Open-source hardware is on its way, and it will foster a new era of innovation, according to MIT Media Lab director Joichi “Joi” Ito.

The emergence of freely available hardware designs and near-free components will unleash the same sort of technology innovation that open-source software kicked off a decade or so ago, Ito said Tuesday.

“If you want to build a video camera, some day you’ll be able to find all the standard parts, the designs online for free, and then you’ll only design the pieces of the product that interest you,” Ito said at an MITX fireside chat in Cambridge, Mass.

Developers would focus their attention on the more valuable hardware they build atop that standard base, just as software developers write specialized software that runs on Linux and open-source middleware instead of proprietary Unix or Windows operating systems and Oracle’s WebLogic or IBM’s WebSphere middleware.

The industry is starting to talk open-source hardware in the context of the Open Compute Foundation, which focuses on data center servers. Ito is talking of far broader application.

Ito used the birth of Google as an example of the creativity open-source software enabled.  If Google Co-Founders Sergey Brin and Larry Page started out without open source, they would have had to spend big money on operating systems and other commercial software to do what they did, he said. But, because of open source, “all they had to do is write a little software and connect it to university network [all] for a couple thousand dollars,” he said.

The advent of open-source software decimated start-up costs of software companies and that, in turn, sparked an “explosion of innovation in the valley because you could try anything,” he said.

In the same manner, the adoption of the open-source model will siphon costs out of hardware design, because companies won’t have to devote as much capital to equipment. They could download designs to build them themselves or sign a contract manufacturer to build them.

The cost savings will push hardware innovation “into smaller companies, into academic labs and dorm rooms,”  Ito said.

Panel photo courtesy of MITX director Debi Kleiman.

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During a meeting with the press after this morning’s Chromebook announcement, Google co-founder Sergey Brin had to admit that the company is no longer playing within the limits of its “organizing the world’s information” mission.

Brin, who is working on several futuristic Google pilot projects including a driverless car, said Google was not just about cataloging and sharing information. It was also about using technology to improve the world in dramatic ways.

“I’m not going to try and argue that autonomous vehicles are organizing the world’s information,” he said. “There are pieces of the company out there trying to improve the world beyond information.”

Brin also discussed the Chromebook, and the challenge the cloud-based computing model could present to Microsoft.

“I don’t think there is anything inherently wrong with Windows,” Brin said, before adding that the simplicity of the Chromebooks computing model will ultimately beat out the traditional notebook.

“The complexity of manning your computer is really torturing users. It’s a flawed model fundamentally,” he said. “This model doesn’t put the burden of managing your computer on yourself. Companies that don’t use that model, I don’t think will be successful.”

Asked what place Windows had at Google, Brin estimated 20 percent of the company is still running on a Windows operating system. By next year, he would like to see the entire company running on Chromebooks.

“The head-to-toe hardware to software model really simplifies our job from an IT point of view. It improves security,” he said. “You lose security when you add complexity, with every driver you have to install.”

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Just as Silicon Valley was starting to come to terms with the sudden departure of Apple founder and CEO Steve Jobs, another technology giant dropped a bombshell: Google CEO Eric Schmidt said he is stepping down to become executive chairman of the company. Schmidt says he will focus primarily on government relations, while Larry Page is going to take back the CEO role he held until Schmidt arrived to take the job in 2001. Although Schmidt will still be around to advise on various matters, the executive shuffle makes it clear that Larry Page is now in sole control of the web giant. But does he have what Google needs? That’s not obvious.

After the news broke Thursday afternoon, Schmidt posted a message on Twitter that linked to his blog post about the changes, also writing “day-to-day adult supervision no longer needed!” That comment was a reference to the fact that Schmidt — a former senior executive with Sun Microsystems — was seen by many as the “adult supervision” the two young billionaires needed in 2001, when they were planning the stock offering that eventually came in 2004. The memories of the tech implosion of the late 1990s were so fresh still that many clearly felt Page and Brin needed to be stopped before they blew all Google’s money, and since Schmidt looked the part of a senior executive, the company’s backers felt he would go over better with investors.

Over the past 10 years, Schmidt has repeatedly stressed — as he did in his announcement and on the earnings call — that although he was the chief executive, he and the two founders have functioned more or less as a triumvirate, advising each other and debating various courses of action. Schmidt has suggested this is because of the mutual respect each had for the other, but his role was undoubtedly also influenced by the fact that Page and Brin share ultimate voting control of the company, thanks to their majority ownership of Google’s multiple-voting shares.

Now, Page has taken the reins as CEO, and Schmidt made it clear in his blog post about the news that this was done “to simplify our management structure and speed up decision making.” After the split, each member of the triumvirate seems to be taking on the role for which he is arguably the best qualified: Schmidt, who is the most senior (and tends to wear a suit), becomes the public face of the company when it comes to government: meeting with senators who are investigating the company’s privacy infractions, for example, or appearing before congressional committees, the FTC, and so on. Page becomes the day-to-day leader, and Brin gets to spend time on the projects he enjoys (which may or may not include self-driving cars).

How Schmidt performs in the governmental role remains to be seen. He might have to tone down his penchant for inappropriate jokes about how people “can just move” if they don’t want their houses to be photographed by the Google StreetView car, or his comments about how “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.” That’s probably not going to go over well in Washington.

The reality is, Google is facing challenges on a number of fronts. Yes, it turned in another stellar performance in the most recent quarter, with revenues climbing by 26 percent to $8.4 billion. The search-related advertising business is still doing extremely well, and that cash cow has allowed the company to do many other things, including promoting the Android operating system and running a number of popular (but money-losing) services such as Gmail and YouTube. But the tech giant has been unable to get much traction on the social-web front, and that has led to criticism that it’s losing the battle — or is at least in danger of losing the battle — for both users and advertisers to Facebook, whose share of the online-ad pie is growing at a phenomenal rate.

Critics are also getting more vocal about the rapid deterioration of Google’s search results, its core business, thanks in part to the contributions of “content farms” such as Demand Media, with many saying Google hasn’t done enough about the problem because it gains ad revenue from those publishers. Then there are the governmental hurdles Schmidt is expected to help the company leap: a potential antitrust investigation by the Department of Justice into Google’s proposed acquisition of travel-information provider ITA, along with pressure from Congress on the company’s approach to privacy, and continued difficulties with foreign governments like Italy and China.

Larry Page is taking the helm at what could be a turning point for Google. Its core business is under fire; it’s losing ground to Facebook in an important new market; and it’s still relying on search-related ads — a market getting long in the tooth — for 90 percent of its income. It has been unable to build any substantial new businesses, despite a number of attempts, including its recently rebuffed $6-billion acquisition offer for Groupon. As angel investor Chris Dixon put it, some Google watchers are probably asking: Is Page’s return like Steve Jobs coming back to Apple in 1997, or is it more like Jerry Yang’s return to Yahoo in 2007?

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Google dropped a bombshell during its quarterly update by announcing an executive shuffle that will see co-founder Larry Page take the reins as CEO of the web giant, while current chief executive Eric Schmidt assumes the role of executive chairman. Page’s fellow co-founder Sergey Brin is to focus on strategic direction and new projects.

The management shake-up comes as Google announced its fourth-quarter results, with revenue coming in at $8.44 billion for the quarter ended December 31, 2010. That was an increase of 26 percent over the same period in 2009, while operating income came in at $2.98 billion compared to $2.48 billion from the year before.

Page’s move to CEO means he will take charge of day-to-day operations on April 4, while Schmidt will focus on deals, partnerships and government outreach. Schmidt said he will also look at being a technology thought leader while continuing to serve as a mentor to Brin and Page.

Schmidt said in a statement that the move was aimed at streamlining the decision-making process, which has been shared by Page, Brin and Schmidt, and that the reorganization will clarify their individual roles and ensure there’s clear responsibility and accountability at the top. Schmidt said he is confident in Page’s ability to lead and believes the changes will be good for the company.

We are confident that this focus will serve Google and our users well in the future. Larry, Sergey and I have worked exceptionally closely together for over a decade—and we anticipate working together for a long time to come. As friends, co-workers and computer scientists we have a lot in common, most important of all a profound belief in the potential for technology to make the world a better place. We love Google—our people, our products and most of all the opportunity we have to improve the lives of millions of people around the world.

Schmidt joined Google’s board as chairman in 2001 and became the company’s CEO later that year. He leaves just days after rival Apple announced that CEO Steve Jobs was taking a leave of absence to focus on his health.

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Gandhi changed the world. The steam engine changed the world. Heart transplants changed the world. The Internet changed the world. Google simply made a small (albeit important) contribution toward making Internet a better experience for all of us.

Google’s contributions are still worthy of praise. It is no longer impossible to find relevant information on the fast-growing Internet. I remember tearing my hair out looking for relevant information. Today it is as simple as acting on our impulse to seek that knowledge–and that has infinitely changed the way we interact with the machines.

The article triggered a chain reaction and a trip down the memory lane. I had been a Google-addict for a while and loved its simple elegance over rivals such as AltaVista and Inktomi-powered searches. I had talked to the company earlier, but I didn’t meet the Stanford duo in person up until September 1999. The company had just raised about $25 million in venture money.

“I have never paid more money for so little a stake in a startup,” John Doerr of Kleiner Perkins Caufield & Byers was heard saying. Good thing he did – for he paid next to nothing for what could arguably be the Internet-equivalent of Alaskan oil and gas fields.

Larry Page & Sergey Brin had stopped by at the Forbes.com offices and we talked at length about the company. It ultimately resulted in this feature, How Google Is That? Larry still had the same disastrous haircut he supports today. Brin was measured and logical as always in his responses. They thankfully made no meaningless and “do-no-evil” hypocritical statements. They were just two guys out to change the world. I remember getting along with them famously, but never saw or talked to them since, though I have been to many Google press events.

Then & Now: You’ve come a long way baby

The company was 12-months old. They had just come up with their version of contextual-text advertisng system. They had 40 employees, were looking for an inhouse chef, and were doing about 4 million page views a day and about 4 million searches a day. That’s 45 searches per second. No one in the company owned a glider, though their venture backers had their own private planes. The company was housed in 165 University Avenue in Palo Alto and the co-founders were single.

In July 2008, Google registered 7.23 billion searches – about 242 million a day. That works out to about 4 10 million searches in an hour or over 1100 2772 searches per second. (Funny, it turned out to be much bigger than the market estimates used by Google.) It had sales of $5.4 billion in the second quarter of 2008 alone. It now employs over 19,000 people. Larry and Sergey are billionaires and own a Boeing 767 & a Boeing 757. They are both married. The company has offices in multiple locations and data centers that are sprinkled around the globe.

After meeting with them and discussing the merits of search-only approach versus portals, I came to this conclusion: “Perhaps the other Stanford duo, Yahoo! cofounders David Filo and Jerry Yang, should be a little concerned–their media ambitions have superseded their customers’ desire for a really smart search engine.” In hindsight, I am surprised I was able to get away with making that statement and my editor didn’t catch what clearly was an opinion – a no-no in the non-blog mediascape. After all, it seemed so stupid to suggest that because Yahoo had 240 million page views a day and was literally printing money.

Brin tried to convince me that the text-based contextual advertising (first popularized by LinkExchange, a company that was bought by Microsoft) was their way of making money. “Banners are not working and clickthrough rates are falling, I think highly focused ads are the answer,” Brin said, and pointed out that Google would be in black in 24 months. By 2001, I could have kicked myself for doubting the kid!

Why did they win?

Fast forward 9 years, and most of Google’s competitors have gone to the great technology graveyard, nary a tombstone. Simpli.com, Dogpile, Direct Hit and Northern Light were all part of the new search engines that were taking on the incumbents like Yahoo, Lycos and HotBot and wanted to make web searches simpler and more accurate.

“Google is essentially trying to categorize and catalog the web. We have a very different product and a different approach,” Jeffrey Stibel, cofounder and CEO of then Providence, R.I.-based Simpli.com told me for the Forbes.com story. He was taking a more exotic linguistic approach to search. It is now owned by Valueclick, an ad-network.

In comparison, Google’s analysis of the link structure of the World Wide Web and large-scale data mining and ability to ranks a page against similar pages turned out to be the right approach. Was it just the algorithm and a better monetization scheme? Was it a right solution at the right time? I think it was a bit of all that – but most importantly, it was a farsighted approach to infrastructure and the network.

It’s the infrastructure stupid.

This was the critical difference – I wrote about it recently – between winning and losing. I was reminded of this by an old PowerPoint presentation. They talked about using commodity compute infrastructure to out muscle everyone and doing analysis of the web like it has never been done before. It seems so obvious today – but back then it was an idea ahead of its time. The impact of pizza box servers was yet to be seen, and companies like Cobalt Networks (sold to Sun Microsystems for $1 2.4 billion) were selling early versions of Linux-powered thin servers, but they were not cheap by any means.

Many on Wall Street question why Google spends so much money on infrastructure. The question is why not – after all every millisecond of performance means more searches and more searches mean more advertising. More infrastructure means more crawling, more indexing and better results. I think that slide reminds us of the fact that infrastructure-as-an-advantage is in the DNA of Google. And that is unlikely to change – and that is why world’s smartest engineers and computer scientists still want to work there.

History has made a genius out of all who bet on Larry and Sergey – the investors, the employees, journalists who were enthralled by their story. In reality to those who built Google, it was the only option.

Tomorrow: What You, Me & Corporations Can Learn From Google

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Editor’s Note: Matt Rogers, the founder of Aroxo, is a regular contributor to Found|READ, and a very thoughtful guy. I often visit his blog, Digging my own ditch , to see what he’s up to — he let’s us publish — and today I ran across this: How search engine spam created Web 2.0 and drove the social revolution. In it, Matt ponders how small, even sometimes seemingly arbitrary decisions, can have great impacts on your business. He relates this notion to the selection of “two little words” (marketing), all the way through the evolution of Google’s search results presentation method (architecture). It’s worth reading, not just to remind you that small things count, but also this: that probably one of the greatest sources of your stress — the “law of unintended consequences” — affects every founder, and that this is a good thing, because it is sometimes responsible for truly epic, if surprising, innovations (Web2.0).

A friend of mine mentioned something to me recently. He commented that a site he works with recently changed the text on their registration button from “Register here” to “Register for free” and, as a result, registrations shot up.

That really blew me away.

Clearly pretty small decisions can have an enormous and disproportionate impact.

This got me thinking and something else occurred to me, namely how a similarly small decision caused by search engine spam created the Web 2.0 phenomenon.

Back in January 1996, Page and Brin were busy building a new search engine. One that we now know as Google. Their starting point for this adventure was fixing the problem with the other search engines: that their search results were not very accurate.

There were two problems, firstly the search engines were happy to take payment from companies who wanted to appear in their search results and secondly the order of the search results was both arbitrary and easy for spammers to fool.

Companies which wanted to appear in the search results would just stock up their pages with the search terms they were interested in and, voila, in came the traffic. The problem was that the people using the search engine didn’t find what they were looking for. The existing search engines basically weren’t working.

This is where Google came in, they calculated the search engine positions by looking at how many other sites linked to the page, the text which the user clicked on, and how popular the referring page was. They built Google like this because (at the time) this had not been spammed.

This technique worked, web users were suddenly able to access the pages they were looking for and Google became massively popular. What also then happened is fascinating.

This decision encouraged genuine content producers to generate inbound links in order to get access to Google’s traffic. It drove more and more linking on the web, and instead of people getting annoyed about losing control of their content, they loved it. It drove greater sharing,

communication, and integration – the bedrock of Web 2.0.

This, small architectural decision has had a massive impact on the web, both its utility and its social impact.

I wonder whether Page and Brin considered this when designing Google?

For more from Matt see:

* Aroxo: The 4 Stages of Testing Your Product.

*

Harvard, on How to Cope with things Simple to Chaotic

* Getting to launch! A step-by-step guide…

* How to bootstrap Your Startup

Matt Rogers is the founder of Aroxo, a novel retail and exchange website based in London. Matt has been chronicling his founder’s experience, and sharing the lessons learned with Found|READ.

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