Introduction
There are few things as powerful as human passion. On the Internet, we see it in blogs, videos, and social networks, through many voices with a story to tell, eager to be heard. Over the past year, there have been many developments at Google I would like to share with you - products, partnerships, and milestones. There are many feature lists, statistics, and technical accomplishments behind them. However, what really inspires me are the words of the people whose lives we touch. While in the past Larry and I have taken turns writing this letter, this year I would like to give a voice to these people so you can hear just as I do how Google affects their lives.

Search
Search remains the heart of Google. Every day, millions of people search on Google for information either for themselves or someone close to them - information that can help their careers, their education, or their health. Sometimes it is just a casual curiosity that sends them searching, but at other times, their need for information can be critical - and what they find can even save a life. That is why we work so hard to provide the best possible information for every query, on any topic, in any language, in any country.
Our search must also work well for different levels of expertise. Sometimes it is patients who seek medical information on Google, but other times it is doctors themselves. To go more deeply into technical fields, we have developed Google Scholar™, the most comprehensive search for scholarly work. And we also launched Google Patent Search as well as News archive search, which adds nearly 200 years of newspaper archives to Google News™. In addition, information providers and individuals can now help us improve search within their fields of expertise by creating Custom Search Engines on their own sites that provide more specific search results related to their interests.
Stories like these help us understand just how important it can be for people to have comprehensive search results. In the past year, we have increased our search index size by billions of documents, leveraging continued infrastructure improvements to our indexing system. This has increased capacity and improved refresh time. We also launched Webmaster Central as the place for webmasters to get information about how Google crawls and indexes websites, and to find tools such as Google Sitemaps™ to direct our crawler more efficiently.

Books
A comprehensive search engine is not restricted to the Internet. Much of the highest quality information in the world may be found in tens of millions of books tucked away in libraries and on publishers’ shelves. These books can be tremendous assets - but only if people know that they exist. Google has embarked on a mission to digitize the world’s books and make them discoverable, simply by searching online.

Book publishers benefit from wider distribution of their books. In 2006, we continued to add to our growing book index. We introduced four new partners to the Library Project, including the University of California, considered the largest research and academic library in the world; University Complutense of Madrid; University of Wisconsin-Madison; and the University of Virginia. Our Partner Program grew with new relationships and expanded agreements and now includes more than 10,000 publishers. Book Search is now available in 9 languages, and next year, there will be more.

Today users can search through millions of books to find popular, obscure, and beloved titles on every topic imaginable. Of course, Google Book Search is not just good for readers. Publishers benefit from increased exposure for their books.
This year we also developed a new look and browsing interface for Google Book Search™ that makes it even easier to use. We’re hearing from readers, researchers, and book lovers around the world that they are locating books more quickly and easily than before.
Video
Sometimes text isn’t the best way to communicate or understand an idea. If you are learning about a sport, an art performance, or a mechanical invention, video can be a far more compelling medium. This is one reason 2006 saw such a dramatic growth in the viewing and sharing of online videos. To this end, we have developed Google Video™ to search video, and this year we acquired YouTube™ - an incredibly dynamic and compelling way for people around the world to share their lives and express themselves.

YouTube has the largest online video audience and offers the most entertaining, original content on the Internet - with a community that continues to grow exponentially month after month. YouTube has struck more than 1,000 partnership deals with content providers looking to participate in this growing creative community - including Universal Music Group, CBS, BBC, Sony Music Group, Warner Music Group, the NBA, and The Sundance Channel.
In addition to professional content, user-generated content is central to the YouTube community experience. As more people capture special moments on video, YouTube empowers them to become the broadcasters of tomorrow. YouTube is a cultural phenomenon, winning the hearts and minds of an increasingly broad demographic. It has democratized the entertainment experience and created a new way for people to communicate across the globe. For example, when Leigh Buckley, a wife and mother from New Hampshire, was diagnosed with leukemia, she and her husband Andrew began chronicling her experience and posting the videos to YouTube. They have received an overwhelming response from people not only wishing her well but also organizing bone marrow drives.

Google is about connecting people with information. Online video is a new genre for connection that engages a new generation.

Local
People use Google products to learn not just about the farthest reaches of the universe but about places closer to home. Google Maps™ has become the #1 mapping site across Europe and #2 in the U.S., and now offers detailed street maps in more than 50 countries. We are pleased that so many developers have used our mapping technology as a platform for further innovation, and proud that more than 30,000 websites use our maps API. Local authorities in London now use the Google Maps API to let residents report problems such as road defects and trash on the streets. Google Maps is also available now on mobile devices and plays an integral role in our partnerships with mobile providers. We expect more and better local products to result from our work in the mobile space.

With more than 200 million unique downloads, Google Earth™ users worldwide are venturing out to explore, understand, and share our planet. Google Earth now covers more than half of the world’s population and a third of the land surface in high resolution. We’ve found that one of the first things users do after launching Google Earth is look at their own home from space. Then they quickly discover that Google Earth lets them search and browse a growing web of geospatial content from community storytelling, 3D buildings, location referenced photos and historic maps to Wikipedia articles, United Nations and European Space Agency content, and even photos and stories from National Geographic and videos from Discovery Networks. Furthermore, Google Earth also enables people with limited resources to better understand the world around them.
Mobile
In many regions, mobile is often a “first screen” device - the primary way users access information.

Here’s a story that illustrates this global reality:

A Googler was vacationing in Africa recently and happened to be wearing a Google T-shirt. A local approached him, clearly very excited about Google News. Naturally, the Googler asked, “Do you know you can get Google News on your mobile now too?” To which the man replied, “How else would I get it?” Indeed.

We’ve made great strides toward universal accessibility, in no small part because we have forged relationships with some of the most prominent carriers and equipment manufacturers in the world. Motorola, Sony Ericsson, Vodafone, Nokia, Beeline, KDDI, NTT DoCoMo, Bharti Airtel, China Mobile, and Samsung are our partners, and we look forward to growing these relationships.

Our efforts in mobile are helping to drive adoption of the mobile web and create interesting revenue opportunities for our partners, such as the mobile ad pilots that we launched in more than a dozen markets in 2006.
Content, Collaboration, Community
We have worked to expand our offerings that enable users to manage their information - to create content, collaborate on it as a group, and then share it with the world.

Perhaps the most important online collaborative tool is email. Gmail’s introduction in 2004 contributed to a new focus on webmail generally, including a shift from offering storage space in megabytes to gigabytes. Gmail™ has developed substantially, with the introduction of features like Gmail Chat, which brings together email and instant messaging.
For better time management, we offer Google Calendar™ a free online service that we launched this year that makes it easy to keep track of your schedule and share it with friends. Google Calendar fits perfectly with our other online collaboration applications like Gmail and Google Docs & Spreadsheets™ designed for managing and sharing documents. This product combines both ease of use (nothing to install, just use your browser) along with powerful Internet capabilities like collaborative editing, access controls, and content available anywhere you can get to the web.

As I write this right now, other Google employees are editing this document (and making it “flow” - I confess I am difficult to edit).

Products that enable the discovery and sharing of content have become a dynamic force on the Internet. We want to support these activities for all types of information, including photos, documents, and blog content. For example, today we offer Picasa™ photo-organizing software and more recently launched Picasa Web Albums for online photo sharing.
Another focus is products that enable users to discover new people and learn more about each other. Orkut™ our experiment with social networking, is now part of the social fabric for the majority of online users in such countries as Brazil and more recently, India.

Finally, in the area of personal publishing for large audiences, we unveiled major updates to Blogger™ and Google Groups™ and introduced Google Page Creator™, which people can use to easily and quickly create professional-looking web pages. Our acquisition of JotSpot, collaborative wiki technology, is another demonstration of our commitment to this space.

Organizations are increasingly sharing these services with all of their users. In 2006, we developed Google Apps for your domain, which includes Gmail, Google Talk™, Google Calendar, Google Docs & Spreadsheets, Page Creator, and the Start Page. Arizona State University (ASU), with 65,000 students, has already implemented Google Apps across the university.
Advertising
Our goal is to create a single and complete advertising system. Diversity in our advertising and publisher base continues to be central to our business and is important to our long-term success. Advertisers large and small use Google to reach their target audiences easily and get measurable ROI.

Last year we launched the AdWords™ Starter Edition, a simplified version of AdWords that lets users create an account quickly using a one-page sign-up form.
As more and more users look for local information online, we must continue to improve our ability to attract local advertisers. We have launched local business ads, local coupons, and refined local targeting so businesses can target customers right in their neighborhood. This year we partnered with companies like Intuit, Verizon, and AT&T to help us bring more business information online and convert more small businesses into happy Google customers. Small business is big business.

We have also gone beyond text for brand advertisers. Traditionally, video and other rich formats have been used exclusively by large advertisers because of their higher production costs and higher minimum spending requirements. However, our new clickto-play video ad format can serve ads to both large and small advertisers. In fact, video can be the best way for a small business to communicate its offerings in a genuine and personal way.
And we’re helping advertisers of all sizes buy and place offline ads more effectively. In January, we acquired dMarc™ Broadcasting to help develop a radio advertising product and now have more than 900 stations in more than 200 metro markets. In addition, more than 100 advertisers and 70 newspapers have participated in significant tests for print advertising. We believe these offline efforts are key to creating a complete ad system. We continue to roll out new pricing and account tools to help online advertisers better manage their campaigns. Last year the ads team launched Position Preference, which allows advertisers to set controls to have bids automatically adjusted to maintain a desired ad-position range. We also released Preferred CPC in beta, which enables advertisers to bid to an average CPC. To help improve conversions, there is now Web Optimizer for doing multivariate testing on landing pages. And for easier, more robust account management, there is AdWords Editor, a client-based application for making offline changes to AdWords accounts and uploading them later.

Effective advertising is just one component of ROI. Once a customer is on an advertiser’s website, it’s important that they find what they are looking for and complete a transaction. Google Analytics™ allows webmasters to easily monitor and optimize the design of their sites to make them as frictionless for customers as possible.
Once a customer has decided to make a purchase, completing the purchase swiftly and easily is paramount. Google Checkout™ tremendously simplifies the buying process by enabling you to shop across the web with just your Google login. Checkout has done a great job of increasing conversion and driving leads. Initially launched last summer with just a few stores, it has now reached millions of registered users and signed thousands of merchants, including more than 100 of the top 500 online stores.
Early in Google’s development we realized that great search depended on great content. To that end we created Google AdSense™ for content, which now enables thousands publishers to spend their time developing great material instead of having to sell ads themselves.
Global
I’ve mentioned some of our global efforts earlier, but it’s so important to us that I want to call out a few more facts here. Last year we added 44 domains so that Google is now available in 158 domains and more than 100 languages. Google News is now up to 39 editions, with launches in Hebrew, Arabic, and Russian. Gmail added Hebrew and Arabic to reach 40 total languages.

Google Toolbar™ is now available in 42 languages for Internet Explorer (26 for Firefox) and Desktop™ 4 is in 28 languages. And Google Groups 2 came out of beta and is available in over 40 languages. With international sources comprising 43% of Google’s revenue in 2006, we continue to grow our global monetization efforts. AdWords added several additional language/country interfaces, and now supports more than 40 languages. AdSense for search and AdSense for content both added four new languages bringing their totals to 27 and 23 respectively. We also launched electronic fund transfer payments in 9 more countries and piloted a Western Union payment method in China and Malaysia to further extend payments in local currencies.

Our mobile initiatives, critical to worldwide access, also include these firsts: we integrated mobile search and our first syndicated mobile sponsored links with KDDI, Japan’s second-largest mobile carrier; and we partnered with major mobile carriers and global handset manufacturers such as Vodafone and Telefonica.

We’re also making great strides with our awardwinning machine translation system. We want it to vastly improve the web experience for users everywhere. We improved or added several new language pairs, including English to/from Chinese, Arabic, and Russian; we now have over 20 language pairs.

Google is committed to its investment in markets across the globe, and the advances mentioned above bring us closer to our goal of making Google accessible to people in more languages and in more countries - a goal we will continue to pursue in 2007.

Culture
We have worked hard to create and maintain a compelling environment for Googlers. We’re building a culture rooted in transparency, innovation, and scale. Because we aspire to innovate as much on the people side as we do on the product side, we were honored to top FORTUNE’s “100 Best Companies to Work For” list in our first year of eligibility.

None of what we do would happen without a global employee base. In 2006, we hired 4,994 full-time employees, and for the first time, half of our software engineering hires were outside our Mountain View headquarters, including significant increases in China, Russia, India, Brazil, and Europe. Employees outside the U.S. now make up nearly a third of the company, and many of them moved into new offices this year including Beijing, Trondheim, Istanbul, Tel Aviv, Copenhagen, Vienna, Taipei, Warsaw, Haifa, Moscow, St Petersburg, Sydney, Mumbai, Cairo, and Delhi. Having a presence in all these locations attracts Googlers who want to work where they already live, and contributes to local economies.

We have improved our benefits programs to include such things as more doctors on staff and many new cafes in different locations. We expanded our equity refresh program and introduced our Transferable Stock Options program. We launched a range of development programs including EDGE, which helps grow our engineers into better leaders. And we work hard to infuse Google’s culture and principles into every office around the world, empowering employees to make contributions that help drive Google’s overall success.
These initiatives help us scale by attracting amazingly talented people, and then nurturing them as we preserve what’s special about our culture. Whenever we open new offices, we strive to keep things “Googley.”
Our commitment to our employees is matched by a broader sense of responsibility to our user communities worldwide. Specifically, we recognize that access to information is a powerful tool to help identify and solve problems. We are committed to harnessing our resources to help address pressing global needs.

Sustainability is one example. Last fall we kicked off a project to install 1.6 megawatts of solar photovoltaic panels at our Mountain View campus. This project will be the largest solar installation on any corporate campus in the U.S., and we think it’s one of the largest on any corporate site in the world. The amount of electricity that will be generated is equivalent to powering about 1,000 average California homes. We’ll use that electricity to power several of our Mountain View office facilities, offsetting approximately 30% of our peak electricity consumption for those buildings. Our work in this area has just begun and we hope to do much more in the future.

This past year Google.org, our philanthropic arm, got off the ground by building out a leadership team. Among these new hires was Dr. Larry Brilliant, who joined us in March to serve as the head of Google.org. He is a great leader to help Google.org tackle its threefold mission of global health, global wealth, and the environment. While Google.org is ramping up, our existing philanthropic activities are still going strong. Google Grants puts our advertising program to work for charities and nonprofit organizations that don’t always have equal footing in the traditional advertising business. More than 2,100 organizations in 16 countries have now been accepted to run targeted ads to reach their constituencies around the world.
This is just a start. When I write this letter in future years, I am optimistic that I can report significant progress on the global challenges that we hope to address through Google.org’s work.

Thank you
We had a remarkable 2006. None of our achievements would have been possible without our passionate users, strong partnerships, and talented employees. As I read back over this letter, what stands out are the individual experiences of the people who use our products. It is an honor to share these pages with a few of them.















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