Google tries to cut reliance on ads

DIVERSIFICATION: Investors may be looking forward to the search engine company's IPO, but Google first wants to raise the proportion of non-ad revenue from 4 percent

AP , SAN FRANCISCO

Thu, Jun 03, 2004 - Page 12

Google Inc is sharpening the search tools that it sells to companies, schools and government agencies, hoping to mine new revenue sources as it strives to become less dependent on online advertising.

The Mountain View, Califor-nia-based company on Wednesday took another small step beyond its renowned online search engine releasing its most significant upgrade of a 2-year-old kit that's sometimes called "Google in a box."

The hardware-and-software package is supposed to provide prospective customers with everything they need to do a better job indexing and searching the information on intranets -- a cluster of Web sites maintained behind security shields known as firewalls.

Google's top-of-the-line system, priced at US$175,000, will index up to 1.5 million Web pages and perform 300 search queries per minute -- five times the capacity and speed of the earlier version, said Dave Girouard the company's general manager of enterprise. A less sophisticated version of the kit will sell for US$32,000.

The original version of Google's search kit is being used by "several hundred" customers, Girouard said.

Online advertising accounted for all but 4 percent of Google's first-quarter revenue -- a heavy concentration that has raised mild concerns among some industry analysts as the company prepares for a highly anticipated initial public offering of stock. The IPO is still several months away.

Although online advertising is expected remain its financial foundation, Google is trying to diversify.

The company reportedly is working on a product, code named "Puffin," that would search information stored on the hard drives on individual computer users -- an initiative that would intensify Google's rivalry with software giant Microsoft Corp. Google so far has declined to discuss the Puffin project.

Microsoft's next operating system, expected to be released in 2006 or 2007, is supposed to include a search feature that sorts through the content stored on computer desktops and the Internet.

Other recent Google projects have included a free e-mail system -- still available only to a select group -- and an online social networking site called Orkut.

Google's success searching publicly accessible Web sites doesn't necessarily mean the company will be able to transfer its prowess to privately guarded intranets, said industry analyst Stephen Jue of RBC Capital Markets.

Both Yahoo! Inc and Inktomi Corp -- now owned by Yahoo -- have previously pursued largely disappointing expansions into corporate search, Jue said.