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EOS ASSIGNMENT:

GOOGLE INC.

GOOGLE INC. : OVERVIEW

Google Inc. was co-founded by Larry Page and Sergey Brin in 1999. Its major dominance is in
Internet search and online advertising. It is a public corporation and as of year-end 2008, the
company had 20,164 employees.

Raised an IPO of nearly $1.7 billion in 2004 ( at $65 per share ).Post IPO it started rapid
expansion by acquiring companies like Writely, JotSpot, YouTube, dMark, etc.

Fundamentally, Googles business model is about selling advertising (97% of Googles


revenue is from advertising). To maximize profits, Googles needs to understand its users.
With more information, it can sell more accurately targeted ads

Google's Mission Statement: "to organize the world's information and make it universally
accessible and useful

GOOGLE INC. : ORGANIZATION


OVERVIEW

Corporate Governance: Dual class equity share structure, giving more power to Class B shareholders
(Sergey, Larry and Eric controlled 80% voting majority)

Corporate Values:

Googles core philosophy include values such as (1) dont be evil, (2) technology matters, (3) we
make our own rules, (4) Democracy works, (5) Focus on the user, etc.

Co-founders attitude towards the employees same as when they are a start-up

Managing Innovation: Adopted unconventional approaches for managing innovation such as

20% rule: Engineers encouraged to spend 20% of their time on projects of their own choice

Team size not more than 3-5 members in order to keep productivity high

70/20/10 rule: Only 70% time to be spent on the core business, rest 30% on projects of own choice
and fundamentally new projects

Not shy to invest in projects with high risk, high reward portfolio

PRESSURES ON CORE BUSINESS


ADVERTISERS

Complained of improper charges for clicks that didnt occurred or lacked user interest

Competitor could deplete a companys advertising budget by clicking on the ad several times

A hacker could hijack third party PCs and repeatedly click on ads

Ads appearing on sites not approved by the advertiser

Problem related to trademarks use

NEWS PUBLISHERS

Complained that Google used their content impermissibly on Google News

They sought payments for the use of their articles

USERS

Users personal data and history available to google, revealing all sorts of their interest

Some google advertisements linked to sites that attempted to defraud users

OVERVIEW OF THE NEW


BUSINESSES
COMMUNICATION APPLICATIONS (Gmail, Gchat, Google Voice, Android, Nexus)

Gmail launched with 1 GB storage space, 20-30 times better than competition

Faced criticism for advertising which was based on words of users email

Expanded into real time and voice communication (Gchat and Google Voice)

Launched Android platform in 2008, Nexus One in 2010

HOSTING: VIDEOS AND BOOKS (YouTube and Google Books)

Acquisition of YouTube at $1.65 billion

Several lawsuits on copyright infringement

YouTube was losing $470 million in 2009 high bandwidth cost and low advertising revenue

Google Books launched; hosting digital versions of millions of books

Books arrived through either (1) Google Boks partner program or (2) Library Project

Some authors claimed copyright infringement; lawsuit followed

OVERVIEW OF THE NEW


BUSINESSES
PRODUCTIVITY APPLICATION

Google had enormous cloud server base

Concern with cloud based applications were:

Required fast internet connection

Privacy Issues

One could access every Google service with the help of cloud: Google Reader, Google Calendar,
Gmail, Photos, etc.

Google Docs were increasing concern for Microsoft offices mainstay products

OTHER NEW SYSTEMS

In 2008, launched Google Chrome web browser with omnibar

In July 2009, launched Google Chrome OS, competing directly with Windows

Google Checkout (e-wallet by Google) allowed users to pay participating merchants

COMPETITORS

Google competes with different companies in different domains

Yahoo!

Main competitor in search business but market share has been continuously decreasing

Full fledged internet portal. Content ranging from Finance, Sports, Travel etc.

Used to be a fierce competitor but currently in a state of crisis

Microsoft

Search engine Bing. Also features portal style content

Dominant in the PC software industry

Future competition likely be in cloud computing

eBay

Largest e-commerce facilitator

Search is first step in e-commerce transaction

Owns PayPal. Google checkouts competitor

Others

Amazon

Facebook

Traditional news outlets

KEY FACTORS BEHIND


GOOGLES EARLY SUCCESS
1. Making an innovative search engine

Solved the keyword spamming and generated reliable searches

It assigned weights to the keywords instead of counting them

2. Google was user centric and simple

Simple white page without ads/editorial content was used for fast searches

3. Google delivered search results which people really wanted

No space was sold to advertisers in the search results.

Kept the page light for fast loading at users end.

4. A better approach to paid search made Google economically successful

Initially adopted Cost Per Impression

Later moved to a better model by altering Cost Per Click in which they introduced a ratio of
actual CPC and expected CTR.

SEARCH BUSINESS TO BECOME


MORE CONCENTRATED
Yes, the search business will continue to become more concentrated.
1.

Users are getting more informed

2.

3.

They want more and relevant information in a very simplified manner.

Entry Barrier for a new entrant

Currently Google uses a very innovative search style which lets users see the indexed result of
their search keywords.

This massive indexing itself is a barrier for any new entrant.

Enormous resources of Google

It can work on any innovation in any field it decides.

IS SEARCH A WINNER-TAKE-ALL BUSINESS?

Google now taking 85% market share, it certainly seems that its a winner-take- all industry

Competitors who wish to beat Google, will now have to focus on the needs which have not
been addressed by Google and thus come up with another solution using upcoming
disruptive technologies

There is always a challenge to keep on providing new and innovative solutions to the
users. This challenge will keep on attracting new players to experiment and come up with
new solutions

POSSIBLE ALTERNATIVES
1.

2.

Building a full-fledged portal like Yahoo!s

Consolidating all the content

Up to date and subjective searches

Searches and content classified by relevance

Targeting Microsoft's desktop software hegemony

Compete head on with Microsoft

Desktop searches, office alternatives (open source initiatives like Open Office)
Provide interfaces compatible with Linux users to extend market base

3.

Becoming an ecommerce intermediary like eBay

Build trusted networks to provide online payment (like Paypal)

Providing functions like purchasing journals and copyright articles via Google Channels

1. BUILDING A FULL-FLEDGED PORTAL LIKE


YAHOO!S
Pros:
Google has enough expertise to enter portal business.
Portal can be use as a complement service to their search engine.
May be a relatively easy investment
Cons:
There are already 2 big players in the Portal business, Yahoo! and MSN
Yahoo! has first mover advantage- loyal customers, who may find it difficult to switch to another portal
format

2. TARGETING MICROSOFT'S DESKTOP SOFTWARE HEGEMONY


Pros
Possible in the long run, if Google gain the technology
Cons
Microsoft already has positive feedback loop
High installed base of users
High switching cost

3. BECOMING AN ECOMMERCE INTERMEDIARY


LIKE EBAY

Pros

Have enough capabilities to create a payment service


Opportunities to explore. Can be next big thing
Competitors are not into it yet
Cons
Already has big player Paypal
Paypal had 87million accounts in US

THANK YOU

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