Google executives said they have no plans to build a browser and downplayed threats from Microsoft's new advertising system and plans to bundle search into the next version of its operating system.
Following complaints from the investment community that Google doesn't offer enough insight into the company's business and strategy, Google executives on Wednesday held a live question-and-answer Webcast with analysts.
Asked if Google would consider developing its own browser, as has been speculated for some time, chief executive Eric Schmidt said, "We would only do so... if we thought there was a real user benefit."
Google makes decisions on what products to develop based on what users want and not on what rival companies are doing, he said. "The industry is obsessed with this browser question. And our observation is you have a number of good browsers now," including Firefox and Apple Computer's Safari.
In response to a question about how Google executives feel about the possibility of losing revenue to advertising customers who may jump ship to Microsoft's new AdCenter, Schmidt predicted that the impact of the competition will be either neutral or positive to Google's business because it will likely encourage even more people to buy ads who aren't already doing so.
"Microsoft entering the market undoubtedly will influence some people to enter the market," he said. "Yahoo and Google will be beneficiaries of more motion."
As far as Microsoft's plan to integrate search into the Vista operating system, of which Google has previously been critical, Schmidt said, "There is a lot of opportunity for Microsoft to change what they're doing based on customer feedback... We want to make sure that the use of the power of Windows is done in a correct and legal way."
Google's partnership with Dell, announced last week, was in no way formed as a response to competition from Microsoft, Schmidt said. Under the deal, millions of Dell PCs will be preloaded with the Google toolbar for Web and PC search, along with a co-branded home page.
"We are ecstatic over the Dell deal," he said. "We did a six-month test because we wanted to test various components of how people would react from an end-user perspective to an integrated offering." Google found that users liked it.
"The thing that distinguishes the Dell deal is its comprehensiveness," Schmidt said. "We obviously would like to do deals like Dell if they test out well."
Asked if the company would consider buying companies rather than just partnering to get more customers and broader distribution of its products, he said no.
"M&A (mergers and acquisitions) as a method to acquire traffic has not historically worked," Schmidt said. "I wouldn't rule that out, but it's unlikely that in and of itself we could just buy customers... It's a bad business strategy, and it's not consistent" with Google's philosophy.
Meanwhile, Google is not planning to create a service that would compete with shopping Web sites by allowing consumers to shop from aggregated merchants for things like iPods, mobile phones and furniture, as analysts speculated, Schmidt said.
A report released Tuesday by Bear Stearns said: "We understand that Google has contacted some testers recently to run a beta on a new programme that allows the testers to shop from 'high quality merchants'... This could be pretty significant, as Google could be using this programme to test for large sellers, a way to dump inventory into Google Base, and potentially create an eBay Express/Amazon-like experience for buyers."
But according to Schmidt, "we have been working to automate the advertiser cycle. The moment the customer wants to purchase something we want to make that as fast as we can" by building a "payment system that would enable that, but not the kind of payment system that would result in what you are describing".
Asked why Google is working with EarthLink to cover San Francisco with wireless Internet connectivity and also offering Wi-Fi in Silicon Valley's Mountain View, Schmidt said that making sure people have access to high-speed connections will increase the company's business.
"From the very beginning at Google we understood that customers who move from narrowband to broadband are heavy users of Google" and are more likely to click on ads and make purchases, he said.
Google wants to serve as a catalyst and model for the industry to spur the spread of broadband deployment, Schmidt said.
"Lesson one is we are going to do it with partners. Lesson two is that the hardware is moving quickly forward," he said. "We do not yet have an answer to the question which is the obvious question of what are the limits to an advertising-supported model."
Asked what the company's biggest success story has been, Jonathan Rosenberg, senior vice president for product management at Google, pointed to the integration of Keyhole technology into Google Earth and the ad-based business the mapping has driven. The disappointment has been Google's "offline print efforts", he said, under which Google is selling ads for use in print publications. "That probably hasn't taken off as fast as we'd like."
Asked about how the company plans to gain market share in China, a market dominated by local search company Baidu.com, Schmidt said, "It's too early to call that question for many months... Things don't occur in a month or two, even in China."
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