Googles mission is to organize the worlds information and make it universally accessible and useful. While other companies were busy cramming the most ads possible on their homepages or squeezing every last hour of productivity out of employees, Google created an enjoyable experience for every party involved in the company including users, employees, and investors. Googles success has come as a direct result of keeping people happy.
History of Google
Google was founded by two Stanford University computer science graduate students, Larry Page and Sergey Brin. When the two met in 1995, they argued about every topic they discussed except for the best approach to solving one of computings biggest challenges: retrieving relevant information from a massive set of data. By January of 1996 the two had begun collaborating on their first search engine. It was named BackRub for its unique ability to analyze back links pointing to a given website, and quickly earned a growing reputation among those who had seen it.
By 1998, the two had bought a terabyte of disks to create their first data center and renamed their search engine Google; which was a play on the word googol, referring to the number 1 followed by one hundred zeros, a reference to their goal of organizing the immense amount of information available on the web. Initially, Page and Brin had unsuccessfully tried to find companies to license their technology, but ended up raising an initial investment of almost $1 million when they decided to build a business on their own. And, by the end of that year, Google was answering 10,000 search queries per day and began to receive public recognition. They appeared on USA Today and were named one of the Top 100 Web Sites and Search Engines by PC Magazine. By early 1999 Google was answering over 500,000 searches per day, and their meteoric rise began.
By the end of 1999, Google had raised another $25 million from venture capitalists, moved to their current headquarters in Mountain View, California, grew to answering over 3 million searches per day, and received a slew of recognition, including being named on Time magazines Top Ten Best Cybertech list of 1999. They also went global with the introduction of versions in ten other languages for users to search in their native tongue, and still they were just getting started. Google continued to grow, developing strategic partnerships, developing new features, developing new services, and fulfilling over 34,000 search requests per second.
Ultimately, Google became the technology powerhouse that we know today. They achieved the status of having over 72% of the search engine requests in the United States. They also added a multitude of other services, including video, email, mapping, images, an operating system, an internet browser, internet protocol phone service, and many, many others.
Google is a global technology leader focused on improving the ways people find and use information. We maintain the worlds largest online index of websites and other content and, via our automated search technology, make this information freely available, nearly instantly, to anyone with the Internet connection.
Google primarily generates revenue by delivering relevant, cost-effective online advertising. Businesses use our AdWords program to promote their products and services with targeted advertising. In addition, the thousands of third-party websites that comprise our Google network use our Google AdSense program to deliver relevant AdWords ads that generate revenue and enhance the user experience.
Google, currently headquartered in Mountain View California, is now a strong leader in the technology sector, specifically in the Internet Information Provider industry. With a market capitalization of $199.88 billion, Google is almost five times larger than its nearest competitor, Baidu Inc. They produce $10.29 billion in operating cash flow each year and have $33.38 billion in cash reserves. Clearly, they are a financially strong company with extensive resources.
Their business, as originally founded, remains focused on search technology with the Google search engine available on more than 150 Google domains, presented in many different languages. They have also created a tool to enable users to translate search results between languages. Other search tools included the ability to search for stock quotes, sports scores, news headlines, local addresses, images, videos, patents, maps, and much more. And, for information that is not already available online, Google is working to digitize it with projects like Google Books and the Google News Archive.
Googles dominance in the search engine field allows the company to generate the majority of its revenue through advertising. Hundreds of thousands of advertisers use Google AdWords to target potential customers as they search for terms relevant to the products and services they offer. Advertisers do this by bidding to have ads appear with search results on a pay-per-click basis. They can even target a specific geographic area. Another product offered by Google in the advertising genre is GoogleAdSense, which allows blog and website owners to generate additional revenue by allowing Google to place relevant ads on their sites. In order to help advertisers, Google provides tools such as Google Analytics, Website Optimizer, Insights for Search, and Ad Planner which are tools to help advertisers measure results and be more efficient.
Google also offers a variety of apps that are intended to make it simpler for people to share information and get things done together. Apps like Gmail, Google Calendar, and Google Docs, among others, allow users to have access to free programs and tools that are not accessed through individual computers, but are stored on internet servers. This is called cloud computing and it makes information portable, so that it is accessible anywhere and through any device that the user has internet access.
Perhaps the most recent front of development, Google also has entered the mobile market. Through a variety of tools and partnerships, Google tries to make their products available on mobile devices so that users can access Google Maps, Youtube, and other services through any mobile phone. Taking this concept to the next level, Google has created and released the Android operating system. This is a free operating system that any developer can use and any hardware manufacturer can install on any device. This OS puts a comprehensive line up of Google products at the smart phone users fingertips, instantly.
SWOT Analysis of Google:
Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis
* Already number one search engine has established name, in which its users trust
* Dependable, reliable, and fast
* Needs very little end user marketing
* Has a simple interface and it gives comprehensive results without confusing users
* Many products and services (desktop, Mobile, & web), allowing users to meet many of their technology needs through Google
* Interface with 88 different languages
* Dependent on search based advertising for nearly all revenue
* Weak in social networking presence
* Search queries only answered with 50-60% accuracy
* Rising cost for data center
* Allow vendors to pay for advertising on localized search results
* Develop social networking site or integrate products with existing sites
* Develop feature to enable chat between Google users, especially those using Google products to collaborate on documents
* Find entry into huge gaming market
* Privacy issues regarding content ownership
* Competition from Yahoo, MSN, Bing, Baidu, etc.
* Imposed Censorship
Porters Five Forces Model
Rivalry Among Competing Firms: Low. There are certainly other search engines, but Google is clearly the dominant player in the field. Also, while other companies offer competing options for many of Googles products, nobody offers nearly as complete a mix of products and services. This allows Google to keep consumers engaged across a wide range of products and inspires brand loyalty. For example, someone likes the Google search engine, so they decide to try Google Docs. After coming to see Google Docs in a positive light, they decide to use Google Group to collaborate on documents. Seeing the benefit of Google Groups, they decide to use Google Calendar for their scheduling, etc. Over time, Google comes to be associated with good quality and helpful tools, so when a new product offering comes out, consumers instantly assume it is a good product and want to use it.
Also, in Googles primary revenue stream, pay-per-click search based advertising, Google has no real competition, and as long as Google dominates the search engine field they have little chance of losing advertisers to a competitor. Potential Entry of New Competitors: Low. There are few technology companies that have the knowledge and resources to mount a serious challenge of Googles dominance. Google has developed proprietary technology that is hugely successful. It would be extremely difficult for a competitor to enter the field and duplicate Googles technology, so unless Google loses its position on the cutting edge and is surpassed by the next technological improvement, they are a difficult target for new competitors.
Potential Development of Substitute Products: Low. Some of Googles products face possible substitutes in the market. For example, consumers could use a GPS instead of Google Maps, but Googles primary business is based around their powerhouse search engine which is difficult to substitute. It would be nearly impossible to effectively search the vast amount of information available through the internet and retrieve relevant information without the help of a search engine.
As for Googles primary revenue source, search based advertising; it is difficult to imagine a substitute product that would allow advertisers to pinpoint their marketing to potential customers who are actively demonstrating an interest in a related topic. Targeted advertising that the advertiser pays for only when it shows a measureable result will always be attractive to businesses as long as the pricing structure remains reasonable, and with Googles auction style approach, it is virtually ensured that the price will not exceed what the market will bear.
Bargaining Power of Suppliers: Low. Since Googles products and services are primarily technology and information based, it has very limited exposure to suppliers. Google is not buying raw materials to produce or manufacture tangible goods. Unless a massive societal shift occurs that limits Googles access to information, Google will not be at the mercy of suppliers for their primary resource. The only aspect of Googles business in which suppliers might exercise bargaining power would be servers. However, several manufacturers produce hard disks for storage of information and Googles size and massive use of storage servers gives them the bargaining power.
Bargaining Power of Consumers: Low. Most of Googles products and services are offered at no cost. Googles paying customers, namely advertisers, have no equivalent service to divert their spending to. Other search engines simply dont have the volume of use or the supporting tracking and planning tools that Google has.
Summary statement of the problem: The primary problem that Google faces can be summed up in one word, SIZE. The size of Google makes it extremely difficult to maintain its past innovation and growth performance. Due to the success that Google has enjoyed in its relatively short history, it will be increasingly difficult to identify and capitalize on opportunities that are sufficient to continue to grow and develop at such an astronomical pace. At the same time, Googles position as a dominant industry player puts it in a position to be an attractive target for competitors to emulate and challenge for market share.
Summary statement of the recommended solution: In order to best address this challenge, Google must do several things simultaneously. Google must recognize and remember that its success stems from being on the cutting edge. Google cannot afford to sit on the sidelines when new technologies come to market. They must always look for opportunities to capitalize early. Similarly, Google should not only continue to seek attractive acquisition targets, but also invest in R&D in order to keep the technology pipeline active. Structurally, Google must avoid a centralized control structure that views new growth opportunities from the perspective of their current size and performance, because truly great growth opportunities are not always easily recognizable in the early stages. What better example of that than Google itself?