Competing with Google

In varied industries, the search giant is viewed with admiration and fear as a potential threat



Wal-Mart, the nation's largest retailer, strikes fear into the hearts of its competitors and suppliers. Makers of goods as varied as diapers and DVDs 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 a technology pioneer and the seed of a threat, said 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 whether 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 admiration.

Google's recent moves have stirred concern in industries including book publishing and telecommunications. Industries feeling the Google effect include advertising, software and the news media. Apart from in 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 cell phones 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 expert.

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

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 spread of Internet technology. It has many competitors, and it could stumble. In the search market, Google faces formidable rivals like Microsoft and Yahoo.

Microsoft in particular is pushing hard to catch Google in Internet search. "This is hypercompetition, 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.

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 useful."

The company's 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 publishers and authors who say it violates copyright law.

Google, which tends to keep its plans secret, 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.

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 free national 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," Schmidt said in an analysts' conference call last month.

Telecommunications executives are skeptical that Google could seriously eat into their business anytime soon. 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, chief technology officer of BellSouth, the Atlanta-based regional phone company.

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