As in previous quarters, the majority of CapEx was related to IT infrastructure investments including data center construction, production of servers and networking equipment. The firm expects to continue to make significant investments in CapEx in future quarters. Free cash flow, a non-GAAP measure defined as cash flow from operations less CapEx, remained strong at $938 million, up 50% year over year.

Google has launched almost 100 Search quality improvements in this quarter.

A lot of these have been international Search quality improvements. You will note on the more visible things, the new tailored homepages in Asian markets. Japan now has a completely new homepage that is tailored to Japan and Korean Search now has the universal search results that you’ve seen in some other countries. Now the firm has also done a much better job selecting local country results and demoting foreign results in those countries. As a result, the firm has seen its Search quality measures uptick significantly in several countries.

Also, the firm has been doing some user interface improvements. You’ll notice that you can now search within a site directly from the Google Search results. You’ll get a top level site in your search results, but if you want to further search within that site there is a box right on the search results page and you can quickly do a query.

In the past year, Google deployed Universal Search, but the work wasn’t done with the initial launch. In fact, over the past year, the firm has been able to double the number of queries where it shows these blended results especially in images, video and books. This has improved Google’s ability to answer questions. The firm has also deployed Universal Search in a number of countries, the firm has added 17 countries that support the Maps Universal Search feature.

In maps, the firm has deployed Street View in 30 cities now, up from 12 in the past quarter.

The new Street View API has got other sites integrating Street View with them. Google is making a lot of effort collecting this data from Apps, and it is including user contributed data. In fact, Google now allows users to correct information about local entities and locations on their maps. In fact you can see recent changes as they happen right now if you go to maps.google.com/recentedits. The firm has been working on difficult queries, the challenging ones and it had a substantial initiative over this past quarter where it was able to make a very large improvement in what it considers the hardest 20% of its queries.

Google has made a little bit of progress on Mobile, because more and more people are accessing its Search and other services through mobile devices.

Google has now launched a much faster Search experience and it’s now available in Mobile in 40 languages. The company’s Mobile Search traffic, as a result, and due to market growth, is growing very rapidly. That’s for Search, but across other properties also, the firm has now launched a new version of YouTube mobile site and mobile users now can access the entire library of videos. If you remember in the past, it was a subset because there was little bit of delay in transcoding, but now all the videos are available. The firm has had mobile playbacks increase tremendously.

In ads, the firm did a bunch of things in the last quarter.

One of the main areas was AdSense where the firm made improvements for both publishers and advertisers. The firm launched Google Ad Manager for Publishers, which helps publishers make their entire inventory available on the AdSense network. In testing, publishers greatly increased their revenue with this. Google has also launched demographic targeting on social networks, which uses gender and age information from over 30 social networks to help advertisers place ads.

AdWords is one of the tool that gives customer’s better control and more data and those things are the Conversion Optimizer, which Google first launched in 3Q07. The company is now seeing rapid adoption across its advertiser base. What that Conversion Optimizer does is let the customers bid per customer conversion rather than per click. You can pay when someone buys something rather than when someone clicks something. That lets people optimize a lot better and the firm is excited about getting wider and wider adoption of that and it has been taking off like Google had hoped.

In Analytics, Google has added industry benchmarking.

Google Analytics lets you track visitors to your website and your overall traffic and how you are doing, and so on. Industry benchmarking is a new feature launched so you can tell how you’re doing against others in your same industry, and that’s been a very popular feature. The firm finds people who adopt Google Analytics end up increasing their advertising spend with it, as they better understand their metrics.

YouTube is growing extremely fast.

The company is up to about ten hours of video uploaded every minute on YouTube. The firm has in-video ads, which have great adoption on YouTube and customers are increasing the size of their campaigns. The firm has now launched AdSense for videos, so now these in-video ads can run on sites besides YouTube and they may perform very well; the firm is seeing much better click-through ads than banner ads and that’s a big deal and it is excited about that.

The firm has completed its acquisition of DoubleClick.

They are a technology and networking partner, a tremendous asset and Google is very excited about what it can do together. The company is working on combining its ad network with DoubleClick display ad management products. Together that helps publishers and advertisers generate more revenue, and it can put much more richer and diverse content on the Internet. There are huge opportunities there and the firm is very excited about how thing are going so far.

In applications, the firm launched Google sites, which is based on the JobSpot Technology it acquired and makes it easy for anyone to create and manage a website.

It makes it easy to add an entry as Wiki. The firm uses it for teams, projects, companies, schools and it is already seeing a lot of interest in that.