The biggest tech industry news story of the 2000s was undoubtedly the dramatic rise of Google. But will the search and online advertising juggernaut continue its dominance over the internet economy in 2010? Time will tell. Until now, Google's biggest frenemies were the traditional media. ("Frenemy" is a term used to describe someone who looks and acts like a friend but is actually an enemy). But as Google's portfolio has grown to encompass more than 150 products — including free, hosted versions of popular software applications — it has attracted an array of tech industry competitors. Google's rivalry with tech firms is likely to get more intense in 2010. With Google, tech firms are up against the internet's most-trafficked website and a money-making machine. Google is poised to rack up more than US$23 billion in revenues in 2009, with margins over 30%. With its huge cash reserves, Google has money to buy innovative start-ups (recent examples include On2, ReCAPTCHA and AdMob) to keep itself at the cutting edge. Here is Network World's list of 10 tech vendors that are likely to shape up as Google's biggest rivals in the year ahead and the areas in which they will compete hardest: 1. Amazon On track to rack up US$22 billion or more in sales this year, Amazon has the financial wherewithal to battle Google in e-books and cloud computing. Indeed, Amazon CEO Jeff Bezos is a true frenemy of Google's, having been one of the search firm's initial investors back in 1998. Analysts agree that 2010 is shaping up to be the battle of the e-books. Since 2002, Google has been scanning millions of out-of-print books and incorporating them into its search service. In October, Google said it was opening up an e-book store called Google Editions that will allow customers to buy and read electronic books on any device with a browser. With e-books, Google is taking on Amazon, whose Kindle e-book reader has a commanding lead in the market. The Kindle is the best-selling item at Amazon's website, which is now offering more than 360,000 e-books in its Kindle store. Amazon said in December that it would release a free Kindle book reading application for BlackBerry users, which will complement a similar application for PC users. The other main area where Google is taking on Amazon is in cloud computing, a market that is poised for significant growth in 2010. In April 2008, Google debuted its Google Apps Engine, which is a cloud computing platform that allows developers to create their own web applications and run them on Google's infrastructure. Users pay for the amount of compute, storage and bandwidth resources that they use. In April 2009, Google added features to make its cloud computing platform more attractive to enterprises. Amazon's Elastic Computing Cloud (EC2) pay-as-you-go compute service was released in 2006, and it has been upgraded several times, including the addition of load balancing, auto scaling and monitoring services. In December 2009, Amazon added Symantec's security and storage offerings. Usage of EC2 is on the rise with business customers , who find it a low-cost way of handling bursty network traffic although security concerns remain. 2. Apple In 2009, Apple and Google went from being partners — with common board members — to rivals in the mobile phone and online music businesses. With US$36 billion in sales and legendary engineering prowess, Apple is more than up to the task of battling Google in these areas as well as browsers, where Google Chrome competes against Apple Safari. Headlines about a looming Google vs Apple war centre around the smartphone market. In July, Apple rejected Google Voice, which allows users to share a single number across multiple phones, as an application for the iPhone. In August, Google CEO Eric Schmidt resigned from Apple's board, citing conflict of interest. By October, Google and Apple eliminated all overlapping board members amidst a US government antitrust investigation. Meanwhile, Google's Android mobile device platform — with more than 1 million units sold as of April through T-Mobile — is gaining ground against the popular Apple iPhone. The iPhone continued to be one of Apple's bestsellers in 2009, with more than 20 million units sold in the last four quarters. The digital music market is poised for strong growth in 2010, with Google and Apple both in hot pursuit. In October, Google launched a music search service that lets a user preview a song when making a music-related query. Google's music search partners include MySpace and La La Media, a streaming music website that was purchased by Apple in December. Another music partner of Google's is Pandora, a streaming music service that's available on Android-based mobile phones. All of these online music upstarts like Pandora and La La Media are out to unseat Apple's iTunes. Although sales of its popular iPod device are slowing, Apple still reported sales of more than 54 million iPods in the last four quarters. 3. AT&T AT&T is a rival of Google's politically (they are on opposite ends of the network neutrality debate) and in the smartphone market, where AT&T is the exclusive carrier of the iPhone in the United States until June 2010. With more than US$123 billion in sales in the last four quarters, AT&T dwarfs Google and isn't afraid to flex its regulatory muscle, as in its complaints about Google Voice to the US Federal Communications Commission. In its battles with Google, AT&T is out to protect its iPhone-related revenue, which averages out to US$1,000 per iPhone customer per year, experts say. In the last four quarters, AT&T has activated 11.5 million iPhones, producing a significant stream of wireless data revenue. That's why AT&T is pushing Apple to extend its exclusive contract for another year. In the meantime, AT&T is hedging its bets and could partner with Google in 2010. Rumor has it that AT&T will offer its first Android phone from Dell in 2010. During 2009, AT&T and Google lobbyists argued strenuously before the FCC about Google Voice. AT&T wants Google Voice to be required to connect expensive calls through rural telephone companies like AT&T is required to do under "fair access" rules. Google argues that it isn't a carrier, can't offer a free application if it is required to meet carrier regulations, and shouldn't be required to connect expensive porn and conference calling services through rural carriers. For now, Google Voice is still in beta mode and isn't available on the iPhone. 4. Facebook Google has been eyeing the rapid rise of Facebook — which has attracted 350 million active users in just six years — with concern. Although venture-funded Facebook's financials are not publicly available, analysts estimate that its 2009 revenues will top US$500 million, much of it from an advertising deal with part-owner Microsoft, another Google rival. The Google/Facebook rivalry is based on the question of where users will get their information in the future: in search or in social networks? Google is worried enough about users turning to their social networks for information and advertising that it has sidled up Facebook rivals MySpace, LinkedIn and Twitter for various applications. Indeed, rumours of Google buying Twitter were rampant this year. Google also has its own social networking application, Orkut, which was upgraded in December. And it offers Google Friend Connect, a tool for web publishers to add social networking content to their sites, in direct competition with similarly named Facebook Connect. Meanwhile, Facebook has sought out relationships with several arch-enemies of Google, including Microsoft and Yahoo. Back in 2007, Facebook sold a 1.6% stake to Microsoft rather than Google and chose Microsoft's search engine for its site. Facebook also has added features this year such as Open Stream API, which allows developers to export Facebook data to other applications. Two outstanding issues facing Facebook in 2010: protecting the privacy of users' information and keeping hackers at bay. 5. Hulu Google has owned YouTube for four years, but it hasn't figured out a way to turn a profit from the fast-growing video streaming site. YouTube's closest competitor in this segment is Hulu, which has the benefit of deep-pocketed media ownership. Online video usage exploded in 2009. The question for 2010 is whether YouTube will continue to dominate this market. YouTube is best known for featuring video clips and user-generated content. The website attracted more than 126 million viewers and served up 10.3 billion videos in September, according to internet market research specialist Comscore. YouTube's weakness: it doesn't make enough money to cover its massive network bandwidth costs. Analyst firm Credit Suisse estimates YouTube will lose US$470 million in 2009. Hulu is second to YouTube, with 39 million viewers and 583 million videos viewed in September, Comscore reported. But Hulu only provides professionally created content from its owners, which include Fox, NBC and Disney. Though not profitable, Hulu may start charging for its content in 2010, which would shake up this market. 6. IBM Google's rivalry with IBM could heat up in 2010 with the release of new collaboration tools such as Google Wave. With IBM, Google is up against a financial powerhouse; IBM has racked up more than US$95 billion in sales in the last year and reported profit margins between 43% and 47% in each of the last four quarters. In the midst of a deep recession, more companies are experimenting with low-cost hosted collaboration tools such as Google Apps. Google Apps is a suite of hosted applications including email, calendaring, instant messaging and document sharing. Google Apps competes against IBM's Lotus Notes and Microsoft Exchange. In September, Google introduced Google Wave, a hosted application that combines email, instant messaging and document sharing. In December, Google bought AppJet in a bid to add features to Google Wave. In October, IBM introduced LotusLive iNotes, a web-based email, calendaring and contact service priced to undercut Google Apps. Also this year, IBM improved the social networking features in its LotusLive Connections, which now includes blogging, book marking and file sharing. 7. Microsoft Google's biggest rival across the board — in search, collaboration tools and browsers — is Microsoft. Though it's not as dominant a player in the IT industry as it once was, Microsoft is still a fearsome rival that has racked up US$56.3 billion in sales over the last four quarters. For the last decade, Google has reigned supreme in search — at least in the United States. The search situation may be changing with Microsoft's May 2009 release of Bing, which ranks search results based on relevancy to other users. Microsoft has inked Bing-related deals with Twitter, Facebook and Yahoo. After the launch, Microsoft continued to enhance Bing, adding image search and mapping. Google is worried enough about Bing that it is beefing up its own search capabilities. In December, Google unveiled real-time search, which include Twitter results. Google also added a photo search capability, a dictionary and a translator that finds relevant content in 40 languages. Entering 2010, Google still dominates search, with more than 70% of the market. For 2010, the battle between Microsoft and Google is likely to focus on cloud-based collaboration tools.Google Apps is designed to undercut sales of Microsoft products, including Exchange and SharePoint. Microsoft has responded with Office Web Apps, free web-based versions of Word, Excel, PowerPoint and OneNote that are due out in 2010. Office Web Apps is part of a push by Microsoft to embrace the hosted, subscription-based model of selling software applications. Microsoft's approach is to provide integration between its hosted applications and SharePoint, which is due for an upgrade in 2010. Meanwhile, Google is developing real-time, cloud-based collaboration tools with Google Wave, which is in an invite-only preview mode. The developer community has responded positively to demonstrations of Google Wave, which also competes against Microsoft's overlooked Silverlight offering. The launch of Google's Chrome browser poses the question of whether 2010 will spark another browser war, this time between Microsoft and Google. Microsoft's Internet Explorer has been the premier browser since the late 1990s. Microsoft introduced version 8 of IE in March 2009, claiming it is the fastest, most stable and secure browser on the market. So far, Google's introduction of its Chrome browser — currently in version 3 — hasn't chipped away at Microsoft's dominance. Chrome had just 3.7% of browser market share in October, according to Janco Associates. The question is whether this dynamic will shift when Google unveils its Chrome OS in 2010, which is designed specifically for netbooks. The first netbooks with Chrome OS installed — including a system that Acer is developing — aren't expected until the second half of 2010. 8. Nokia Nokia is the world's number one mobile phone manufacturer, providing four out of every 10 mobile phones sold. Although Nokia has lost market share to Apple and RIM, it still shipped more than 108 million units in the third quarter of 2009 alone, racking up billions of dollars in sales. The rivalry between Nokia and Google is in the area of operating systems for smartphones. Nokia has its own Symbian open source operating system, which competes against Google's Android. Despite rumours last year, Nokia says it's sticking with Symbian and has no plans to sell an Android-based mobile phone or netbook . In the meantime, Nokia is teaming up with Microsoft to bring Office Mobile to Symbian devices. Nokia's CEO, Olli-Pekka Kallasvuo, said in December that a new-and-improved version of Symbian will ship soon. Nokia also will ship high-end devices that run the Linux-based Maemo operating system. Meanwhile, Google's Android is poised for major developments in 2010. More than 50 Android-based devices are expected to ship in 2010, compared to 10 in 2009, according to mobile sector market research firm CSS Insight. Among the vendors who have committed to Android are Acer, Sony Ericcson, HTC and Motorola. Market researcher ABI predicts that Android devices will own nearly a quarter of the smartphone market by 2014. 9. Verizon Google and Verizon are true frenemies. They've tussled over spectrum space, but they're teaming up on smartphones. Google has a powerful ally and sometime rival in Verizon, which has rung up more than US$105 billion in revenues in the last four quarters. Verizon is teaming up with Google for one reason: to slow the growth of Apple's iPhone and the revenue it brings to arch-rival AT&T. In October, Verizon and Google announced an agreement to jointly develop Android-based smartphones, PDAs and netbooks. Verizon's first Android-based smartphone is the Motorola Droid, which hit stores in November. Verizon also said it would support Google Voice on its Android handsets. Verizon hasn't always been Google's buddy. In 2008, Verizon chose Microsoft as its mobile phone search provider. This decision came after Google complained to the US Federal Communications Commission that Verizon wasn't moving quickly enough to open up access to its wireless data network. In a surprising move, Google and Verizon in October released a joint position on network neutrality in which they called themselves "unlikely bedfellows". 10. Yahoo When it comes to search, one of Google's biggest competitors besides Microsoft is Yahoo. Although it was bloodied by the failed Microsoft take-over in 2008, Yahoo still churned out more than US$1.5 billion in revenue in each of the first three quarters of 2009. Yahoo competes against Google in news, email and, most importantly, search. Yahoo has made some improvements in 2009 by integrating search with its rich content. Users can watch videos or stream music straight from the Yahoo search results page. Yahoo also helps users find travel deals and compare product prices. Yahoo recently added Twitter to its search pages. Yahoo's search capabilities could change dramatically in 2010, if a joint search and advertising deal between Yahoo and Microsoft is approved by federal regulators. The deal — inked in December — would allow Yahoo to integrate Microsoft's Bing search engine into its portal, while Yahoo would provide search advertising results to both companies. The Yahoo/Microsoft deal is aimed at helping the two companies compete against Google.
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