Google grows up with major challenges at it turns 10

Business Materials 4 September 2008 05:57 (UTC +04:00)

Ten years ago Google was just a misspelling of an obscure mathematical term that few had ever heard off. But then on September 7 1998 two Stanford University graduates founded a company with the name based on a cool idea of how to make web searches more accurate by analyzing links to websites. ( dpa )

What followed was one of the most meteoric rises in US corporate history, resulting in a hugely profitable company that rakes in 150 billion dollars per year.

But Google faces numerous challenges as it tries to keep growing. The company still relies on search advertising for over 90 per cent of its revenues, and its critics contend that it abuses its dominant position on the web to encroach on users' privacy.

Yet the anniversary comes as Google makes important strides to consolidate its position as the world's dominant technology company by providing users with ever cooler tools. The unveiling this week of Google Chrome, the company's first web browser, highlighted its ambition to move most computing functions from the desktop to the web and thus undercut its great rival Microsoft.

Google watchers had long predicted that the company would produce its own browser. But Eric Schmidt, the seasoned chief executive brought in by Google founders Sergey Brin and Larry Page to provide "adult supervision," consistently delayed the project until he thought the brash young upstart was mature enough to tackle the most important battle of its life.

"When I joined Google in 2001, Larry and Sergey immediately said, 'We should build our own browser,'" Schmidt told Wired Magazine. "And I said no."

It wasn't the right time, Schmidt told them. "I did not believe that the company was strong enough to withstand a browser war," he said.

But with annual revenues of over 20 billion dollars, profits of 5 billion dollars, growth of 35 per cent and a host of applications that run over the internet and need the support of a purpose-built browser, Google's 10th anniversary seems an auspicious time for the launch.

It's far from the only arrow in Google's quiver. The company is also about to see the first cellphone based on its Android software, which Google hopes will extend its dominance from the laptop to the mobile internet, while its YouTube video site is the unchallenged leader in the online video space.

Critics point out that none of these initiatives are assured of success - Google's users may not download the browser, or like the Android phones, while online advertisers are wary of linking their brands to the questionable content of YouTube.

But even if Google never succeeds in successfully developing a single other application - which is doubtful since it employs 16,000 of the brightest people on the planet - its achievements until now will mark it as one of the most revolutionary companies the world has known.

Before Google, using a search engine was a hit and miss affair that usually left users with little option but to scroll through pages of search results to find anything close to the answer they were looking for. With Google, out popped the answer immediately. It was orders of magnitude better than anything that came before it.

Equally important for the development of the internet was Google's concept of selling advertising linked to search and site content. If people were searching for "teddy bears", then teddy bear sellers were likely to pay more money than pharmaceutical companies to get their information in front of those people, Google reasoned. And if you had a blog about teddy bears, wouldn't teddy bear companies like to advertise on your site?

Google's innovation was to create a system that was scalable across the web. It took a page out of the online marketplace eBay and auctioned off search terms to the highest bidder.

It also developed a program called Adsense, which analyzed the content on blogs and websites and sold relevant ads to the highest bidders, who only had to pay if the customer clicked on the ad. These developments powered the explosion of the internet, allowing the creation of millions of new sites and blogs catering to every imaginable niche.

Other innovations included the scanning of millions of books so that their texts are searchable online, the creation of mapping technologies that included street views and navigable birds-eye views stitched together from satellite images - and all supported by relevant ads.

"I see the history of the internet as BG and AG - before Google and after Google," says tech analyst Carmi Levy. "They rewrote how we find stuff online, and reshaped how ads are delivered and paid for. It's a once-in-a generation company."

Levy believes that Microsoft, which was the previous holder of that crown, is doomed by Google's dominance. "The company is awash with cash and is using it to drive innovation, but someday some other company will "outgoogle google," he says.

It's unlikely to happen anytime soon, but who knows? After all just 10 years ago Google was just an obscure mathematical term.