Search is key to all online services, argues Schmidt

Google is increasing investments in its search and advertising businesses, striving to allocate 70 per cent of its resources to these markets.

Of the remaining portion, 20 per cent goes to online services in fields related to search such as Blogger, Google Mini, Picasa and Google News.

The final 10 per cent is earmarked for projects outside the company's core business, such as Google Talk and the Google Wifi project in which the search giant is building a city-wide wireless network in San Francisco.

Although Google's initiatives in these last two segments tend to generate most media buzz, search is still very much at the core of the company, said Google chief executive Eric Schmidt during a gathering with press and analysts at the company's headquarters.

"Almost all of the really interesting products have come out of the 20 per cent project in the last few years," he said.

"The way our model works is to build great search and integrate all of the other user experiences around it. That seems to be where the industry is going. "

Schmidt empahsised that Google is investing heavily in its search algorithms, allowing the company to deliver more accurate and personal search results.

He predicted that the competition with Yahoo and Microsoft's MSN would become more intense in the future.

"It's obvious that things are going to be more competitive in the future," he said. "This is quite good for end users."

Google unveiled an update to its Desktop Search application at the press and analyst event as well as three new products that aim to improve search accuracy.