Google's acquisition of a tiny Web word processing maker turns the spotlight on a growing number of so-called Web 2.0 companies struggling to survive--or angling to be Google's next purchase.

The Web search giant last Thursday confirmed it had bought Upstartle, which produces the hosted word-processing service Writely.

Though a small purchase--Upstartle employed only a handful of people--Google's move is significant because it further highlights the company's interest in Web-based productivity applications, which could be considered an online alternative to Microsoft's dominant Office desktop software.

It's hard to pinpoint which Web start-ups could be bought next. But analysts and entrepreneurs expect Google and competitors like Yahoo, America Online and Microsoft's MSN unit to continue scooping up smaller, niche companies and products to fill out their offerings.

"The general pattern is that big companies let the other companies do the innovations for them," said RedMonk analyst Stephen O'Grady. "Smaller companies can do innovation in a more agile fashion outside the boundaries of a large company, and they get acquired."

The deal has also rekindled speculation over Google's future plans. Observers note that a document-creation service like Writely could complement a Google project called GDrive to provide online storage.

The company has not explicitly said what it intends to do with the Writely service, one of a growing number of services often grouped under the Web 2.0 moniker.


Full article: ZDNet News