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Both Google and Microsoft have made moves to enter the health care industry recently, and both are hoping that the sector will prove to be fertile hunting grounds. This election season many Americans are taking stock of the way our health care system functions, and depending on the outcome in November, there may be major changes in store. Microsoft and Google are both taking a risk by pushing tools and software applications aimed at patients and professionals, and their daring may be ill-advised.

Microsoft launched a controversial health record storage tool called HealthVault in October, and thus far they have managed to attract some high profile industry partners, including American Heart Association, LifeScan (a glucometer manufacturer), and the American Diabetes Association. Talkibie covered the launch of HealthVault, and initial reactions to the technology were mixed. However, as the U.S. population ages and baby boomers become retirees, experts predict that the average patient will become more involved in tracking and managing their health records. The web is an increasingly convenient and secure option for keeping track of everything from taxes to social calendars to bank accounts, so why not hospital records?

Google had been hush-hush about a health records tool for months, though the technology world was expecting a competitor to Microsoft HealthVault. CEO Eric Schmidt finally announced Google Health in February, and the web-based application will allow patients to upload and link their personal health records to doctors offices, pharmacies, specialists, and other authorized parties. As the official Google blog puts it, “Google Health aims to solve an urgent need that dovetails with our overall mission of organizing patient information and making it accessible and useful. Through our health offering, our users will be empowered to collect, store, and manage their own medical records online.” The new record storage site is being tested at the Cleveland Clinic and Google is inviting both patients and doctors to share any thoughts or suggestions for improvement.

Microsoft also has designs beyond online patient record storage. They recently announced a new application called Patient Safety Screening Tool (PSST), which would be used within hospitals as a means of monitoring patients to prevent infection. PSST specifically targets sepsis, a deadly infection common in hospital in-patients which can affect as many as 750,000 patients annually. As a Microsoft press release explains, ““The Patient Safety Screening Tool for Sepsis can help save lives by monitoring clinical data inputs and dispatching alerts and reminders based on predefined thresholds and pattern matching to facilitate early detection and intervention.”

While all these efforts towards cracking the health care market are laudable, one has to wonder if Microsoft and Google are barking up the wrong tree. The industry is notorious for tight budgets, strict administration, and binding bureaucracy. While some might view these as barriers, these two technology companies clearly see them as opportunities for improvement. If a new software tool or web application can save doctors time, save administrators money, and save patients’ lives, it would certainly have every chance to succeed in the health care sector.

Despite intense negotiations and Steve Ballmer’s best efforts, the Microsoft buyout of Yahoo! is off, for now. With top executives unable to reach a price per share agreement, Microsoft withdrew their $33 per share offer. Yahoo! co-founder Jerry Yang reportedly asked for $37 per share for his company, which Ballmer was unwilling to meet. Yang maintained that the Microsoft offer undervalued Yahoo!, despite their closing price of $19.18 on January 31st, the day when possible deal became public. In a press release Ballmer explains his decision to give up: “We believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal.”

In the wake of the announcement, Yahoo! stock sank, reportedly off 16% by 10 A.M. on Monday. This reaction shows just how much shareholders and traders were depending on a successful negotiation, and Yahoo!’s next moves will determine whether they stay afloat. They’ve begun more than a few new ventures in recent weeks as an attempt to boost stock prices in the face of Microsoft’s offer, but will any of their efforts prove successful without the deal going through?

First, Yahoo! launched a news-rating website called Buzz, which gives readers the ability to vote on their favorite content by “buzzing it up”. The most popular stories and pages will rise to the top of the page, giving readers a chance to see what others in the Yahoo! community are reading. Buzz attempts to mimic the success of popular link-sharing sites like Digg, Del.icio.us, and StumbleUpon while spreading the success of Yahoo!’s news service.

Also, Yahoo! entered into a controversial partnership with Google for a short experiment in ad sharing. Google was allowed to place ads on 3% of Yahoo’s various sites, which prompted a share rise of 7% upon announcement. The strategy lasted just two weeks, but some experts speculated that it could signal a longer-term cooperation between Google and Yahoo!. The controversy comes from anti-trust watchdogs and regulators, who would likely strike down a true partnership between the two, as it would consolidate web advertising in too few hands.

Lastly, Yahoo! plans to unify many of their various services into one network, giving users the opportunity to create profiles and share their activities with friends. The social networking model would tie together their popular email service, Flickr (a photo storage & sharing site), Del.icio.us (social bookmarking site), Upcoming (social calendar site), and many others. They plan to sideline Yahoo! 360°, a social networking site that hasn’t caught on in a major way. Rather than building a social network, Yahoo! plans to build social features and conveniences into each of their services, providing users with a unified, customizable dashboard.

While many had hoped that a deal would be imminent (particularly Yahoo! shareholders), executives at Yahoo! were not ready to give up just yet. These recent announcements could be what it takes to keep them in the game, albeit not on the level with Google. As for Microsoft, they’ll have to wait for another opportunity to jump into the web market.

Online advertising has always been a risky business. Ad buyers rely on imperfect data, fluctuating prices, and visitor counts to determine when and where to place their ads. Top web measurement firm comScore has recently suffered from a drop in their stock prices as data they collected differed greatly from that released by Google. As a recent Wall Street Journal article reports, “It was another reminder that the science of tracking Internet usage is still far from perfect.”

The controversy began over paid click data released by comScore and by Google. In their quarterly earnings report, Google asserted that clicks on its advertisements had increased by 20% from the same quarter in 2007. As a Google press release explains, “Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 20% over the first quarter of 2007 and approximately 4% over the fourth quarter of 2007.” ComScore, on the other hand, had already estimated 1.8% growth in Google’s paid clicks. That’s way too large a discrepancy to be within a margin of error, and comScore stockholders let their flagging confidence show. The firm’s stock dropped 8% and shares closed down 40 cents at $23.18.

The key to the different numbers is all in the fine print. Google’s earnings report extends to global websites and were overall figures for all partner sites. ComScore measured only U.S. clicks and did not include non-search ads. A prominently displayed press release on comScore’s website accounts for the seeming error. Bold face type explains, “The main difference between the paid clicks trends reported by Google and comScore can be traced to the fact that the comScore paid click data cited in financial analysts’ reports (and subsequently reported by the media) are U.S. data only.” The treatise also warns, “Analysts’ efforts to use comScore’s domestic data to estimate Google’s global trends were misguided…It also needs to be noted that comScore does not currently provide a measurement of global paid click data and has never claimed that its U.S. data can be used to “predict” global trends.”

O.K., so it was simply a matter of comparing apples to oranges. Why the stock scare? Why the outrage? Advertisers, as implied in the press release, use the data released by measurement firms like comScore and Nielsen to find the most advantageous spots for their ads. As the Wall Street Journal put it, “Advertisers study their [comScore’s and Nielsen’s] data - including a Web site’s total visitors or page views and time spend on the site - to try to determine which sites are popular among particular demographic groups or in certain topic areas, such as news or sports.” If advertisers see comScore’s numbers and make decisions based on those, they’re barking up the wrong tree. They must delve deeper into demographic data to find real value on the numbers. However, comScore clearly deflects responsibility back to their users, who should not rely on their data for financial reporting or decision-making.

All of this has created quite a controversy in the web measurement world, and it has industry experts and marketers alike wondering exactly how to track internet data. It’s tempting to lean towards Nielsen or comScore data as a barometer for economic growth or financial status, but it is really most useful for media and consumer research. As comScore’s press release warns, “we should all be mindful that the primary uses of comScore’s data are for marketing and media analysis purposes.”

In the two months since Microsoft first made an unsolicited $44.6 billion bid for Yahoo!, much speculation has been circulating about how the deal will play out. The rumor mill is churning today, as several new developments have arisen. Yahoo! is allowing Google to post ads on its site, while Rupert Murdock’s Newscorp. is approaching Microsoft about a possible joint offer for the beleaguered internet search company. How will this all play out? It seems that every one in the industry has an opinion, and the news coverage has been fast and furious.

First, BBC News is reporting that Google and Yahoo! have struck a deal to test a new advertising strategy together. For two weeks, they will share advertising space on the websites they operate. Google will be allowed to display ads on 3% of Yahoo! search results pages, in an attempt to thwart Microsoft’s takeover. The strategy could force Microsoft to pay more for Yahoo!, as shareholders and company executives have complained that the initial offer undervalued the company’s true worth. Indeed, Yahoo! shares rose 7% in reaction to the advertising plan. The experiment is temporary and not indicative of a permanent relationship with Google.

Yahoo!’s talks with AOL, however, are of a more substantial nature. As a recent Wall Street Journal article explains, “Yahoo Inc. and Time Warner Inc.’s AOL are closing in on a deal to combine their Internet operations, a move aimed at thwarting Microsoft Corp.’s effort to acquire Yahoo.” Time Warner would merge AOL’s web portal into Yahoo!, though not its ISP dial-up service. The deal would give Yahoo! some capital with which to buy back shares from investors, strengthening their position against Microsoft.

On the other side of the negotiation table, Microsoft and Newscorp. are rumored to be discussion a possible joint offer for Yahoo!. This deal could leave Yahoo! with no champions to help them escape Microsoft’s grasp. As the New York Times puts it, “The combination, which would join Yahoo, Microsoft’s MSN and News Corporation’s MySpace, would create a behemoth that would upend the Internet landscape.” The possible deal between Microsoft and Newscorp. would give Ballmer the option of raising his offer for Yahoo! in the face of their rising share prices.

All these deals boggle the mind, and it’s very hard for consumers to know exactly how the various talks might affect them. Everyone likes an underdog, and it’s sad to see Yahoo! scrambling to raise their profile, but the business has been struggling for years in the face of stiff search competition. A deal with Microsoft, Newscorp., and Yahoo! would combine three of the most popular websites in the world. Microsoft has not yet announced its plans for Yahoo!’s brand should the deal proceed, but it seems clear that the executives at Yahoo! are desperate to avoid finding out. Most analysts agree that if Newscorp. and Microsoft make a joint offer, there’s little hope for Yahoo!’s continued resistance.

We are all familiar with the “get rich quick” schemes that have been around for years. Some prove successful, but most fall through. However, as the tech-savvy generation comes into their own, the next big money-making idea centers around website advertising. An article published by Business 2.0 Magazine describes a new phenomenon known as “traffic arbitrage.” This controversial practice is netting thousands of dollars a day for adept web developers. According to the article, “The concept is straightforward: Buy cheap traffic for your website from one search engine, get paid more for the ads streamed from another. Arbitrage is a major revenue source for some businesses.” The process is actually quite ingenious and surprisingly simple. Here are the step-by-step instructions describing how anyone could do this:

• Create your site, but don’t waste time or money buying an expensive domain name. It is unnecessary, because you can make the ads do all the work for you.
• Fill your site with ads from an ad host, like Google’s AdSense. Aligning your site with a popular search engine such as Google will greatly increase traffic flow.
• Place your own ads on Microsoft’s AdCenter. It’s cheaper than many competitors, and this will drive the traffic you want to your site.

After these three steps, all you have to do is bid for keywords and wait. Users will be drawn to the site, and many of them will also be drawn to the Google ads that have been placed there. The owners of the websites then cash in on the discrepancy between what they paid Microsoft and what Google is paying them. It seems like the perfect plan.

However, some web entrepreneurs have taken the idea a bit too far. In response, Google has been making efforts to block users who design sites for the pure purpose of traffic arbitrage, claiming that this diminishes the user experience. Generally speaking, the pitfalls here are obvious. A site created solely for the purpose of ad propagation is not going to be very popular, with high bounce rates and low return traffic. Users are very easily turned off by sites that offer a seemingly endless stream of clickable ads with little other content. It also seems like a bad business move; after all, the idea is to attract people to your site and keep them interested long enough to click on a select few ads. If the site is nothing but ads, what is there to attract the user?

Still, as is normally the case with a money-making scheme, this idea seems to be growing in popularity with many traffic arbitrage aficionados. As one enthusiastic blogger puts it, “I don’t know about you, but I do not know any businesses where you can make immediate and riskless [sic] profit, other than Traffic Arbitrage.” It certainly seems that, when pursued correctly, this idea certainly seems to work for many people. From all angles, the risks seem extremely low, and the potential payoffs seem almost unbelievable. After all, any venture that can earn yield thousands of dollars per day would be enticing to most people. As long as the web site creator is careful to make sure that the content of their site is not solely dedicated to ad space, it seems as though traffic arbitrage, however morally questionable some may deem it, is a very lucrative venture for up and coming entrepreneurs.

Online video continues to rise in popularity, and advertisers are still scratching their heads about how to make money from the YouTube phenomenon. According to a recent press release from Comscore, “More than three-quarters of the total U.S. Internet audience (75.7 percent) viewed online video [in January].” And that’s only U.S. internet users. Despite this growing trend, online advertising giant Google has yet to make money on web video ventures, despite owning the largest and most popular site, YouTube.

One reason advertisers haven’t jumped at the online video market may be the nature of user-generated content. They’re afraid their message might be associated with unflattering videos. As a recent article in the Globe and Mail explains, “Many advertisers, for now, are staying away for fear their ads could inadvertently appear with clips that have nudity, foul language or perhaps criticism of their brand.” After spending $1.76 billion dollars to acquire YouTube, though, Google is determined to soothe these fears.

One new strategy is to place advertising in the form of banners or clickable text within a larger video. This will allows advertisers to partner with appropriate videos for their products. For example, a banner for iTunes might be placed on a video for the latest band to hit it big in the viral world. The service also allows advertisers to target ads based on a number of criteria. Their ads can be direct by demographic factors like age, gender, geographic location, or even time of day, eliminating the risk of placement solely based on content.

The other strategy which Google is pushing is for clickable video ads to appear on sites that are a part of their content network and as a sideline on Google search pages. The ads will play with a click, not automatically upon navigating to a page. A good example of this can be seen with this Adobe ad featured on AppleInsider. This also allows clear, directed targeting to eliminate some of the guess work in online video advertising. For example, a Google user who searches for “flower arranging” might be greeted not only with websites on the topic, but also with a 1-800-FLOWERS video about their latest promotion.

In addition to the promise of targeted ads, Google is trying to lure advertisers with the promise of measuring user interest, something which traditional advertising venues cannot provide. As their AdWords page on clickable video ads explains, “We’ll report a clickthrough whenever a user clicks the display URL and visits the advertiser’s site, rather than when a user clicks the play button or image.” This is a more accurate count of interest in a product, as it can measure how many users take action, not just how many users view the video. The pricing for AdWords video is also prorated based on clicks, making it more accessible to companies of all sizes.

While these new services do not guarantee that online videos will start making money for Google, they do pose a significant threat to television and print advertising. It is much cheaper to advertise online than on a television broadcast, and the ROI of any given campaign can be measured immediately and accurately. These benefits could lure companies away from traditional advertising venues to take advantage of the popularity, low cost, and targeted nature of online video. If Google’s plans are successful, we’ll be seeing a marriage between sponsored and user-generated content on our favorite web video sites.

The team at Google is optimistic about the company’s latest release. They have recently launched Google Sites, a free, user-friendly web site building application aimed at professional teams and businesses, and the service has been incorporated into Google Apps. Using the technology from their 2006 acquisition of the wiki platform JotSpot, Google Sites boasts the following:

• Anyone can use this application (”as simple as editing a document”)
• It will create an environment in which all forms of media can be made readily available to your team (”one-stop sharing”)
• Peer editing of your ongoing projects (”to keep it fresh and up-to-date”)

In addition, there is even an introductory video available which will allow users to tour the application’s features. This CNET article quotes Matt Glotzbach, product management director for Google Enterprises, as saying Google Sites fills “a key hole in the Google Apps Suite. It is the nucleus for other pieces to fit into for online collaboration.” It sure seems as though this new application would be well received, having even been dubbed a “Microsoft SharePoint killer” because of its relative low cost and collaboration features.

However, many feel that these early views of the product might be all hype. Take for example that last comparison, that some believe Google Sites to be a major rival to Microsoft’s SharePoint. Yes, it is true that Google Sites is less expensive and more “user friendly,” as Google has aimed the service at a larger target audience than simply IT professionals. However, the list of competitive features ends there. Many industry experts do not think that Google Sites is ready to compete with industry leaders like IBM and Microsoft. In a recent interview with eWeek, Forrester Research analyst Erica Driver points out that, “Google Apps is still limited compared to IBM Lotus Quickr and Microsoft SharePoint platforms.” Driver also points out other industry professionals’ criticisms of Google’s entire suite, Google Apps, claiming that it lacks “secondary functionality.” According to Driver, these would include search features, information rights management, business process management and informal learning. She goes on to say that competitive products include “an abundance of functionality,” which includes basic content services, collaboration and communication, social computing, portal services, and productivity tools.

Early user reviews of the application have not been promising, either. As one blogger writes,”After 16 months at Google developer’s hands, the outcome is substandard. This is such a pity.” Michael Dressler, partner at The Last Mile Group and one of the original JotSpot developers, was discouraged by the lack of an API (application program interface). JotSpot developers feel disappointed because without an API it’s impossible to create new, more sophisticated applications with this product. To some, this means that JotSpot technology has regressed since it was originally acquired by Google.

There is also quite a bit of negative feedback regarding security and ownership of information over Google Sites. According to the legal agreement users make when they use this application, any information you post can be used by Google for the purposes of promoting their site. Furthermore, Google can (at any time, for reasons they see fit) block access to or destroy your data files. For many enterprise users, this is clearly a cause for concern.

Still, not all reviews are bad. Writer Dan Farber believes that Google Sites and the entire Google Apps Suite has the potential to give competitors a run for their money: “Google Sites is a key piece of functionality for Google Apps. It gives the suite a way to integrate all kinds of components in support of accomplishing a particular task. Adding social capabilities and a database to the suite will turn up the heat on Microsoft to show what it has waiting in the wings to go beyond the prodigious Microsoft Office.” So, even though Google’s suite is a web app tool and Office isn’t, some believe there is a potential for Google’s platform to out-perform Microsoft in terms of usability. And, of course, Google Sites is still in the early stages of release; the company has historically been very responsive to user feedback and complaints, and has planned upgrades accordingly.

Taking into consideration the feedback from industry professionals, it appears that Google Sites is going to meet with some resistance. There is much criticism and little praise to be found for the tool. Though this does not necessarily mean that the application is doomed, it does somewhat imply that there are many upgrades and improvements that Google might consider looking into in order to counter some of the arguments being made against the web suite. However, if the current atmosphere is any indication, it does not appear as though Google Sites will present any stiff competition for Microsoft and IBM. It will be interesting to see if a second release of the application will provide the functionality that Sites is missing.

As Yahoo! Research Chief Prabhakar Raghavan recently told Businessweek, “In a sense, there are only five computers on Earth.” These computers, vast data centers which have come to be called “clouds”, belong to Google, Yahoo!, IBM, Amazon, and Microsoft. Nearly all of our online activities, from sifting through CNN.com’s news stories to searching for risotto recipes to updating our family’s blog, are facilitated by a vast network of computers owned by one of these companies. These clouds are able to process huge amounts of data at amazing speeds, and many industry experts point to them as the wave of the future. The five big clouds are now opening up to smaller businesses, allowing them to compete in the world of data-intensive computing.

Clouds are essentially networks made up of a myriad of smaller machines, inexpensive servers, which can store and move huge amounts of data. These next-generation supercomputers are what allow Google to achieve their goal, “to organize the world’s information and make it universally accessible and useful.” Most of these cloud clusters are not on a company’s central campus, but in various locations around the world. And when one machine dies or outlives its usefulness, it is replaced and the service goes on uninterrupted. Businessweek likens the trend toward cloud computing to a shift in how American’s receive electricity: “At the most basic level, it’s the computing equivalent of the evolution in electricity a century ago when farms and businesses shut down their own generators and bought power instead from efficient industrial utilities.”

Now, smaller businesses will have the option of shutting down their small “generators”, expensive, clunky, and inefficient servers which cannot compare to power of clouds like Google’s or Amazon’s. As Talkibie reported in January, Amazon’s Web Services Division is reaching out to businesses who would essentially “rent” a piece of the cloud. Applications, websites, data, and even documents could be hosted on Amazon’s cloud, allowing smaller companies to launch products without the risk or investment of their own data centers.

Yahoo! has also taken an active role in expanding cloud computing beyond the borders of Silicon Valley. They’ve pioneered an open source project called Hadoop, which mimics some of the functions of Google’s groundbreaking software MapReduce. MapReduce essentially breaks down every computing task into thousands of smaller tasks which can be completed by individual machines within the cloud, then reassembles the information gathered into an answer. Yahoo! is working to make this software available on other computing clusters through Hadoop. Ironically, Google is now using Hadoop for some its community projects (MapReduce is too secret). Yahoo!, like Google, is making some of its computing power available to universities for scientific research and teaching.

IBM has also made gestures to open its cloud to business customers. In addition to hosting web applications for small and medium-sized businesses, they have collaborated with Google to build a prototype cloud for use by large universities. Fitted-out with Hadoop and IBM’s business applications, the joint Google/IBM university cloud will help computer scientists further develop the cloud computing of the next generation. Microsoft also sees the application of clouds to scientific study and higher learning. As Businessweek reports, Tony Hey, Microsoft’s vice-president for external research predicts that clouds will, “function as huge virtual laboratories, with a new generation of librarians - some of them human - “curating” troves of data, opening them to researchers with the right credentials.”

This trend towards open clouds will not only help small businesses, scientists, and students, but it will also change the landscape of the internet. It will likely increase its size and scope dramatically, and allow us to connect across boundaries in record speed. These five companies are essentially setting themselves up as the world’s computer, with the internet as their operating system. They are providing top universities with the latest research into computing, not the other way around. Though it’s too early to tell whether the trend toward large-scale clouds will benefit the average user, it is certain to change the way we interact with each other through technology.

Many industry experts, journalists, and bloggers have expressed their displeasure with Microsoft’s possible takeover of Yahoo!. Though the executives at Yahoo! have so far rejected the $41.7 billion offer, many expect a deal will be reached at a higher price, much to the dismay of the lion’s share of writers on the subject. As Jerry Yang, Yahoo!’s CEO, fends off the strong arm tactics of Steve Ballmer at Microsoft, we find ourselves rooting for him without knowing exactly why. Is it because we like the underdog? Or just because we hate Microsoft? Is there anything positive that could come out of this deal for consumers?

Yahoo! has been spiraling downward for quite awhile, and they haven’t been able to compete with search engine giant Google. Google has inked deal after deal with rival companies, perhaps the most important being the acquisition of DoubleClick, an internet advertising broker, which gives Google even more control over how ads reach internet users. The DoubleClick deal was cleared by the FCC after months of hearings, but is still awaiting approval by European courts. Yahoo! has lost ground to Google consistently when it comes to search technology and advertising, though Microsoft’s offer clearly intends to buck this trend.

Almost every news source covering the deal mentions that Microsoft wants a piece of the internet advertising industry. Perhaps together Yahoo! and Microsoft can present a viable alternative to Google for both search users and advertisers. The key to developing solid, targeted ad technology is collecting user behavior data, which is one thing at which Yahoo! has always excelled. As the Seattle Times reports, “Yahoo assembles a profile of a person’s behavior based on searches within Yahoo, videos watched, ads clicked and visits to Yahoo sites and partner sites such as eBay. The profile that emerges could have details such as a person’s basic salary, health concerns, cars, number of children, gender, age, ZIP code, industry and work.” Yahoo! is able to collect these detailed profiles in a way that Microsoft is not, and the information could lead to a vast improvement in Microsoft’s presence and success online.

Aside from the expected boost in Microsoft’s online ad chops, industry experts are speculating about the company’s possible plans to expand online software efforts. As the Wall Street Journal reported last week, “the company’s products face pressure to evolve as the rise of online services changes how people use technology.” Microsoft is being outmatched by the Software As A Service (SAAS) industry right now, and they rely almost exclusively on traditional software licensing for their revenue. Their competition comes from SAAS vendors who provide value to business users by hosting applications on proprietary servers, freeing businesses from expensive data centers and draconian licensing fees.

The Yahoo! deal could help Microsoft transition into the online software arena. As British insurance company Aviva PLC told the Wall Street Journal, “[the company] hopes Microsoft will combine Yahoo’s online software and knowledge of how the Internet works with Microsoft’s understanding of how a business operates to develop innovative corporate software.” If the deal goes through, Microsoft should be making plans to harness not only Yahoo!’s potential for ad revenue but also their expertise in web applications.

This dual strategy would push them towards the ultimate goal of competing with Google, which has an early lead in providing office tools through web applications. Google Apps, which includes word processor, spreadsheet, and presentation programs is becoming more and more popular with businesses of all sizes. Microsoft has made some moves to allow online access to its Office Suite, and perhaps with help from Yahoo!’s experts they will bring their software to the next generation of delivery.

Speculation is still all over the board, and it will likely be quite awhile until a deal is reached. One has to wonder, due to the recent fine imposed by the EU against Microsoft for a record $1.4 billion, if a merger of the two will be approved by government anti-trust groups. While I definitely sympathize with the folks at Yahoo! and hope against hope that they will be able to fight off the acquisition, there just might be some benefits for users in the long run. Most of us are stuck with Microsoft our software provider whether we like it or not, and a deal with Yahoo! just may give them the innovative approach they need to please us.

Whenever Google comes out with a new product or service, U.S. industry watchers seem to shower praise on the search giant. They have become the advertising and web technology version of Apple, and consumers eagerly speculate about their latest moves and await their product releases. Not so in the tech-savvy nation of Japan, where users were quick to pan a mobile version of Google Maps which was well-received by U.S. consumers. As Businessweek reports, “Says [Google] software engineer Ken Wakasa: “People’s expectations are very high here compared to other regions.” As Google prepares to expand their mobile search division, they are using picky Japanese consumers as a test market for products and services designed for web-enabled cell phones.

In the summer of 2006, Google famously teamed up with Japanese mobile carrier KDDI, the second largest in the Asian nation. Last month, Google also struck a deal with the largest carrier, NTT DoCoMo. The two companies provide cell service to nearly 100 million users, and a much larger percentage of them (compared with U.S. consumers) use their cell phones for web access. The partnership aims to improve search engine technology, email access, ads, and website performance for mobile phones. Japan is the location of choice for Google not only because of the discerning population of cell phone users, but also because plenty of popular Japanese websites are specifically formatted for mobile access.

Google employs an observation method for testing, as a representative told Businessweek. “We just tell them: ‘Find me a restaurant for tonight in Shibuya,’ and we just watch.” Testing is sometimes done in-house, but participants are encouraged to use their mobile devices as they normally would. This gives Google a more realistic picture of how to improve their search technology. The ultimate goal of testing is to allow mobile users to find what they need using the smallest number of clicks.

The search engine’s testing efforts in Japan have revealed some surprising results. For example, while many computer users access Google to search for news stories and articles, data from testing in Japan suggested that mobile searchers are looking for images or videos rather than sites with lengthy (and necessarily tiny) text. This focus on image results has helped Google tweak their mobile search service. Rather than having the options to search for a number of different media (like on the regular Google home page), mobile users will have these options automatically integrated into their results. This move is a step forward for universal search, an initiative to automatically provide search results in many formats to users.

Another surprise for Google came during an unusual spike in searches late one night. As Google’s chief in the Japanese lab Ken Tokusei told Businessweek, “We were wondering: Was it spam? Was it a system error?” The late-night surge came from a popular television show which promoted a freeringtone download but did not show the web address long enough for viewers to log on. This surge is remarkable because it shows that Japanese cell phone users, who are a few years ahead of their American counterparts, are using phones for web searches even when their at home, and presumably, have access to a PC.

Perhaps the biggest barrier to making Google searches as easy from a phone as they are from a computer is the compatibility issue. Unlike computer software, where users really have very little choice of operating system, cell phones come with a myriad of different software packages depending on the manufacturer and service provider. The variety of software makes it hard for Google to optimize their offerings for every user, though their mobile platform Android aims to unite developers. With Japanese consumers as their guide, Google will hopefully bring a new uniformity to web-enabled phone software, allowing more users to experience their useful apps anytime, anywhere.