BARTIROMO: As a steward of technology and innovation your entire career, what would you say is the most innovative thing out there? What's the next big thing, from your standpoint?

Dr. SCHMIDT: I've always thought that the scariest piece of innovation is knowledge understanding and language translation. I don't understand how it works, but to watch a computer--literally watch it--read something in English, dissect what it's about, translate it into a language that I don't speak and having that other person say, `Wow, that's incredible,' to me, that's magic. And it isn't magic, it's just very good computer science, very good artificial intelligence, very good physics. And that's where we are. So the things that are most impressive to me are the things where the computer does something that nobody could do, literally translate things 100 language in parallel, summarize something for me, take me to something which I didn't know I was interested in but knows that I cared about it. And we're right on the cusp of that.

BARTIROMO: Eric, your stock went from $750 to $450 in a very short period of time. What do you think happened?

Dr. SCHMIDT: I don't know. We don't really focus on short-term movement of the stock price. We said, since the company went public, that we're in this for the long term, and we want shareholders to be with us. These short-term fluctuations in outlook and so forth are not something that we focus on. We don't talk about it. We're really focused on this huge opportunity before us, which is automating the trillion-dollar industry that is advertising. We won't get all of that, for sure, but we should be able to get a significant part of that over the lifetime, certainly of my service to the company. And our goal is to build this into an institution that lasts for many, many years and is the greatest innovator in technology in this space.

BARTIROMO: So the biggest priorities right now, continuing to access that potential huge, huge advertising market. What else?

Dr. SCHMIDT: Well, our number one priority is end-user--end-user happiness. Literally, are people happy with the results that they get using Google search? So it's literally search, and every day we bring out new improvements and indices that are--taxonomies that are understanding of language, more content, bigger--all of the things that make Google such a great search experience. That's our number-one priority, even more important, for example, than advertising. The way we pay for it, of course, is by improving our advertising solutions, as you described. That's what we do in the core.

Our next big play is in this applications phase, where we think people spend a lot of time online with information, and we can help them, whether it's their e-mail, which is an easy one to understand, but what about their personal data? What about their spreadsheets and their calendar, keeping it all there? And we can help them search. We can solve the problem of `how do I live in this digital lifestyle?' If we do that right, they can do it on mobile phones as well as at home, in their office and on a Mac and on a PC, and it all works great.

BARTIROMO: This is all fantastic for the consumer. It's free, they've got access to all this stuff, they don't have to pay for it. What about...

Dr. SCHMIDT: It's a pretty good model.

BARTIROMO: Yeah.

Dr. SCHMIDT: It works pretty well.

BARTIROMO: What about the corporate customer? I understand that there are tests going on right now. What are you hearing from that customer?

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