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Google goes to market

Google goes to market

By Alan Sipress

When Google Inc. quietly bought a software shop called Android Inc. a year ago, neither the suitor nor the quarry revealed much about the terms of their attraction.

Google never said how Android, a 22-month-old start-up that described itself solely as a maker of software for mobile phones, would fit into its grand strategy.

Yet Android was typical of the acquisitions made by Google: a modest firm with niche expertise to help the Internet giant build on its core businesses rather than strike into wholly new frontiers.

Most of Google's purchases have been so small as to barely attract notice, and the company has done little to highlight them. But taken as a whole, the company's record of acquisitions offers a few signposts toward its future.

In the two years since it went public, the company has bought at least 15 enterprises, including four start-ups that specialize in mobile software, a clear signal of Google's interest in bringing search and other Web-based services to mobile customers.

During the previous year, Google also picked up and Zipdash Inc., which provided, respectively, a social networking service and traffic information for mobile customers. Google would later buy Reqwireless Inc., which developed software for Web browsing and e-mail on mobile phones. Together, these acquisitions helped move Google closer to achieving the aspiration of company co-founder Larry Page to develop a "smart phone."

"We are bringing more of our products to mobile phone users. Since there are at least twice as many mobile phones than PCs in use globally, and mobile usage is growing faster than PCs, we want to make Google available in a device-independent way," Page said this summer during rare public comments on the subject. He added that the company was developing new ways for marketers to advertise on mobile phones.

Industry analysts say the mobile Web is a natural fit for Google. According to a report prepared last month by Mahaney, less than 1 percent of Google searches are conducted on a phone, but that number will grow significantly as phone and network technologies advance. Safa Rashtchy, senior analyst with Piper Jaffray & Co., predicted that mobile search and related applications would be a substantial part of Google's business within five years.

"They have been somewhat silent on mobile," Rashtchy said. "But it's clear that's a big focus for Google."

The purchase two years ago of Keyhole Corp., a digital mapping and satellite imaging company run by Hanke, was especially intriguing. Google kept quiet about the financial terms but trumpeted its acquisition in a press release, saying that with Keyhole, "you can fly like a superhero from your computer at home to a street corner somewhere else in the world."

"What they got by buying us is a running start in entering that market," he said.

Buying Where2 LLC, another mapping firm, helped lay the groundwork for Google Maps, while @Last Software, a winter acquisition, allowed for three-dimensional design on top of Google's maps and images. These products create new advertising opportunities as the search engine integrates maps and local ads, said Merrill Lynch & Co. analyst Justin Post.


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