Google Reveals Its Product Formula

During a day with financial analysts, Google's top executives say that the company's decisions to expand its products follow a mathematical guideline.

Google executives attempted to demystify the search companys product decisions during presentations with Wall Street analysts on Wednesday.

As Google Inc. has moved beyond Web search and into product areas as diverse as e-mail, photo-organizing software and mapping tools, one of the common questions for the company is how it decides where to devote resources.

In classic Google fashion, its executives answered with a formula, one that CEO Eric Schmidt said was derived from the mathematical calculations of cofounder Sergey Brin.

Google is striving to split its product investments three ways, following a formula of "70-20-10," Schmidt told analysts gathered at the companys Mountain View, Calif. headquarters.

Seventy percent would target its core search and advertising products, while 20 percent would focus on adjacent products, such as its newer desktop and product search services.

The final 10 percent would center on the most experimental products, those "things that are truly interesting to us," Schmidt said. These projects would include ones where the company remains unsure if users will adopt the service or if it would make money, but such experiments are critical for the long term.

"Every company that has forgotten to remain innovative has ultimately lost in the next technology change," Schmidt told analysts. "So the 70-20-10 turns out to be roughly the right answer for us."

/zimages/6/28571.gifClick here to read about an experimental Google service that suggests popular queries.

When Google tested the goal against its current operations, it found that it was close to already following the formula.

Products can move among the categories as well. Google News, a service for searching news articles, and Froogle, a product search service, are both beta products that fall into the category of adjacent products, Schmidt said. But they are likely candidates for moving into the "70 percent" category of core products over time, he said.

Analysts peppered Google executives with questions ranging from whether the company was developing a Web browser or voice-over-IP services to how it will manage a business that is growing at a record pace.

The executives steered clear of divulging any specific product plans for the future, instead outlining the companys broader plans to become more global and extend its advertising reach.

During a question-and-answer session, Brin said that Google has an "objective this year of becoming an international company" as opposed to a U.S. company with some global operations. Brin is president of technology at Google.

Next Page: Googles global push.