Google Acquires Picasa, Fends Off Competition

With its IPO looming, Google buys a photo management company and launches a new browser toolbar in an effort to separate itself from its search rivals.

Still pursuing its own IPO while fighting mounting competition from Yahoo and Microsoft, search engine giant Google this week acquired Pasadena, Calif.-based digital photo management company Picasa Inc. Google has also rolled out a new feature called Browse By Name for faster searching from Microsofts Internet Explorer browser.

Google Inc.s latest acquisition comes on the heels of the announcement in May of a partnership with Picasa to improve photo publishing on Googles Blogger service. Google added blogging to its roster of services last year after acquiring Pyra Labs, the original creator of Blogger.

Meanwhile, Google rival Yahoo this week announced its acquisition of Oddpost, a Web-based e-mail service based in San Francisco. Yahoos move follows Googles entrance into the e-mail market with Gmail, which the company launched in test mode three months ago.

/zimages/2/28571.gifGoogle raised some eyebrows with its plans to scan Gmail messages in order to distribute relevant ads. Click here to read more.

In April of this year, Google filed the paperwork for its initial public offering. The company is taking the unconventional approach of offering shares through an online auction.

Under the Picasa deal, most of Picasas employees will be hired by Google and relocated to Googles product development center in Santa Monica, Calif., a Google representative said. Google is not disclosing the financial terms.

Googles new Browse By Name feature, also unveiled this week, is designed to allow speedier Web navigation by letting users type words or phrases, rather than URLs, into the IE address bar. For example, a user can type "Grand Canyon" into IE and then be automatically directed to the National Park Services Web site for the Grand Canyon. In situations where there are multiple relevant Web sites for a specific word or phrase, users receive a list of relevant search results.

As some analysts see it, the top players in the search engine market have been leveraging acquisitions and R&D investments in recent months to converge on some of the same ground, albeit from slightly different directions.

For example, fueled by a $100 million internal investment, Microsofts MSN division in June launched an alpha test version of an improved search service.

"MSN will be getting some impressive navigation and indexing capabilities. Theyre claiming theyll be able to index absolutely any type of file," said Rob Sullivan, a senior analyst at Enquiro, a search engine marketing company in Kelowna, British Columbia.

Separately, MSN is working on two related upcoming services, dubbed MSN Blogbot and MSN Newsbot.

On the e-mail side, Googles emerging Gmail was the first to offer 1GB of free storage. "That much storage capacity was unheard of in the industry. Until recently, MSN only offered 2 MB," Sullivan noted.

/zimages/2/28571.gifClick here to read more about MSNs decision to increase the storage for Hotmail users.

Oddpost, the company just picked up by Yahoo, will reportedly work on developing a new premium e-mail service for Yahoo. Yahoo already operates a photo publishing service.

For its part, Googles other recent acquisitions include Applied Semantics and Kaltix, companies specializing in search filtering and indexing, respectively.

Sullivan said he wouldnt be at all surprised to see Google pour more cash into competitive acquisitions whenever its IPO becomes final.

"With the IPO, Google will have huge pockets. This could put Google in the market to buy a much larger player, such as AskJeeves or even AOL," he said.

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