February 9, 2006

Udi Manber, who has been chief executive of Amazon's A9 subsidiary, will be a vice president of engineering at Google.

Effective immediately, Manber is being replaced at A9 by David Tennenhouse, previously a vice president and director of research at Intel.

Amazon spokesman Craig Berman said Manber would stay at A9 until Friday.

"It could set back their efforts, but A9 was more of a trial to hedge their bets and have a presence in there," said Safa Rashtchy, a senior Internet analyst for Piper Jaffray & Co. who estimates that 10 percent of Amazon's tech spending centers on search.

"I don't think they will give up on it that easily, but it hasn't produced any major advantages for Amazon and it is still experimental."

Google is by far the leader in the search-engine field, commanding 46.3 percent of the U.S. market according to the latest November data from Nielsen/NetRatings. By comparison, Amazon's A9 ranked 29th, with 0.1 percent of the market.

The effect that Google's feat will have upon Amazon's future success in search is unknown. So far, the success of the Mountain View, Calif.-based Google has already pressured many e-commerce companies to expand their technology investments, and Amazon is no exception.

Amazon's main tech investments are on platform, search, Web services and digital, but it is especially hard to discern where the secretive Seattle company's tech spending is focused: on playing catch-up or innovation.

In an e-commerce report, Merrill Lynch analyst Justin Post wrote that he expects Amazon technology investment to reach $601 million in 2006, a 33 percent jump that is "well ahead of our estimated revenue growth of 20 percent, but a deceleration from 2005 spending growth of 62 percent."

Amazon's spending on technology, product development, and research and development has risen from $208 million in 2003 to $406 million in 2005, according to Post's report.

Whether those investments will turn into profits over time remains to be seen, as does what Google expects from its future performance: Unlike most tech companies, Google refuses to provide earnings estimates for financial analysts.

That makes it harder for them to chart the company's growth -- which led to the pummeling of the company's stock last Thursday when it failed to meet their admittedly high expectations.

Manber's defection is the latest coup for Google, a formidable foe for many technology industry titans. In September, the company snagged Internet pioneer Vinton Cerf from MCI Inc. Also last fall, Microsoft Corp. and Google waged a court battle over Microsoft executive Kai-Fu Lee's decision to resign from Microsoft to oversee Google's efforts to open a research center in China. That case has since been settled.

Google's other recent notable hires including longtime Microsoft executive Mark Lucovsky and former eBay Inc. executive Louis Monier, who was also a key player in the development of the first search engine, AltaVista.

Source: Seattle PI.com

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