Google CEO on Search, Competition and Mobile Market

Google has become all but synonymous with searching on the Web, but this is no time to sit still. Speaking at the Morgan Stanley technology conference Tuesday, CEO Eric Schmidt described today's search market as a very fluid industry, and reiterated his enthusiasm for the opportunities lying ahead in mobile computing.

"It looks like people will move very quickly from one search engine to another," Schmidt said. "A majority of people actually say they use more than one search engine, and of course Microsoft is working very hard to build a competitive search engine," he added, noting the recent leak detailing plans about Microsoft's next steps in the market.

In search, Schmidt sees an ongoing challenge from a determined Microsoft, as well as a host of upstart players looking to augment traditional search with semantic data and other information on the Web.

Microsoft, for its part, has been talking loudly about trying to resurrect a search deal with Yahoo after last year's abortive negotiations. Schmidt said he would welcome the competition, provided Microsoft played fair.

"The problem has to do with Microsoft's ability to use its Windows monopoly to restrict consumer choice," he said. "Anything that Microsoft would do that would eliminate consumer choice with respect to search engines, Internet browsers, distribution — of which it was previously found guilty — are of concern, and there's a history of that."

Schmidt's talk comes amid a gloomy economic climate that he warned could get worse before it gets better, sapping the value of tech firms such as his own, which had long seemed impervious to recessionary pressures. Companies across all industries are tightening their belts and reassessing the business value of new initiatives that might have sailed through in flusher times.

"For the next few quarters, things are going to be very, very tough, so we're talking about 2010" before the economy begins to right itself, Schmidt said. "Everyone's sort of assuming that 2009 is a tough, tough year."

The online ad industry may be better positioned to weather the economic storm than other sectors of the economy, but Schmidt said Google is by no means immune.

"Google management spends most of its time doing business reviews today," he added. "I think the situation is pretty dire. The combination of everything that we have seen does not appear to have a current bottom."

Serving ads along side the search pages users see on their PCs will remain the core of Google's business in the near term, but Schmidt was characteristically optimistic about the future of mobile computing.

He looks for Google's revenue from mobile search to eclipse search on the PC over the next several years — "not decades" — as smartphones become increasingly sophisticated and affordable.

"The fact of the matter is that mobile devices are going to be the majority of the way that people get information," he said. "The argument is relatively simple: You already have them. They're called your phones."

He also took note of the netbook phenomenon, where smaller, lightweight laptops are making significant inroads in the traditional PC business.

"What's particularly interesting about netbooks is the price point," he said "Eventually it will make sense for operators and so forth to subsidize the use of those books so they could make services revenue and advertising revenue on their consumption. That's another new model that's coming."

New Frontiers for Google

In his far-ranging talk, Schmidt touched on several other fronts of Google's business, including the ongoing integration of the businesses of ad giant DoubleClick. Despite the harsh effect the economy has had on display ads, Schmidt cited that as one of Google's most immediate areas of expansion.

But rather than the static banner ads that many people have come to know and ignore, Schmidt looks to video and interactive rich-media ads that would do a better job of engaging a Web user.

To that end, Google continues to work with major advertisers, such as Proctor & Gamble, to help them develop online advertising strategies. Last fall, the two companies swapped employees for several weeks in an attempt to hone P&G's Web strategy and enhance Google's position among the dominant company in the consumer-products sector.

Schmidt said that Google is planning similar exchanges with other companies, but declined to name them as details are not finalized.

The online video arena, where Google has a vast reach with the wildly popular YouTube, has thus far yielded disappointing monetary returns. Schmidt said that monetizing YouTube remains a work in progress, and that Google is pursuing licensing and distribution deals with content producers to make money off things like music videos in a model similar to Apple's iTunes.

He also said that YouTube is planning to roll out more long-format and high-definition video content.

This article by Kenneth Corbin appears courtesy of InternetNews.com.

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