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This year the market shaped up to be a fight between the big three - Google, Yahoo and MSN Search. Each one has their own unique market strategy and seemingly bottomless pockets to finance their approach. No wonder it seemed that the Internet looked as though it was being transformed before our eyes in a way we have not seen since the early days of Netscape.

While the tsunami of new initiatives and announcements from Google made it look like a company in a hurry to set the agenda and leave its competitors behind, in truth a lot of the new products from Google this year were playing catch up.

For example, the GoogleTalk instant messaging service launched at the end of the summer simply put in place a piece that both Yahoo and MSN have had for some years - and both are more polished than the Google version. Nevertheless, as with the mail service launched last year, Google needed an IM product to allow its customers to communicate with each other and provide a channel to Google's new services. Even so, by adding VoIP to the IM client, Google also served notice that these channels may not necessarily be limited to text.

The announcement of Google Base is undoubtedly the most intriguing of its new launches

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and gives some idea of where the company is heading. Google's stated long term goal has been to index all the world's information. Now, it also wants to be the gatekeeper too.

Google Base is significant in two respects. Firstly, by allowing customers to post classified ads Google is opening a whole new front, this time against eBay - who also got into the VoIP business this year by buying up Skype - but also by allowing them to post content directly into the index compared with the traditional practice of having the content collected by spiders across the world wide web. This move may the first step towards the 'social networking' model which has been developed by Yahoo! Certainly we expect a whole new range of extensions to Google Base next year as it settles in.

Although dismissed by some as simply Google being seen to 'do something' about the growth of click fraud, the release of Google Analytics could also prove to have long term affect on the future of the web. Based on the Urchin web analytics tool that the company bought earlier in the year, the tool allows smaller site owners to drill down and really discover where their traffic is coming from and how to tune their site. Such insight will help kick start better e-commerce sites in the coming year. Less obviously but just as important, Google Analytics provides a fine example of how AJAX technology could transform interaction on the web.

Google finished the year with a sigh of relief. AOL, its biggest customer has decided not to defect to Microsoft. Although Microsoft thought at one point it had lured AOL away with some hard bargaining from the Time Warner board, Google managed to sign a five year deal with what is still the world's biggest ISP. One of the trends to watch in 2006 is how that relationship develops.

[Part 2 follows on Friday]