‘Broadband leadership will be a precondition for economic growth’

29 Oct 2009

Eric Schmidt has brought Google out of the recession, now he wants to conquer the enterprise.

The chief executive of Google, Eric Schmidt, believes that all most businesses will need, apart from a product or service that sells, of course, will be a broadband connection.

Google, which began life on the campus of Stanford University in California when two post-graduate students – Sergey Brin and Larry Page – decided to make the internet more searchable, is now the most-visited website on the planet.

Google’s strength

Not only that, but it has also emerged as a powerful online advertising and media engine. In recent weeks, Google reported a 7pc increase in third-quarter revenues of $5.94bn, prompting a confident Schmidt to say the worst of the recession is behind the company.

“Google had a strong quarter – we saw 7pc year-over-year revenue growth despite the tough economic conditions. While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us now and feel confident about investing heavily in our future,” Schmidt said at the time.

He was in Killarney last week to address more than 2,500 “Googlers” from across the search giant’s non-US sales organisations.

Products company

Alert and curious after a mere nine-hour flight on his Gulfstream jet from California – which he flew some of the way himself – Schmidt made it clear that he considers Google not to be a media company, but a products company.

This is evident from Google’s never-ending stream of innovative new products, from display advertising tools for Google and YouTube to productivity tools such as Google Apps, Google Maps and, most recently, Google Wave, a messaging technology that Google earnestly believes will signal the evolution of email.

The company is becoming a major force in business ICT. Just look at its products: Google Apps is now being used in businesses with up to 20,000 workers, which should make a certain Seattle-based software company a little nervous. It has brought out an operating system for mobile phones called Android, a browser called Chrome and will next year unveil an operating system for netbook computers called Chrome OS.

It’s a deal

In recent weeks, Google signed its biggest enterprise IT deal yet – the deployment of Google Apps Premier Edition across 20,000 PC users and 15,000 “on-the-road” workers at global services giant Rentokil. The plan is to achieve a significant reduction in IT spend across the 35,000-user network spread across 50 countries.

The Rentokil deal was swiftly followed by a major 15,000-user implementation last week by Jaguar Land Rover, which is also deploying Google Apps as part of its transition from Ford Motor Company.

Google is active in productivity software, operating systems, email, security, storage – is it not clear that the company is gunning for the fortunes of software giant Microsoft? “I prefer not to talk about Microsoft. Microsoft can talk about Microsoft,” Schmidt said. “If someone was to set up a business tomorrow, does it make sense to have a CIO or an IT department? All you need is an internet connection. Everything else you need to run a company is online.

“I prefer not to talk about Microsoft. Microsoft can talk about Microsoft.”

– Eric Schmidt, chief executive of Google

“The future is cloud computing and large enterprises that already have large IT infrastructure are moving to cloud computing step by step. We have customers that now have 20,000–30,000 employees who have converted to Google applications. All the big universities in the US have made this switch. It’s cheaper.

“How long will it take for us to have a significant portion of that [enterprise] market? It may take many years. It took 30 years to build it, but it will take more than a year to get into it. But, with the products, there is no lack of demand. We win all the deals. The problem is we only win the deals where we have the products that are suitable for the task, so we need to build more features. A typical opportunity would be in companies that have document retention rules where lawyers prevent them from deleting documents. That’s where we need to create new products.”

Google investment plans

Building those products may be a boon for Ireland and anywhere else Google has engineering centres. While in Killarney, Schmidt confirmed that Ireland stands to benefit from the company’s plans to invest in innovation, and this will result in new jobs in Dublin.

“We benefit from the production of young people out of universities here. What has happened is the area of Dublin we are located in has become the hot area, a destination for talent. The majority of our global revenue goes through here and, therefore, as our global revenue expands we’ll be expanding consistent with that. Global revenues are growing faster than US revenue. We will be looking at increasing headcount. It is an absolute fact.”

Schmidt said that during his time as chief technology officer at Sun Microsystems he had a good working relationship with IDA Ireland and added that his main motivation to invest, as CEO of Google, is the Irish workforce.

On the recession

But on the question of Ireland’s recovery from the economic gloom, he was very curious. Reminded how the construction boom became Ireland’s Achilles’ heel, he summed the situation up quite accurately. “What happened in the US: you get a liquidity bubble, which creates a construction boom, which serves all known political interests, buildings mean developments. It makes politicians look good, it makes constituents happy. Property values go up, everyone wins until it stops – certainly in America the bubble in commercial real estate has not yet burst and that’s going to be painful.”

As a small, open economy, Ireland’s recovery, Schmidt believes, will depend on the country’s investment in communications infrastructure.

“Broadband leadership will be a precondition for economic growth in the next 10 to 20 years.

“The reason for that is so much information is now going to be transmitted over these broadband networks and information is the thing you’re going to need to build these industries, they are information industries.

“Whether it’s university research or entertainment, the other thing that is interesting about broadband is governments around the world realise it is about competitive advantage and they are using government funds to accelerate adoption or taxing citizens directly. The most interesting are Singapore, Tokyo and Korea – in Korea’s case they have 160Mbps default penetration.

“At those speeds, the distinctions between movies, DVDs and the internet go away and are just replaced by a fibre cable and that’s the future. The right thing to do it is to light up Ireland with fibre, and to do that systematically over a 10-year period,” he explained.

“I would argue that with the quality of the workforce you see here, Ireland could really take advantage of that – you have really sharp people.”

By John Kennedy

Photo: Pictured in Killarney last week, where more than 2,500 non-US “Googlers” were present, were John Herlihy, vice-president, Global Ad Operations, and the CEO of Google, Eric Schmidt.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years