It has been a year of shifting territories among the big names of the internet.
Google grew from strength to strength; Yahoo! struggled to keep up its own momentum, and towards the end of the year had to make significant layoffs.
For some time, Google’s focus has been on growth. On getting bigger, much bigger, than the competition. This year, that focus changed; founders Sergey Brin and Larry Page told staff they wanted better products, not just more of them.
As usual, the company was swift to adapt. It has owned a weird and wonderful selection of online services for a year or more, and spent the latter part of 2006 bringing them together, and making them work better.
The most important of these products is Gmail (gmail.com), Google’s superb web mail service. Free to use, and offering speed, simplicity and flexibility far beyond anything offered by competitors, Gmail has become one of the web’s most admired (and imitated) services.
But the imitators have a long way to go before they can catch up with Google. The company has invested billions in "data farms" – cheap warehouse buildings crammed with cheap computers, which are linked together to become a massive data-processing system. A supercomputer on a massive scale.
This is what makes Google’s online services work, and work dependably. They have to be dependable when they are looking after people’s email.
Not just email, either. This year, Writely (writely.com) was bought by Google and became Google Docs (docs.google.com), a place to put all your written documents. The company bought video community YouTube (youtube.com) as well; some time during 2007, it is expected to merge it with the existing Google Video (video.google.com).
The long-neglected Blogger service (blogger.com) also got a much-needed kick in the autumn, starting with a migration to a new backend that adds new features, better service and better integration with other Google products.
Is all this an attempt to create a web-based operating system that competes with Microsoft Windows? Not quite. But it does offer a way for most people to keep most of their personal data on the web, rather than on a hard disk.
It makes it easier to consider your computer more disposable; it doesn’t matter which computer you use if all your data’s on the web. All you need is a screen, a keyboard, and a broadband connection.
Yahoo!’s woes were a source of constant frustration for the company and the wider industry. It continues to attract huge levels of internet traffic, and its name remains one of the best-known and most-trusted of internet brands.
It has purchased some of the most exciting web sites around (Flickr.com, del.icio.us, and Upcoming.org) and hired some of the best brains.
But a memo to staff from top boss Brad Garlinghouse spelled things out clearly: the company was losing focus, its services suffered from too much repetition and duplication. Things had to change.
And they did. Soon afterwards, Yahoo! laid off staff, including a number of senior managers. The results of this and Mr Garlinghouse’s memo remain to be seen during 2007.