Google Acknowledges Issues in China

Includes: BIDU, GOOG
by: Ezra Marbach

From Google's (NASDAQ:GOOG) Q2 2006 earnings conference call transcript:

Safa Rashtchy - Piper Jaffray

Good afternoon. Congratulations on a solid quarter. First, could you give us your assessment of if you're still gaining market share? And if so, what do you think is contributing to that market share gain?

Second, a question on the international front. It seems like two of the potentially largest markets, China and Russia, have posed some challenges where there are frontrunners and you are not number one. They may be one of the few countries where you are not number one.

Could you give us your sense of if you are seeing this type of local competition that has captured the top market share elsewhere? How do you plan to deal with these kind of local players that may be emerging? Thank you.

Omid Kordestani - SVP of Global Sales and Business Development

Hi, Safa, this is Omid. I think Sergey and I are going to respond to you. We, first of all, believe in terms of the public data that's out there from research companies, we believe the data is directionally correct. Our internal estimates differ in terms of precision with that data.

In general we think we are doing really well in the United States and in Europe, and, as you mentioned, in some of those local more emerging markets for us, we have more challenges there. I think the equation there is one we are aware of how to solve. We need local engineering talent. We need local product innovation. We are busy trying to staff those operations.

Safa Rashtchy - Piper Jaffray

Do you think in the U.S. you are gaining market share? And if so, what's helping you with that?

Sergey Brin - Co-Founder and President of Technology

This is Sergey. Maybe I'll take the rest of that. I think we've really accelerated the development of our products, specifically with respect to search. We're just devoting an enormous number of resources to it, and we've made tremendous strides in relevance and comprehensiveness, in ease-of-use, and freshness also. I think the end users really appreciate that and sympathize with that. I think our reputation has also grown with that. I think that's really helped here.

I wanted to talk a little bit about some of the other markets you mentioned, Russia and China. By the way, those are probably not the only two challenging markets for us. Also I would include Korea. There are probably a few others here and there. There have been some unique circumstances in each of those countries.

In China, for example, as you know, we have had some connectivity availability and latency issues. There are also some different product needs in that particular country. But we're now getting to be quite well staffed there, and have been addressing some of those and I think we're making good strides.


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