The Vision To make search engines so powerful they would understand "everything in the world".The Mission To organize the worlds information and make it universally accessible and useful.The Focus Google continues to focus on innovation and on the user experience.
Google Strategy• It’s the same as of Honda & Sony• Both these companies have major share in world manufacture share of Engines and Electronic Goods• Google wants world wide web’s major share.
QUESTION?• IS GOOGLE IN THE RIGHT INDUSTRY? Let’s Analyze the Industry
Internet Advertising - 2007Global - By E-Marketer• Number 1 – Advertising Medium in terms of growth rate.• Ad spending on the Web should net out at $21.7 billion this year VS $20.4 billion on radio.• E-Marketer predicts that online advertising will reach $28.2 billion next year (an increase of 30 percent)• Online advertising will account for a nearly twice as many dollars - constituting a hefty $44 billion market
Internet Advertising Trend and PredictionsGlobal - By Zenith Optimedia
Internet Advertising Trend and PredictionsGlobal - By Zenith Optimedia - continued• The internet will grow six times faster than traditional media between 2006 and 2009 and increase its share of the ad market from 5.8% to 8.7%.• All of the fastest-growing ad markets are in the Middle East and Central & Eastern Europe• These regions are growing at double-digit rates, compensating for an under performing North America• World Adspend to grow 5.2% in 2007, on par with long- term trend• Olympics, elections and football to lift growth to 6.2% in 2008.
Global Market Share in Search Total search in year 2006 99.57 Bn Google is doing 138.1 Mn search per day
Porter’s Five Forces Model for Google Search Supplier bargaining power : • Supplier concentration is low • Switching costs is low • Threat of forward integration is low • Importance of volume to suppliers is high Rivalry factors: • Few players of relatively smaller size industry is growing at rapid Substitution threat: Entry barrier: •Mobile search. But due to pace •Entry barriers due to brand •Product differentiation is low less sophisticated identity and scales is high Switching cost is low technology threat is far away Exit barrier is low few years •Switching cost zero •Informational Complexity due to •Switching cost is LOW secrecy of internal algorithms Buyers bargaining power: • Buyer size/volume is very small • Change cost/frequency is very low. • product/service importance is high. • Ability to backward integrate is very less. • Price sensitivity is high • Product differentiation is low
Leadership• Dr. Eric Schmidt,• Chairman of the Board and Chief Executive Officer• Larry Page, Co-Founder & President, Products• Sergey Brin, Co-Founder & President, Technology
Philosophy of Google• Focus on the user and all else will follow.• Its best to do one thing, and do it well.• Fast is better than slow.• Democracy on the web works.• You dont need to be at your desk to need an answer.• You can make money without doing evil.• Theres always more information out there.• The need for information crosses all borders.• You can be serious without a suit.• Great just isnt good enough.
Google’s Culture• Heart of Small Company• Hand’s on contribution to the Products by each employee• Flat Hierarchy• Each employee having several responsibilities in different departments• Hiring Policy – Non Discriminatory – Preference of ability over experience• Multilingual company environment• Multidomestic culture• Recreation along with work• Common café for all employees
Google’s Global Presence•21 countries at present
Uniqueness about GoogleSEARCH• Speed, Accuracy, Objectivity and Ease of use of.• Fit between their technology and the consumer behavior.• Page Rank technology – Orkut merged• Solved the scale up problem• Positioned as “Fastest Crawling Technique”• Keeps the search “Up to date”
Uniqueness about Google• 1st to get it right advantage• Advertisers tie up as “CPC”• Trade off between “Speed” & “Compression”• Best asset utilization (Efficient storage space)• R&D expenditure = 50% Net Income(10% of Revenue)
Dynamic View Buying many sites, Searching for various Opening offices in many avenues, Continuous Countries, Huge investment in innovation, Developing R&D, Continuous investment in people, learning new increasing Database technologiesResource Resource ActivitiesEndowments Commitment
QUESTION?• WHAT IS GOOGLE PITTED AGAINST? THE BATTLE ZONE
QUESTION?• HOW WOULD GOOGLE CLASSIFY THESE PLAYERS AND WHO ARE THE TOP COMPETITORS? THE BATTLE ZONE – Part Deux
Direct Competitors OR Complementors?• Internet companies,• web search providers,• Internet access providers,• Internet advertising companies
Indirect Competition Or Complementors?• Competition from traditional media companies.• Most large advertisers have set advertising budgets, a very small portion of which is allocated to Internet advertising.
Google Identifies Top 2• Primary competitors - Microsoft and Yahoo! Inc.• Both Microsoft and Yahoo have more employees than Google. – Microsoft 6 times.• Microsoft also has significantly more cash resources.• Longer operating histories and more established relationships with customers and end users.• Microsoft and Yahoo also may have a greater ability to attract and retain users - because they operate Internet portals with a broad range of content products and services.
Threats Analysis Common Opportunities• BRIC Countries•Computer literacy is on the rise•Telecommuting and at-home-businesses growth•Mobile technologies offer another opportunity.•Cheaper global telecommunication costs open new markets Google Yahoo Microsoft Traditional ad domain Other Software Pay Per Use office Office Suites Apps. Internet Ads
Competitor Analysis• Google – Aim – To make everything free for the Virtual User.
QUESTION?• SO WHAT IS GOOGLE DOING AND WHAT SHOULD IT DO? ACTION ITEMS
Inorganic Growth - List of Google acquisitions2004 2005 2006 2007 2008 2Web Technologies dMarc Xunlei Phatbits Broadcasting– Adscape – Video Urchin S/W Inc. Radio Advertising Game advertising Dodgeball Trendalyzer Reqwireless Measure Map Tonic Systems Current Comm. Group Upstartle Marratech Android @Last Software GreenBorder Skia Orion Panoramio Akwan InfoTech Neven Vision FeedBurner AOL (5% stake) JotSpot PeakStream -Internet YouTube- Video Zenter Sharing Grand Central – VOIP Endoxon
5 year Performance• R&D -> More than 10% increase Y/Y since 2002 – Continuous Innovation, creating new products. – New products every year, Need Based Positioning, Depth rather than Breadth. – Ready to deal with dramatic change.• Cost of Revenue – around 40% increase Y/Y since 2003 – Find new sources of Revenue, margins reducing.
Recommendations• Diversify earnings not products Country Revenue % US 61% UK 14% Rest Of 25% World
Recommendation• Search : Competition from both big web companies and well-funded startups will force Google to remain focused on continuing to innovate in search.• Contextual Ads – Continue good work• Other Ad formats - With Google clearly intent on spreading its advertising platform to the offline world, go for more acquisitions.• Video – Continue Good work. Consolidate position.• Social Networking – Acquire other players.• Office Suite – Continuous R&D
Recommendations• Be Multi-domestic company• Find new sources of revenue.• Continuous Innovation is the key to maintain dominance in such an aggressive environment.• Concentrate on BRIC nations.