Page and Schmidt couldn’t seem to agree on whether bottled water is still available for free at Google’s Mountain View, California campus, which is renown for its generous buffet-style lunches free for all employees.

Schmidt was telling reporters how the company has worked to get itself “right-sized” to perform well financially regardless of the ongoing economic downturn. One of those cuts was water he claimed.

Page, ever the tech geek, backed this comment with data. “We did a long analysis and discovered that reducing bottled water didn’t cause people to drink less water and more soda.” So they got rid of the bottled water.

Schmidt at first agreed, then seemed uncertain: “I’m sure I’ve seen bottled water somewhere.”

Any Googlers’ care to share on the bottled water situation out there?

Companies that once traded and leveraged their huge size and scale of distribution are now considering whether just being bigger might not necessarily be better in the new fragmented media world.

For example, Time Warner Inc is slimming down by spinning off its Time Warner Cable unit and AOL, its Internet division. It may also look to rid itself of its Time Inc publishing unit.

“The notion that there are synergies between content and distribution has been dispelled,” says Tuna Amobi, an equity analyst at Standard & Poor’s. “You’re not going to see a Comcast Corp trying to merge with a Disney anymore.”

Not everyone agrees. Sony Corp remains one of the world’s largest companies with major interests in a global empire that spans music, movies, video games, software, mobile phones and consumer electronics.

Sony Chief Executive Howard Stringer said in an interview with Reuters that it had become more important to be able to integrate and leverage its different units. “We wouldn’t have been able to win the Blu-Ray war if we didn’t have content,” he said.

“You can’t create this in a vacuum any more. You have to have a relationship. You don’t have to own something, but obviously if you own something you have a leg up.

As soon as Chrome was announced earlier this week “all the press and speculation started, ‘Oh, the Android is doomed,’” said Andy Rubin at an event with T-Mobile in San Francisco to show off the latest Android iteration, the myTouch 3G phone, manufactured by Taiwan’s HTC.

Google CEO Eric Schmidt said in Sun Valley yesterday that Chrome OS is a separate product from Android, but the two products are closely related and could eventually “merge even closer.”

Earlier this week, Michael Gartenberg, an analyst at market research firm Interpret, said the introduction of a second operating system to work on netbooks could hurt Google winning hardware partners. “If you’re a vendor you don’t know what to do,” he said.

Rubin argues that there is room for both Chrome and Android, and it doesn’t mean that “one wins and one doesn’t.” Android is specialized and does things that you would not expect from an ordinary operating system, he said.

“In the cellphone space, operating systems may … manage battery life very carefully, they handshake with cell sites as you are in your car or  traveling traveling at high speeds. So there’s different problems that you solve in different categories of consumer products,” he said.

Chrome will have its place outside of the phone. “I really look forward to seeing (Chrome) run on a lot of consumer products,” Rubin said.

At the press conference in San Francisco, two new applications for the phone were introduced — one for voice messaging of text, called Voice Text, and the other to help you find stores and services in the area where you are located, called Sherpa and made by Geodelic.

Even so, Android has only 5,000 apps, one-tenth as many as are available on Apple’s iPhone.

“Five thousand apps is well short of where they need to be but at least it’s accelerating,” said Gartner analyst Van Baker. “They’ve gone from 4,000 to 5,000 in the past 45 days, so it sounds like they’re ramping.”

(Photo: Google handout)

TV Networks Fight Drug-Ad Measure (WSJ)
“Advertising costs are deductible to any company as a business expense. The plan being considered by Rep. Rangel’s Ways and Means committee would eliminate the deduction with respect to prescription drug advertising,” writes Martin Vaughan.

Big media seek 21st century business models (Reuters)
“Media moguls at this week’s Sun Valley conference have spent as much time discussing how to reconfigure business models disrupted by the Web as they have worrying about the weak economy,” reports Yinka Adegoke.

Zucker Says Marketplace Has Reached Bottom (B&C)
Ben Grossman writes: “NBC Universal chief Jeff Zucker said Thursday that while the overall marketplace is still challenged, he thinks it may have bottomed out. ‘It’s still quite uncertain and we don’t really see the full recovery we are all hoping for,’ he said.  ’It’s still tough out there, but I think we have seen a bottom.’”

The Financial Times and New York Times make further syndication deals (Editors Weblog)
“Both the Financial Times and the New York Times have announced their international syndications will include additional countries. The FT has confirmed content sharing arrangements with publications based in Turkey, France, and South Korea,” writes Christie Silk.

NBC Reveals Displeasure as U.S.O.C. Unveils Plan (NYT)
Richard Sandomir writes: “The head of NBC Sports said Thursday that he broke off talks in April about combining the Olympic channel that it partly owns with the one being planned by the United States Olympic Committee.”

AP Works Toward Universal Online News Format (Mediapost)
Gavin O’Malley writes: “The Associated Press, along with fellow non-profit The Media Standards Trust, on Friday unveiled a digital news “microformat” to effectively encapsulate the content and key meta-data of every news story online.”

In other news:

• Detroit Free Press exempt from latest round of Gannett layoffs (Crain’s)
• AOL: More Layoffs Inevitable (Business Insider)

Michael Dell, CEO of Dell Inc, arrives at the Sun Valley Inn

Harvey Weinstein, of the Weinstein Co arrives at the Sun Valley Inn

Les Moonves, CEO of CBS Corp arrives

Cleveland Cavaliers basketball star LeBron James talks on a phone outside the Sun Valley Inn

Eric Schmidt CEO of Google, Bill Gates former CEO of Microsoft and Nathan Myhrvold of Intellectual Ventures in Sun Valley

(Photos: Rick Wilking)

LONDON, July 10 (Reuters) - The quickest way to attract a marriage proposal is to draw the attentions of a rival suitor.

When Data Domain <DDUP.O> agreed terms with fellow data storage company Network Appliance <NTAP.O> it concentrated minds at EMC <EMC.N>.

The upshot is that EMC is now paying an eye-watering six times sales for Data Domain, one-third more than NetApp first proposed to pay.

EMC could not bear to simply stand and watch. Data Domain has technology that threatens EMC’s business model. Its products reduce demand for existing data storage hardware by as much as 20 times.

The winning bid is nearly double Data’s price before the Network deal emerged six weeks ago. It has emerged that EMC had talked to Data but never made a formal offer. This now looks distinctly careless.

It’s clear that EMC could have won Data Domain for significantly less, and a glance at the technology shows how badly it needed the purchase. EMC may be the market leader in data storage. But its software and operating system is the key to its success, and Data’s products make existing systems much more efficient.

The acquisition of Data Domain is another step in the reinvention of EMC under Chief Executive Joe Tucci, from a seller of storage hardware into a provider of the software and services to run it.

His string of mergers dating from 2003 kicked off the eventual consolidation of the business software industry. He has a reputation for buying cheaply in tough market conditions. Data Domain is not Tucci’s biggest deal, but perhaps it’s not the best executed one, either.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. Read some of Eric’s recent columns here –

 (Editing by Martin Langfield; Photo: Joshua Roberts, Reuters)

Google CEO Eric Schmidt told a media briefing at Sun Valley that he believes YouTube, which his company spent $1.65 billion to acquire three years ago, will come good thanks to its recent launch of new advertising formats such as pay-to-promote and pre-roll ads. “We’re optimisic that YouTube will be a strong revenue business for us because of these products,” he told reporters.

But the problem is investors are more concerned with the huge costs involved in streaming millions of videos globally everyday with a very small percentage of them covered by advertising. In other words when will YouTube make money from its dominance?

“We don’t make predictions,” said Schmidt. But then co-founder Larry Page piped in “It’s not that important.” Really? “I’m not worried it will be profitable, we want it to be very profitable,” Page said.

For Schmidt, an important part of YouTube’s future will involve more premium content from small three-man production teams to Hollywood studios. He acknowledged he’d like for YouTube to have some of the content of Hulu.com, which now features Disney-owned shows as well as NBC and News Corp programming. All three companies own Hulu. “We think we need premium content,” he said.

(Photo: Reuters/Rick Wilking)

Google CEO Eric Schmidt said on Thursday that he’s “chatted” with the MySpace folks while at the conference, and noted that Google has had many conversations with Twitter in the past.

Google’s $900 million advertising deal with MySpace will expire next year. Some analysts believe any new deal will involve Google paying considerably less money to run ads on MySpace, whose popularity been eclipsed by Facebook.

Asked whether Google would pay $900 million again, Schmidt replied “we never say never.”

“Remember the economics are different, the traffic is different, market positions are different. That’s why these deals expire,” he said.

As for Twitter, which was previously rumored to be a Google acquisition target, Schmidt said Google talks to Twitter a lot, though he did not specify about what.

“We’ve had a lot of conversations. There’s nothing to announce,” he said.

Murdoch’s News of the World is caught up in new allegations that its journalists intercepted mobile phone voicemails of Hollywood celebrities and athletes. British police have said they are not re-opening a 2005 investigation, which saw the firing of then News of World editor Andy Coulson.

Many want to know how far up the chain of command did knowledge of this alleged activity went. So what does Murdoch have to say on this matter?

“Nothing to say at all,” he told Reuters at the Sun Valley conference late on Thursday afternoon.

Murdoch recently promoted The Sun Editor Rebekah Wade to CEO of News Corp’s News International unit based in London. So in light of the scandal, we asked Murdoch if Wade’s job is safe?

“Don’t be silly,” he said gruffly, and set off pretty quickly for a 78-year old media mogul.

(Photo: Reuters/Rick Wilking)