Google acquires photo-management company Picasa

Google Inc. has acquired a company called Picasa Inc. that makes software for organizing and managing digital photos and that runs a peer-to-peer network for sharing digital photos, Google announced on Tuesday.

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A Google spokesman declined to say how or if Picasa's technology would be further integrated into Google's services. Financial details of the transaction weren't disclosed. In May, Picasa's technology was integrated into Google's Blogger service to simplify the publishing and sharing of digital pictures into Blogger messages.

The software for organizing digital photos is called, like the company, Picasa, and is now on version 1.6 and sells for $29, according to information on Picasa's Web site. The peer-to-peer network for sharing photos is called Hello and its access software can be downloaded for free at http://www.hello.com. The network can be used with or without the Picasa photo management software.

Google, in Mountain View, California, runs the world's most widely used search engine, but it seems interested in broadening its horizons and building complementary Internet services around its search functionality. For example, in April it announced plans to launch a free Web-based e-mail service. Called Gmail, the service is still under development, but some privacy watchdogs slammed it when it was revealed that Google would scan the text of e-mail messages to deliver ads based on their content.

There is a consensus among industry analysts that users are not very loyal to search engines and that search engine companies need to build a suite of services to hold on tighter to their users. Analysts have said in the past that it is key to Google's survival to stop being a one-trick pony and build a broad suite of Internet services similar to those offered by rivals Microsoft Corp. and Yahoo Inc., with things such as instant messaging, e-mail, photo album and calendaring services.

Some analysts have speculated that the money Google stands to raise from its upcoming initial public offering will help the company accelerate the development, creation and acquisition of services it will need if it is to compete on equal footing with its rivals. No date has been set for Google's IPO, for which the company filed a government registration in April.

Currently, most of Google's revenue comes from online advertising, particularly the type of "sponsored search" ads that are served based on the context of a user's keyword search. However, competition in this space is heating up, as Yahoo, Microsoft and others are investing heavily in the search market. In October 2003, Yahoo acquired Overture, a seller of sponsored search ads, and it is continually enhancing its own Internet search technology and integrating it with its other Web-based services. Meanwhile, Microsoft has declared the search market a priority and is developing its own search technology, which Microsoft hopes will reach information not only on the Internet but also in other data repositories, such as proprietary databases and users' desktops.