Schmidt: Want to get rich? Build a platform

A number of waves have led to tremendous wealth generation in the computing industry: microprocessors, PCs, desktop software, business software, networking, online search. But to get rich today, Google Executive Chairman Eric Schmidt has this advice: build a platform.

Speaking today at a panel discussion at the e-G8 Forum in Paris, Schmidt advocated the idea of creating a foundation on which others' software can run.

"The fastest path to wealth is the construction of these digital platforms," he said, in which a company becomes the center of activity and "where other people depend on you."

And even though Google has its own platforms to promote, Schmidt gave highest marks to Apple when it comes to the platform idea.

"The most interesting example is Apple's iOS platform, which has created tremendous value," Schmidt said at the conference, ostensibly arranged to transmit tech powers' thoughts on the Internet to government leaders gathering in France later this week for the G8 Summit.

Google is building two platforms: Android and, broadly speaking, the Web. The first is a direct rival to iOS, and the second is more nebulous because so many other organizations are involved. The Web predates Google, but the company in recent years has championed the transformation of the Web from a place for static Web sites into a foundation for interactive applications such as its own Google Docs.

Google has a somewhat conflicted view of the Web platform, though.

"It's a platform that's owned by none of us, so it's the only platform that truly belongs to all of us," Vic Gundotra, the Google senior vice president who runs applications development matters, said earlier this month at the Google I/O conference.

So if the platform is owned by everybody, how does a company get that lucrative central, essential role? In Google's case, there are two strategies.

First is Chrome OS, which makes the company's Chrome browser into an operating system that's built into special-purpose PCs called Chromebooks. Second is the Chrome Web Store, a vehicle for selling Web applications that run on Chrome--either Chrome OS or the regular version of the Chrome browser running on another operating system.

Schmidt, who earlier was Sun Microsystems's chief technology officer and Novell's chief executive, said he's seen the speed of platform-building accelerate in his career.

"It's happening now in a couple years as opposed to a decade," he said.

Schmidt had another message to the G8 leadership, which represents eight powerful countries: too much regulation can damage the Internet and the start-ups using it.

"You want to tread lightly on regulation in brand new industries," Schmidt said. "There is a tendency incumbents will block new things, [but] the Internet is a remarkably resilient and creative place. Clearly you need some level of regulation for the evil stuff, but I would be careful."

Although Google often takes the anti-regulatory stance so common in industry, it did advocate Net neutrality--the idea that some regulation was appropriate to ensure the big incumbent players on the Internet can't give their own traffic priority access on the network. Google backed off its stance with a compromise proposal that argued wireless data providers, struggling with heavily overburdened networks, should be able to decide on their own which data gets priority.

Governments should be active in fostering broadband, but they shouldn't be too "greedy" when it comes to auctioning off the electromagnetic spectrum that telecommunications companies need to offer wireless network services, Schmidt said. Google, which has said its financial fortunes are directly tied to how much time people spend on the Web, has a powerful interest in ubiquitous, high-speed Net access.

"The single best government policy is the availability of broadband in wired and wireless form right now. You need at least a megabit [per second], which is not that much these days," he said. "Governments have to be sure not to be too greedy in auctioning those off. Governments need to remove the barriers that get in the way of digging the trenches, putting fiber on the poles, and getting everybody connected."

Schmidt cited LTE (Long Term Evolution), the dominant technology emerging for 4G wireless network access, as a good example of the technology industry moving on without need for government regulation.

"Before we decide we need a regulatory solution, let's ask if there's a technological solution that can scale," Schmidt said. "We'll move much more quickly than any one of the governments, let alone all of them."