Ph.D.'s working on this," Mr. Murphy said. "The great thing about search
is that you can do the math and follow the trail."

After following a link to a Chrysler Web site, a prospective buyer can
configure a model, find a dealer and get a preliminary price. Only dealers
can make final price quotes. Yet with more information on the Web, the
direction of things is clear, in Mr. Murphy's view. "It will fundamentally
change what the dealer does, because telling people about the vehicle won't
add value for the customer anymore," he said. "If dealers don't change,
they'll be dinosaurs."

Mr. Breyer, the Wal-Mart board member, watches Google closely in his job as
managing partner of Accel Partners, a venture capital firm in Silicon
Valley. These days, he advises startups to avoid a "collision course" with
Google, just as he has long counseled fledgling companies to steer clear of
Microsoft's stronghold in desktop software.

Internet search, like personal computing in its heyday, is a disruptive
technology, he said, threatening traditional industries and opening the door
to new ones. "We think there is plenty of opportunity for innovation in the
Google economy," Mr. Breyer said.

You are a subscribed member of the infowarrior list. Visit 
www.infowarrior.org for list information or to unsubscribe. This message 
may be redistributed freely in its entirety. Any and all copyrights 
appearing in list messages are maintained by their respective owners.

Reply via email to