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Web browser makeovers and why S&P is bullish on Google

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Google Chrome comic bookMy view of the world is partly framed by my computer screen, so I found it nearly impossible to ignore the clamor this fall about new Web browsers. At the end of August Microsoft (NASDAQ: MSFT) released a beta version of Internet Explorer 8, which was followed a couple days later by an online comic book that announced Google's (NASDAQ: GOOG) launch of Chrome, for Windows only.

And who could ignore the buzz in October about Microsoft's SearchPerks, an incentive program with prizes for those willing to sift the Web via its search engine Live Search? Or the fact that yesterday Google announced a new way for users of its search engine to customize their results, ranking and annotating them?

I wondered why these big public companies considered browsers so important, why they had spent the money to update them and give them away for free over Labor Day weekend--and even to reward me to search online. So I rolled up my sleeves, downloaded, read some and talked to a stock analyst.

I was not the only one to notice some similarities in the two new browsers: Both offer private browsing (Web surfing without leaving any history) and crash recovery (so that only the specific tab involved in opening a faulty Web site fails not the whole browser application).

Yet each browser has innovations. As reporters and reviewers have noted about Internet Explorer 8, for example, Accelerators allow you to highlight a term to use it as a launch pad for such applications as mapping, translating and e-mailing. The Web Slices feature lets you plant a snippet of a favorite site atop your browser; you'll be alerted as it's updated.

Chrome sports what Google calls a "streamlined" look. The browser is designed as a giant box, with its features tucked neatly inside for you to pull out. Chrome can also showcase within your browser screen nine small views of your most-traveled Web sites. BusinessWeek points out that it's the "wizardry" under the hood that really matters and that enables this browser's applications to run fast.

These browser makeovers come, says Scott Kessler, senior director of information technology at Standard & Poor's Equity Research, as browsers and search engines have increasingly become linked. "Companies are ... appreciating the increasing relevance of the browser and search in terms of how they communicate with the world, users, customers," he says. "A lot of applications that formerly ran on computers or desktops now operate within the confines of the browser itself."

Chrome Case: Such is the case with Google's Chrome, he elaborates. Google is very focused on offering a "holistic information experience" -- whether on a powerful PC or a handheld. Its strategy for Chrome is to enhance your online time, with a myriad of applications -- so you'll be tempted to search for a restaurant with Google Local and then check Google Maps. Plus, he asserts, the Google search engine, browser, word processor and other applications "tend to work better together." In trying to build a better mousetrap with Chrome, Google highlighted speed and security, he says.

To Kessler, Google's approach has a lot of potential not just for traditional Internet use, via computers, but also for the wireless Internet. Android, its application for wireless phones, gives Google significant opportunity in the mobile area, he says, as wireless devices proliferate, surpassing the prevalence of computers.

Kessler sees Apple (NASDAQ: AAPL) as a wild card: While Apple has developed a prominent browser (Safari) and is rumored to be looking at creating a search engine, it just completed a deal with Google for voice-based search.

As of October, Internet Explorer still claims the lion's share (71%) of browser users, leaving Mozilla's Firefox with nearly 20%, Safari with 6.5%, and Chrome, Opera and Netscape with less than 1% each, according to Net Applications.

So where's Google's gain with the new browser? Kessler explains that the more people go online, the more they're going to sample Google's offerings and the more it has an opportunity to monetize that usage. And there's strategic value for Google in having people surf with its browser, he says, since Google can do many things to influence how its applications are used. Take Google's e-mail: "They have computers that scan e-mails and place advertisements next to content." A lot of advertisers spend amply so that their ads are seen, he adds.

In October, Standard & Poor's changed its rating of Google to STRONG BUY, citing its third quarter results. Google's share price seemed undervalued, he says. As of mid-November, Google's stock has been trading even lower, below 300 -- down considerably from its high above 700 last year.

Google is positioned in the current economic environment to do well, Kessler says. Every company is reexamining its marketing, and businesses will be more likely to spend money within the search advertising category; these ads are cheaper and interactive, providing feedback so advertisers can adjust their plans accordingly.

Plus, making money at a rate few companies can match, Google has the cash to spend on innovation, he adds.

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Last updated: July 04, 2009: 06:13 AM

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