Business IndustryProfile: Google, Inc.Brandon BeckhamReed MathewsKayla McDonald
The Search Engine Industry and Google Inc. • An overview of the Information Search Industry will be provided. • Google’s current state will be discussed. • Information on Google’s four leading competitors will be presented. • An annotated list of websites on Google and its competitors will also be presented.
The Search Engine Industry History • The first search engines were developed in the 1990’s as finding aids for the World Wide Web. • Indexing the web this way required millions of computers to be run simultaneously in parallel. • Sergey Brin and Larry Page studied the major problem of relevance ranking of search results. • Google’s rise is a direct result of Sergey Brin and Larry Page’s relevance ranking algorithm.
The Search Engine Industry Advertising • Google developed AdWords a web-based automated auction by which customers could place advertisements to be displayed in conjunction with Google’s search results for any given search term. AdWords was a key to Google’s financial success. • Google produced its AdSense program in 2003 for its Google network partners. “Similar to search advertising, advertisers bid on keywords relevant to their ads. With content advertising, however, the ad is displayed on websites with content related to the keyword.” • Together, search advertising and content advertising account for 96% of Google’s revenue. The search engine industry in general depends on advertising to a similar degree.
The Search Engine Industry Google’s Financial Growth • In 2004, Google made its initial public offering (IPO) under the ticker symbol GOOG at the New York Stock exchange, capitalizing at $1.6 billion. (Auletta 2009) • Google is currently capitalized at $171 Billion. (Morningstar)
The Search Engine Industry Domestic Market Share • Google currently controls 64.1% of the domestic market (based on the number of searches). • Yahoo! is at 18% of domestic searches performed. • Microsoft Corporation ranks at 13.6% of domestic searches. • Ask accounts for 2.8% • America Online accounts for 1.4%. (IBISWorld)
The Search Engine Industry World Market Share Search engine Market share Google 82.80% Yahoo! 6.42% Baidu 4.89% Bing 3.91% Ask 0.52% AOL 0.36% (Net Market Share)
The Search Engine Industry Major Players • Major players in the search engine industry include Google, Microsoft, Yahoo! and America Online. • Microsoft’s Online Services Division includes its MSN.com portal and its search engine, Bing. • In July 2009, Microsoft entered into a 10-year partnership with Yahoo!
The Search Engine Industry Trends • Advertising has been moving from traditional media to online sources. • Growth in high speed access to the internet is increasing and will continue to increase. • Growth in mobile access is also increasing and will continue to increase. • “Domestically, internet access is quickly becoming a key feature in most consumer electronics.” (IBISWorld)
The Search Engine Industry Outlook • The future remains bright for the search engine industry. • Advertising continues to migrate from traditional forms to the internet. • The trends toward faster internet access, toward more mobile access and toward higher connectivity serve to amplify needs for search services • Growth for the Search Engines industry will finally slow over the next five years. IBISWorld places this industry in the Growth state of its industry life cycle.
Google’s Current StateGoogle Company Financials Net Income: $8,505,000,000 Net Sales: $29,321,000,000 Total Assets: $57,851,000,000 Total Liabilities: $11,610,000,000 EBITDA: $10,381,000,000 Market Capitalization: $171,093,025,852 Outstanding Shares: 321,301,457 (Morningstar)
Google’s Current State Google Officers Eric E. Schmidt, Chairman Larry Page, Chief Executive Officer Patrick Pichette, SR VP, Chief Financial Officer & Chief Accounting Officer Urs Holzle David Drummond, General Counsel, SR VP & Secretary Craig Silverstein, Chief Technology Officer Ben Fried, Chief Information Officer
The Information Search Industry Google Core Competencies • Advertising from Google’s search is the company’s main source of revenue. • Google has offered cloud-based services. • Web-publishing accounts for “only about 16% of [Google’s] total revenue, or $5.9 billion.” (IBISWorld) • Google’s has developed operating systems and enterprise software.
Google’s Current StateGoogle’s Venture into Smartphones • Google acquired Android, Inc. in 2005 to venture into the burgeoning smartphone industry. • In 2007, Google and several telephone manufacturers joined forces to develop Android. • The Android market in smartphones has grown rapidly. • Android’s advance has affected the entire smartphone market.
Google’s Current StateGoogle’s Venture into Smartphones • Google has not derived much revenue from Android’s success. • Google’s purpose in promoting the Android platform apparently follows the interest of its main business model. Google hopes to develop services for mobile computing and to develop the vast market for advertising. • Google’s venture into the Android market brings the company into direct competition with Apple.
Google’s Current StateGoogle’s Legal Problems • Google has been challenged in court on privacy issues. • Recent patent infringement attacks on the Android platform pose a threat to Google’s plans. • Google’s monumental project to digitize the world’s books, Google Books, drew a class-action suit from American publishers and writers who accused Google of copyright infringement. • The largest legal problem that Google faces stems from the company’s phenomenal growth and its complete domination of the search engine industry.
Google’s Current State Three Recent Events • In January 2011, Larry Page became Google’s new Chief Executive, replacing Eric Schmidt. • A second momentous event occurred when the U.S. Justice Department announced in 2011 that it was bringing Google under investigation of alleged antitrust violations. • A third major event occurred August 15, 2011 as Google announced its purchase of Motorola, inc. The deal if approved by government authorities would represent Google’s largest acquisition in its history at $12.5 Billion.
THE COMPETITIONGoogle’s competitors are manyRecent efforts created more competitionFour Selected Competitors:AOL, Yahoo, Microsoft, and Apple
AOL AOL now independent of Time-Warner. AOL operating at a loss. CEO Tim Armstrong Ad revenues are up AOL looking to be acquired.
YAHOO •One of the original giants. •Broadband internet/advertising are main revenue sources. •Yahoo in decline. •Cooperative deal with AOL, Microsoft. •Consortium looking to buy Yahoo.
MICROSOFT Microsoft-World’s leading software giant. Windows, MS Office, MSN, and Bing. Video Game “Player” with X-Box Expanded into mobile device market.
APPLE, INC. •Leading hardware/software manufacturer. •OS X operating system •Mac computers, iPhones, and iPads. •Enjoys strong brand recognition. •Looking into mobile advertising market.
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