Google throws its hat in the Browser & OS ring with shiny Chrome

Joining a "war" is neither a decision taken easily or for that matter lightly, especially one that historically has seen incumbents muscle and push out thriving rivals, (see Microsoft (MSFT) and Netscape) but Google (GOOG) is not just any company, and it hopes that in the future of web computing Chrome wont just be any browser. And with it perhaps change completely the role of the browser from presenting web pages, to managing web applications in the computers of tomorrow.

Lofty ambitions I know, but this is the same company that has plans to index the entire web, present a photographic view of the entire world, create renewable energy cheaper than coal, and house the complete archive of human information since the start of the written age. Google's getting well compensated for the lucrative advertising network it pioneered in Search and with that comes radically thinking about ways to out-innovate, out-maneuver, and out-class anything offered by main competitors.

Google's newly released "Beta" Chrome web browser is another hat in the ring that contains Microsoft's Internet Explorer (70% market share), Mozilla's Firefox (20% share) and Apple's (AAPL) Safari (6% share). However it has the potential to avoid the also-ran results of other browser efforts and truly usher in an age of web-computing. If this sounds like techno-babble, that's because it is, and Chrome is definitely not any sort of catalyst for Google's ailing stock right now.

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Unfortunately only blowout quarterly reports can do that for this richly valued company. The company is down significantly from all-time highs and Chrome will not get them back there anytime soon. This is an evolutionary step that just might end up being revolutionary when all is said and down.

Google's cash cow of serving up targeted advertising works now because it can collect information on users, their web habits and their searches. The more people who have Google Accounts and the more searches they do, helps Google tailor all those ads. Throw in the popular Google toolbar collecting user information and viola you've got an incredible breadth of information in which to base ad serving decisions on. However, browsers are evolving, not only from a functionality perspective but from a privacy perspective as well. Microsoft's newest browser will incorporate an InPrivate feature which will not store anything users do on the web if they choose to use it. If Google can't know what you've been doing on the web for the last 6 months those ads could start looking less and less attractive and Google will have to only rely on what users search for, assuming of course they use Google for search. Chrome has a similar feature but getting users on the Google experience is priority number 1 for the company.

While the above is a minor detail for browser technology, it is the main driver of Google profitability. The next driver of profitability, Google hopes, will be Web Applications, and their Google Apps suite which is shaping up with constant improvements to become a true Microsoft Office competitor. The difference of course is that Office you install on your own computer, whereas Google Apps, and the online suite of Productivity software, can be accessed from anywhere and collaborated on in real-time.

Industry people believe the browser will become the Operating System of the future!

Considering Microsoft's Windows is on 90% of computers, it is almost an impossible mountain to climb for someone new to create an Operating System. For Google, and looking into the future of web based applications the most logical step to creating an Operating System would be to create the Web Browser of the future. And in a matter of speaking they did.

Where previous browser were a single application that served up web pages and ran applications within itself, Chrome spawns processes for each web page or web application, and includes a task manager to manage them. If something crashed on one web page, only that web page would fail while others would remain perfectly isolated. Process Task Management, Individual Processes for each web application sounds a lot like an Operating System to me. If Google wants to get serious about challenging Microsoft in the OS and Business Software games in the years to come it needs to control how users will access their web applications. A Web Browser that controls each web application individually, and even each component of each web application individually, is exactly the steps Google has to take.

By creating Chrome they've started this journey, and by making the entire project open-source and given out for free, they can quickly and nimbly adapt suggestions, improvements and changes from the developer community at large. As with a first release there will always be kinks to iron out, however the prognosis looks really good, and with a feature set comparable to the fastest growing browsers, in terms of popularity, Firefox and Safari, Google has the brand power and the clout to make a real dent in this industry. It is hard gaining market share in anything, and in the browser-war it is notoriously difficult so by throwing its hat into thing ring, Google's also throwing caution to the wind and hoping they'll be early enough for the web revolution.

Just don't expect the revolution to happen overnight Traders!

Disclosure: Author owns GOOG

Google Opens Up about Mobile Strategy, new Platform called Android shows Promise

Reports trickled in over the weekend that Monday was to be the day that the long awaited "gPhone" announcement would come in some form. Google (GOOG) complied with those rumors and held a conference call announcing an Open Mobile Platform rooted in a Linux based Operating System.

This system, dubbed Android, was announced by Google and several of its partners in the Open Handset Alliance, including Qualcomm, T-Mobile, HTC, Sprint and Motorola. Over 30 partners in all for the Internet search giant, all committed to produce the technology to make a powerful, open Operating System for cell phones a reality. Google will provide the backbone programming for the Linux-based OS and will release an SDK (Software Development Kit) so that developers of all shapes and sizes will be able to create applications for a multitude of devices.

The first of these devices are expected to be available in the 2nd half of next year touting as its main feature a complete full scale Web Browser, much like Apple's Safari on the iPhone or the Opera Mini browser available for certain other smart-phones. Thus far details are scarce and not well known about Android, but next week's sneak peak at the SDK should give several more clues. This open initiative by Google comes right after the announcement of OpenSocial, an open development platform for Social Network sites, with which Google has signed up several partners including MySpace, LinkedIn, Salesforce.com and its own Orkut network.

The power of the mobile Internet is something Google has its sights squarely on, and the advertising platform that that could bring. The world has billions of cell phone users and over a billion handsets are sold each year, which represents a fantastic opportunity for localized and personalized advertising. It just so happens that Google has become a virtual expert at both of those flavors of ad-serving. Analysts and economists are throwing around estimates for growth in the mobile ad space and their particular 'Billions of $$$ by Year X' don't matter just yet, what does, is the resounding emphasis that it is the next great Internet growth sector.

The Android platform will provide Google a foundation to port its Internet software on a multitude of devices, and as CEO Eric Schmidt pointed out during the call:

"This is not an announcement for gPhone, we hope to see thousands of gPhones"

The thinking by Google of course, is that, why make the hardware when so many others already do. Create a platform that will excite partners, can cater to everyone's needs, and everyone succeeds. Google doesn't make the computers that sit at your desk do they? No! But they provide an expansive software platform and a multitude of services that arguably are simpler and better than competitive services. With powerful enough phone hardware and screens that can somewhat do justice to the "Complete Internet" Google can follow the same model with cell phones that they have used to dominate in the Internet space for Personal Computers. Not to mention innovation can foster truly and freely on an open software platform, which Android is touted as being. Google's planning to be there every step of the way and innovate as quickly as they can in this space.

Google shares have risen tremendously since August lows around $500/share, hitting a new all time high of $730 today, closing at $725. The hype built around a mobile push by Google stemmed some profit taking but the potential of this being a major platform and a revamp in mobile industry thinking is too hard to pass up for Investors. The sentiment that phone carriers lock in consumers and halt innovation, both on the hardware and software side, can die a quick and painful death if an open software platform for mobile devices in embraced. Google knows this as do its partners, and most importantly customers are starting to take notice as well.

The mobile space, especially for advertising is still wide open and Google is trying to out innovate its major competitors Yahoo (YHOO) and Microsoft (MSFT). Both companies of course missing from Google's partner list on this project. The simple fact in the mobile industry is that cell phones are turning more and more into little powerful computers capable of doing much more than phone calls and this is no different with the Internet. Consumers will see Internet on their phones much more prominently over the coming months/years and the expectation will be for a complete and encompassing experience.

The quicker that experience becomes reality the quicker Google will be able to grow into a mobile advertising conglomerate. Today's technology consumer is much more mobile than in years past and the thinking is, and I completely agree, that these mobile users will have many more opportunities to use Google products such and Search, Gmail and Maps on the go. With more usage, comes more advertising placement opportunities when it will really matter. Getting advertisements for local restaurants when you're at home is one thing but getting localized and personalized ads for local restaurants when you're hungry and on the town is something completely different. And for this to work well, Android must become the platform of choice.

Disclosure: Author is long GOOG

Apple unveils Exciting but Expected iPod revamp, Stock suffers

The consumer electronics world held its collective breath today as Steve Jobs took the stage to show off Apple's (AAPL) new line of iPods for the holiday season. It's been almost 2 years since a total redesign of the flagship iPod, so most were expecting dramatic changes.

However, Jobs and Apple already changed the world this year! It was called the iPhone. A revolutionary device that ushered in a new era of interfacing, technology, entertainment and mobile communications. To think the company could pull another wonder out of its hat so soon was a stretch. But try they did and the results were astounding, but due to iPhone fever over the past 8 months, expected.

The focus on video and portable video is very apparent in the new line of iPods as the popular iPod Nano has become shorter, wider and sports a 2 inch screen capable of playing videos. The existing iPod received an interface refresh, was branded as iPod Classic and got a bump from 30GB & 80GB to 80GB & 160GB varieties. Perfect for that consumer going on vacation for a month with a load of music and video to hold on the go. The big announcement awaited the new flagship iPod and it came in the flavour of the now called iPod Touch, which incorporates many technologies seen first in the iPhone but without the mobile phone features.

The iPod Touch comes in 8GB & 16GB varieties and is built on the same Mac OS X platform that iPhone users are now familiar with. The most exciting part of iPod Touch is that it keeps the iPhone's wifi capabilities and packs the Safari Wed Browser. This allows iPod users the ability to connect to wifi networks and surf the Internet with their devices. Truly a remarkable thing, but in perspective analysts and investors have seen it before with the introduction of the iPhone 8 months prior.

Ringtones for the iPhone! Another eagerly anticipated feature that is now a reality. With the next version of iTunes, users will be able to use selected iTunes tracks and pay an additional $0.99 to chop up a 30 second portion into a ringtone for use with the iPhone. A great feature, all in all cheaper than other ringtones but nothing unexpected or truly groundbreaking here.

Now the news that's totally new. With the new iPod Touch comes the Wifi-based iTunes music store, which allows iPodders to buy music on the go through wireless networks. These tunes will sync up to their computers seamlessly when the iPod is reconnected to the computer at a future date. A deal with Starbucks was announced also, but seemed to confuse as to what "Free wifi" really means within Starbucks Coffee Houses. The assumption is that iPod & iPhone users (iTunes wifi is coming as an iPhone update soon) will be able to surf the iTunes music store for free, featuring specific Starbucks Music content, but would have to pay for other wireless surfing when sitting at a Starbucks.

Investors headed for the exits in excessive profit taking. Apple's fall from 52-week highs with the market led to a bottom in the 100s that begot a rise to $145 over the last weeks that was built on the hype that this event would bring more revolutionary products. Showcasing expected innovations did not appease the hype machine. Shares fell 5% to around 136 even as Apple announced a whopping 33% price cut for the 8GB iPhone (from $599 to $399). Perhaps investors saw this as a sign that demand was not as brisk as anticipated but I view it as Apple wanting to have a truly remarkable and record breaking Christmas shopping season as its lineup of media and communications devices fit neatly in market segments. With the iPhone price cut and the new iPod Touch model pricing of 8GB for $299 and 16GB for $399 the company has 2 flagship products that are sure to succeed over the holidays.

iPod sales broke 20Million units last holiday season and are expected to jump close to 25Million this holiday season. The injection of new iPods can only help the company reach these lofty expectations. The kicker still is the growth in video downloads as almost 100Million TV Shows have been downloaded to date. However only the flagship Video iPod had those capabilities while the most popular Nano models did not. This year that changes drastically and the full iPod line, with the expectation of the screen-less Shuffle, is now able to watch downloaded videos. Gonna be a rough season in that market for NBC if they can't make amends with Apple over iTunes contract negotiations.

While Apple still has some downside risk given the expected product announcements I believe its limited and only in the short term. The back to school computer season is reportedly very strong and the holidays appear to be ready to break records again as the company shifts its product line to video-centric Mac OS X based devices. The iPhone price cut is sure to spur sales and its only a matter of time until deals are crafted completely in Europe. Apple has so far this summer gone in line with general market trends and if fears resume from the credit crisis the stock will likely follow south. But for keen investors the opportunity is here again as Apple crafts new short term bottoms following this announcement. This opportunity is too good to pass up given company prospects going forward.

Disclosure: Author is long AAPL

Innovators within Technology

It's really Apple (AAPL) and Google (GOOG) that are the two driving forces of innovation within the Internet/Computer part of the technology sector. When Google's CEO became an Apple board member there was some signs that the companies would work together on many more projects. We're seeing this now with Google Maps integration into the iPhone, YouTube on AppleTV and the iPhone and Google's search being prominent in Safari and Leopard.

Yahoo (YHOO) also is involved with Apple providing push e-mail to the iPhone, the Stock app and a host of other innovative services, however, it's a company very much in limbo, having just ousted long time CEO Terry Semel. Any reaps from their long-awaited ad platform Project Panama have yet to show major dividends and it seems like Yahoo has a long way to go to steer the ship in the right direction.

Microsoft (MSFT) on the other hand seems stuck in the mud, is a company that has far too many silos for its own good and cannot innovate as quickly as the others. While companies like Apple, Google, and Research In Motion (RIMM) are busy combining all of their products and services over a common platform, Microsoft is missing the party by having completely separate divisions trying to integrate separate products into a common themes. However thus far very few have ended in success and nothing but bad press surrounds this "innovative" company of late with Vista issues, charges on Xbox problems and who could forget the almighty Zune.

Disclosure: Author is long AAPL & GOOG