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11/4/2006
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JotSpot Deal Shows Google Looking Outside For Growth

Many of its big growth efforts are being driven by acquisitions

For the second time in a month, Google ordered out for innovation. The company last week said it acquired JotSpot, a maker of collaborative online applications, for an undisclosed amount. This deal follows fast on one for YouTube, the leading video community site.

JotSpot's a smart buy for Google. Beyond the defensive value of keeping a credible software-as-a-service provider out of the competition's hands, the deal should help Google find a paying audience for its own software-as-a-service offerings, now anchored by the free Google Docs & Spreadsheets.

Basic JotSpot is free, but 2,000 of the company's 30,000 customers, including BT, Intel, and Symantec, pay for higher tiers of service. That's how revenue stream diversification begins.

JotSpot was founded by Joe Kraus and Graham Spencer, co-founders of portal Excite.com, which is now owned by Barry Diller's IAC/InterActiveCorp. JotSpot's service is considered a wiki, a site that lets people edit, update, and append pages to documents without knowing HTML. The workspace can be publicly accessible or password protected.

On the Google blog, Kraus said selling the company to Google makes it possible to "plug into the resources that only a company of Google's scale can offer, like a huge audience, access to world-class data centers, and a team of incredibly smart people."

What's less clear is whether Google's innovation engine is running low on fuel. It may be that Google must act quickly before the market's infatuation with the company fades. That's certainly preferable to the possibility that for all its internal engineering talent, it's not generating ideas to build that are as good as what it can buy.

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