Google on the desktop

Google has bought Picasa, a company that makes desktop software for managing your digital photos. Google obviously isn’t saying what they plan on doing with their latest acquisition, but speculation is running rampant.

The press release says that Picasa will “complement Google’s ongoing mission to organize the world’s information and make it universally accessible and useful.” Ross Mayfield thinks Picasa gives Google a new potential revenue stream — photos are shared, stored, and printed at an increasing pace. John Battelle says that finding and storing images is a difficult information management problem that hasn’t been solved.

The acquisition puts Google into a new spot. They now have to sell and support consumer software. This is a relatively new spot for Google to be in. The Google toolbar is the only consumer product they have that doesn’t sit on their servers. A browser toolbar is a different animal than a Windows application that people use to manage their information. I suspect that Picasa users will be a bit more demanding than Google Toolbar users.

In recent weeks rumor has spread that Google is readying a desktop search tool to help you locate files, email messages, and other items on your computer. CNet points out that there are significant risks with this strategy, one of which being that building and marketing products requires different capabilities than creating Web-based services. The Google Appliance hasn’t exactly been a booming success.

Another risk highlighted by CNet is the Microsoft factor. MS is already competing with Google in the Internet search market and has promised better search tools in Longhorn.

Picasa gives Google an entrance into the desktop market. Picasa provides instant experience with the business of desktop software. Picasa is already popular, installed on millions of computers, and provides information management. It’s an area that Microsoft isn’t pursuing. It’s tied into one of Google’s products and Google already has a peripherally-related business with their Web image search capabilities. Google gets to expand a bit without overextending themselves into a completely unrelated busiess. And that expansion provides them with a foothold into some markets they are reportedly exploring.

Picasa’s business and pricing model may change now that it is a Google product. When they bought Blogger, Google eliminated the for-fee version and rolled all of the paid features into the free version. The Google desktop search is expected to be a free, ad supported product. Bill Flitter has said in the past that Google isn’t a search company, it’s an ad broker. They exist by serving ads over other people’s content — search results, third-party websites, and email. Does this now include photos? If Google figures out how to automatically organize photos, they’ll be able to sell related ads. Expect Google to make Picasa a free product supported by contextual advertising. Also expect Google to build more features to share photos with others. That way, when you’re looking over pictures of your neighbor’s cruise and wishing you had gone, travel agencies will be showing you their latest deals.

The acquisition also creates a strange family tree. Picasa is (was) an Idealab company. So was Overture, now owned by Yahoo. So Idealab now owns part of both Yahoo and Google. Idealab also has a desktop search tool called X1 that would be in direct competition with Google’s desktop search.