The business case for Google’s Chrome

Google’s (NASDAQ: GOOG) famed cofounders Larry Page and Sergey Brin came out to support Chrome, saying that browser technology is fundamental to the company’s success, so Google decided to get more involved in this area.

“Everything we do is running on the Web platform. It’s very important to us that works well,” Page said during a press conference Tuesday that was webcast from Google’s headquarters.

Trying hard not to offend its partner Mozilla, maker of Firefox, the Google officials nonetheless made it clear that browser technology isn’t advancing as fast as Google would like it to be.

“People are doing a lot more online, and the Web has evolved pretty dramatically … but the underlying browser architecture is still very similar to the original Netscape browser,” said Sundar Pichai, vice president of product management.

Brin concurred, saying that the ultimate goal of Chrome isn’t to be a Web operating system of sorts, but rather a better browser vehicle for the next generation of Web applications, a core business for Google.

“I wouldn’t call Chrome the OS of Web apps. It’s a very basic, fast engine to run Web apps. We’ll see more and more Web apps of greater and greater sophistication, of the kinds of things that today are pretty challenging to do on the Web because of browser performance,” Brin said.

Google is releasing Chrome as open source in the hopes that it will be improved by external developers, and simultaneously help improve other products, including the market-share leader, Microsoft’s Internet Explorer (IE).

In other words, Chrome is meant to be a catalyst for faster innovation in browser technology. “Our business does well if people are using the Web a lot and are able to use it easily and quickly, so any improvement to any set of browsers as a consequence of Chrome is good for Google,” Brin said.

Brin, Page and Pichai all went to great lengths to praise Mozilla’s work with Firefox, crediting it with jump-starting innovation in browser development at a time when the only game in town was IE. “Without what [Mozilla] has done, this probably wouldn’t be possible,” Page said.

Chrome, in the works for about two years, highlights the importance for Google of its increasingly sophisticated Web applications, such as its ambitious Google Apps hosted collaboration and communication office-productivity suite. Apps, built around the Web-hosted “cloud computing” model for delivering applications via the Internet, is considered a major threat to Microsoft’s Office/Exchange platform.

Thus, it’s easy to understand why Google wouldn’t want to look from the sidelines as Microsoft takes IE in the direction it so chooses. The browser is the key software for accessing Web applications, so it’s no surprise to see Google finally jump feet-first into the development of browser technology.

Among the enhancements Google is promoting on Chrome are a more stable and secure environment in which a tab can crash without freezing the entire browser, as well as improved speed and performance with a new Javascript engine called V8.

The Google cofounders’ presence at the press conference underscores the importance of the Chrome initiative, said Gartner analyst Ray Valdes.

“This isn’t one of those projects that started as a 20 percent time thing,” Valdes said, referring to Google’s policy of letting employees spend part of their time on projects they come up with. “This is definitely a strategic initiative that has been two years in the making and involves dozens of engineers.”

Indeed, Google officials acknowledged at the press conference that the company has invested significant resources on Chrome.

But framing it as Google’s attempt to win the browser wars is a mistake, Valdes said. “It’s about the Web apps battle. It’s about having a platform that will support the next generation of Web apps,” he said.

Web applications in general, and Google’s in particular, are pushing the limits of current browsers, including IE, Safari and Firefox. “Google is pushing the envelope and Chrome gives it a bigger envelope for Web apps,” Valdes said.

“More importantly, Chrome is the platform Google will control,” he added. “That makes it a strategic element in their technology portfolio.”

Citigroup analyst Mark Mahaney agreed that investing in developing its own browser makes strategic sense for Google. “Given that search has become such a fundamental part of Internet usage, anything that impacts overall Internet usage is important for Google,” he wrote in a research note Tuesday. “Also, while browser developments have to date had no material impact on Google’s advertising base, a hedge against future browser developments makes sense.”

However, he noted, it remains to be seen whether users will consider Chrome faster, simpler and safer enough than current browsers to justify switching to it.

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