Six Easy Pieces: Google CEO Eric Schmidt Talks with Boston Journalists

11/5/09Follow @wroush

There must be some new force pulling West Coast tech CEOs to visit Boston. Last month, Microsoft CEO Steve Ballmer was in town; yesterday it was Google CEO Eric Schmidt.

To mark the unusual occasion, Google invited a raft of journalists to its offices in Cambridge for an open, on-the-record roundtable discussion with Schmidt. Google’s Cambridge site director Steve Vinter served as moderator. Many of the questions tossed Schmidt’s way focused on specific Google projects such as Chrome, Wave, and Android 2.0, and when they’ll evolve into major consumer-facing offerings. While some of that was interesting, I thought Schmidt’s comments on a few of the bigger strategy and policy questions revealed more about the company’s outlook on the world.

Below are some of the high points from the discussion—including Schmidt’s thoughts on strategies for economic recovery, why people fear Google, and what role the company may play in the survival of journalism.

Google is growing fast in Cambridge.

Vinter said Google’s Cambridge office, which handles a variety of projects from Google Friend Connect to Google Book Search, has passed the 200-employee mark and will be “hiring very aggressively” in the coming months. (That’s in stark contrast to Microsoft, which reduced its headcount yesterday by some 800 people, including some here in Cambridge.) “Virtually every project we have is scaling up,” Vinter said. Schmidt (who attended both Princeton and Berkeley) said Google was attracted to Cambridge in the first place because it “likes cities with extremely good technical universities.”

Many more people will be getting a look at Google Wave in the near future.

Up to now, Google has been carefully parsing out invitations to Google Wave, its experimental real-time e-mail/chat/collaboration/document sharing platform. Schmidt said the company is “getting ready for a broader distribution very soon—weeks, not months.” He said feedback on the software from early users has been positive, but the company has been slow to invite in more users for fear of outages. “So far the experiment has yielded a very innovative model and a lot of buzz, and now we want to see if it can scale,” he said.

Google has very big plans for the Chrome browser and its bigger cousin, Chrome OS.

Adoption of Google’s Chrome Web browser is progressing “very well,” Schmidt said. But for Google, Chrome is “more than a browser,” he said. “It’s a platform for powerful Web-based apps that you can’t really deliver in cloud computing without having a browser that can support cloud apps.” Making Chrome work fast, maintaining a clean separation between applications running in different tabs or windows, and supporting the new HTML 5 standard “are central to making the apps model work,” Schmidt said. “And Chrome’s success is a necessary precondition to the success of Chrome OS,” he said, since the one is derived from the other. “We have a lot riding on Chrome.”

The first public version of Chrome OS will be coming out by the end of 2009, Schmidt said. But the operating system won’t be a serious competitor for Windows, Mac OS, Linux, or other operating systems until manufacturers build cost-competitive machines that run Chrome OS and developers write applications that run on it. “You have to be able to run either the current apps you have, or cloud-based apps that are sufficiently good that you’re willing to move over to them,” Schmidt said. “And your employer will probably be very concerned about the cost—what is the lowest cost hardware you can buy? That is how the hardware cycle will go.”

Information technology has a big role to play in economic recovery—but not necessarily as the star of the show.

Schmidt noted that during the original Internet boom from 1995 to 2001, “the entire growth of the bubble was due to two industries, of which IT was one. We were very happy to be at that level of primacy.” But escaping from recession, he said, will require building a new set of industries in which the United States can lead—and the one that he’s most excited about, surprisingly, isn’t IT. “We are clearly the leader in IT. You have an opportunity around biotech, much of which has been done here in Cambridge. In the cleantech area you have massive rebuilding opportunities…[but] then you have the final one, which no one wants to talk about, but which is the most interesting, which is advanced manufacturing—making new things [that come in] relatively smaller volumes but are very technology-intensive, whether that’s batteries or electronics or new materials.” Fortunately for Google, Schmidt said, “Every [area] I named is heavy in IT and the Internet and information processing.”

People fear Google because it upsets lots of apple carts.

I asked Schmidt why so many people fear Google and fret about its plans. His answer came in three parts. “Google is a disruptor,” he said first. When the company applies its unique abilities to new industries such as the news business, Schmidt acknowledged, it almost always tends to upset traditional economic models. But that’s just life, he suggested. “From time immemorial, a new technology comes along and everybody adjusts,” he said. “In this context, Google is a stand-in for the Internet as a whole—if it were not Google doing these things, other people would.” And “we would argue that that disruption has a very strong consumer benefit” in the end, he added.

Second, Google doesn’t choose small problems—so whatever it does affects a lot of people’s interests. “If we do something, we do it at a national or ideally a global level so that it can reach millions of people,” Schmidt said. “That is the standard we use. We are interested in problems that affect millions of people, where we can materially improve the quality of their lives.”

Third, Schmidt said, “We are an information business, and everybody has an opinion about the information business–including every one of you, and me as a citizen, and the government, and the political parties.” Since it’s Google’s business to handle so much information every day, it will always be barraged by questions about how it does so. But “as long as we are on the side of making consumers more empowered, we will be fine,” Schmidt said.

Google stands ready to help reverse the decline of traditional media, but it doesn’t have all the answers.

Speaking of disruption and the information business: Google is well aware of the pain that many news organizations are going through as they deal with declining revenue from print advertising and circulation. If more newspapers decide to start charging for their online content, Google will be there to provide a payment mechanism, Schmidt said. “We’re in the infrastructure business,” he said. He also said Google is “working hard on stronger advertising products” that would help publications earn more money from both print and online ads, but that the problem “remains unsolved.”

One reporter asked Schmidt whether he felt that in the digital economy that Google is pushing forward so quickly, there will still be news organizations capable of covering stories like the Watergate scandal. “We have a responsibility” to help preserve serious journalism, Schmidt said, “but we have not yet figured out how to exercise that responsibility…We are looking for new ideas. It’s a hard problem, because as everybody knows, print circulation has declined, and the online use of newspapers has exploded, so you’ve got a bridge problem.”

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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