CASE STUDY

On

Submitted to
Vhokto Kumar Biswas
Course Instructor
MIS-312
Faculty of Business.
ASA University, Bangladesh.

By:

Syed Nazmus Sakir ID: 071-12-301

Shehab Mahmud ID: 071-12-310
Argho Paul ID: 071-12-333

Date of submission: 26, August 09

Introduction

The paper states that "Google" originated as a search engine that found its initial
customers in the companies who would eventually become its competitors. The paper
states that Google is transforming the online advertising business model while funding
the development of entirely new generations of information-intensive applications. The
paper highlights that from the case study, it is not in Google's best interest to move into a
consolidation role within the media and entertainment industries. The case studies further
show clearly that this role of media hub from a technology and a mergers and
acquisitions (M&A) strategic standpoint, is definitely not the strategic vision for Google.
The paper analyzes the situation and provides the foundations of growth for Google's
future strategy, including potential M&A targets in key markets.

Part – 2
About Google

Google Inc. is an American public corporation, earning revenue from advertising related
to its Internet search, e-mail, online mapping, office productivity, social networking, and
video sharing services as well as selling advertising-free versions of the same
technologies. Google has also developed an open source web browser and a mobile
operating system. The Google headquarters, the Googleplex, is located in Mountain
View, California. As of March 31, 2009 (2009 -03-31)[update], the company has 19,786
full-time employees. The company is running millions of servers worldwide, which
process about 1 petabyte of user-generated data every hour. Google conducts hundreds of
millions of search requests every day.
Google was founded by Larry Page and Sergey Brin while they were students at Stanford
University and the company was first incorporated as a privately held company on
September 4, 1998. The initial public offering took place on August 19, 2004, raising
$1.67 billion, implying a value for the entire corporation of $23 billion. Google has
continued its growth through a series of new product developments, acquisitions, and
partnerships. Environmentalism, philanthropy and positive employee relations have been
important tenets during the growth of Google. The company has been identified multiple
times as Fortune Magazine's #1 Best Place to Work, and as the most powerful brand in
the world (according to the Millward Brown Group).
Google's mission is "to organize the world's information and make it universally
accessible and useful". The unofficial company slogan, coined by former employee and
Gmail's first engineer Paul Buchheit, is "Don't be evil". Criticism of Google includes
concerns regarding the privacy of personal information, copyright, and censorship.

Early history
Google began in January 1996 as a research project by Larry Page and Sergey Brin, a
Ph.D. student at Stanford working on the Stanford Digital Library Project (SDLP). The
SDLP's goal was “to develop the enabling technologies for a single, integrated and
universal digital library." and was funded through the National Science Foundation
among other federal agencies. In search for a dissertation theme, Page considered—
among other things—exploring the mathematical properties of the World Wide Web,
understanding its link structure as a huge graph. His supervisor Terry Winograd
encouraged him to pick this idea (which Page later recalled as "the best advice I ever
got") and Page focused on the problem of finding out which web pages link to a given
page, considering the number and nature of such backlinks to be valuable information
about that page (with the role of citations in academic publishing in mind). In his research
project, nicknamed "BackRub", he was soon joined by Sergey Brin, a fellow Stanford
Ph.D. student supported by a National Science Foundation Graduate Fellowship. Brin
was already a close friend, whom Page had first met in the summer of 1995 in a group of
potential new students which Brin had volunteered to show around the campus. Page's
web crawler began exploring the web in March 1996, setting out from Page's own
Stanford home page as its only starting point. To convert the backlink data that it
gathered into a measure of importance for a given web page, Brin and Page developed the
PageRank algorithm. Analyzing BackRub's output—which, for a given URL, consisted
of a list of backlinks ranked by importance—it occurred to them that a search engine
based on PageRank would produce better results than existing techniques (existing search
engines at the time essentially ranked results according to how many times the search
term appeared on a page). A small search engine called RankDex was already exploring a
similar strategy.

Convinced that the pages with the most links to them from other highly relevant Web
pages must be the most relevant pages associated with the search, Page and Brin tested
their thesis as part of their studies, and laid the foundation for their search engine. By
early 1997, the backrub page described the state as follows:

Some Rough Statistics (from August 29th, 1996)

Total indexable HTML urls: 75.2306 Million
Total content downloaded: 207.022 gigabytes

BackRub is written in Java and Python and runs on several Sun Ultras and Intel Pentiums
running Linux. The primary database is kept on an Sun Ultra II with 28GB of disk. Scott
Hassan and Alan Steremberg have provided a great deal of very talented implementation
help. Sergey Brin has also been very involved and deserves many thanks.

-Larry Page page@cs.stanford.edu

Originally the search engine used the Stanford website with the domain
google.stanford.edu. The domain google.com was registered on September 15, 1997.
They formally incorporated their company, Google Inc., on September 4, 1998 at a
friend's garage in Menlo Park, California.

The name "Google" originated from a misspelling of "googol," which refers to the
number represented by a 1 followed by one-hundred zeros (although Enid Blyton used
the word decades earlier in "Google Bun" - Chapter IX, The Magic Faraway Tree).
Having found its way increasingly into everyday language, the verb, "google," was added
to the Merriam Webster Collegiate Dictionary and the Oxford English Dictionary in
2006, meaning, "to use the Google search engine to obtain information on the Internet."
By the end of 1998, Google had an index of about 60 million pages. The home page was
still marked "BETA", but an article in Salon.com already argued that Google's search
results were better than those of competitors like Hotbot or Excite.com, and praised it for
being more technologically innovative than the overloaded portal sites (like Yahoo!,
Excite.com, Lycos, Netscape's Netcenter, AOL.com, Go.com and MSN.com) which at
that time, during the growing dot-com bubble, were seen as "the future of the Web",
especially by stock market investors.

In March 1999, the company moved into offices at 165 University Avenue in Palo Alto,
home to several other noted Silicon Valley technology startups. After quickly outgrowing
two other sites, the company leased a complex of buildings in Mountain View at 1600
Amphitheatre Parkway from Silicon Graphics (SGI) in 1999. The company has remained
at this location ever since, and the complex has since become known as the Googleplex (a
play on the word googolplex, a 1 followed by a googol of zeros). In 2006, Google bought
the property from SGI for $319 million.

The Google search engine attracted a loyal following among the growing number of
Internet users, who liked its simple design. In 2000, Google began selling advertisements
associated with search keywords. The ads were text-based to maintain an uncluttered
page design and to maximize page loading speed. Keywords were sold based on a
combination of price bid and click-throughs, with bidding starting at $.05 per click. This
model of selling keyword advertising was pioneered by Goto.com (later renamed
Overture Services, before being acquired by Yahoo! and rebranded as Yahoo! Search
Marketing). While many of its dot-com rivals failed in the new Internet marketplace,
Google quietly rose in stature while generating revenue.

Google's declared code of conduct is "Don't be evil", a phrase which they went so far as
to include in their prospectus (aka "red herring" or "S-1") for their IPO, noting, "We
believe strongly that in the long term, we will be better served — as shareholders and in
all other ways — by a company that does good things for the world even if we forgo
some short term gains."
Financing and initial public offering
The first funding for Google as a company was secured in August 1998 in the form of a
$100,000USD contribution from Andy Bechtolsheim, co-founder of Sun Microsystems,
given to a corporation which did not yet exist.

On June 7, 1999, a round of equity funding totalling $25 million was announced; the
major investors being rival venture capital firms Kleiner Perkins Caufield & Byers and
Sequoia Capital.

In October 2003, while discussing a possible initial public offering of shares (IPO),
Microsoft approached the company about a possible partnership or merger. However, no
such deal ever materialized. In January 2004, Google announced the hiring of Morgan
Stanley and Goldman Sachs Group to arrange an IPO. The IPO was projected to raise as
much as $4 billion.

On April 29, 2004, Google made an S-1 form SEC filing for an IPO to raise as much as
$2,718,281,828. This alludes to Google's corporate culture with a touch of mathematical
humor as e ≈ 2.718281828. April 29 was also the 120th day of 2004, and according to
section 12(g) of the Securities Exchange Act of 1934, "a company must file financial and
other information with the SEC 120 days after the close of the year in which the company
reaches $10 million in assets and/or 500 shareholders, including people with stock
options." Google has stated in its annual filing for 2004 that every one of its 3,021
employees, "except temporary employees and contractors, are also equity holders, with
significant collective employee ownership", so Google would have needed to make its
financial information public by filing them with the SEC regardless of whether or not
they intended to make a public offering. As Google stated in the filing, their, "growth has
reduced some of the advantages of private ownership. By law, certain private companies
must report as if they were public companies. The deadline imposed by this requirement
accelerated our decision." The SEC filing revealed that Google turned a profit every year
since 2001 and earned a profit of $105.6 million on revenues of $961.8 million during
2003.

In May 2004, Google officially cut Goldman Sachs from the IPO, leaving Morgan
Stanley and Credit Suisse First Boston as the joint underwriters. They chose the
unconventional way of allocating the initial offering through an auction (specifically, a
"Dutch auction"), so that "anyone" would be able to participate in the offering. The
smallest required account balances at most authorized online brokers that are allowed to
participate in an IPO, however, are around $100,000. In the run-up to the IPO the
company was forced to slash the price and size of the offering, but the process did not run
into any technical difficulties or result in any significant legal challenges. The initial
offering of shares was sold for $85 a piece. The public valued it at $100.34 at the close of
the first day of trading, which saw 22,351,900 shares change hands.
Google's initial public offering took place on August 19, 2004. A total of 19,605,052
shares were offered at a price of $85 per share. Of that, 14,142,135 (another mathematical
reference as √2 ≈ 1.4142135) were floated by Google and 5,462,917 by selling
stockholders. The sale raised US$1.67 billion, and gave Google a market capitalization of
more than $23 billion. The vast majority of Google's 271 million shares remained under
Google's control. Many of Google's employees became instant paper millionaires.
Yahoo!, a competitor of Google, also benefited from the IPO because it owns 2.7 million
shares of Google.

The company is listed on the NASDAQ stock exchange under the ticker symbol GOOG.

Growth

The first iteration of Google production servers was built with inexpensive hardware and
was designed to be very fault-tolerant
In February 2003, Google acquired Pyra Labs, owner of Blogger, a pioneering and
leading web log hosting website. Some analysts considered the acquisition inconsistent
with Google's business model. However, the acquisition secured the company's
competitive ability to use information gleaned from blog postings to improve the speed
and relevance of articles contained in a companion product to the search engine, Google
News.
At its peak in early 2004, Google handled upwards of 84.7% of all search requests on the
World Wide Web through its website and through its partnerships with other Internet
clients like Yahoo!, AOL, and CNN. In February 2004, Yahoo! dropped its partnership
with Google, providing an independent search engine of its own. This cost Google some
market share, yet Yahoo!'s move highlighted Google's own distinctiveness, and today the
verb "to google" has entered a number of languages (first as a slang verb and now as a
standard word), meaning, "to perform a web search" (a possible indication of "Google"
becoming a genericized trademark).
Analysts speculate that Google's response to its separation from Yahoo! will be to
continue to make technical and visual enhancements to personalized searches, using the
personal data that is gathering from orkut, Gmail, and Google Product Search to produce
unique results based on the user. Frequently, new Google enhancements or products
appear in its inventory. Google Labs, the experimental section of Google.com, helps
Google maximize its relationships with its users by including them in the beta
development, design and testing stages of new products and enhancements of already
existing ones.

After the IPO, Google's stock market capitalization rose greatly and the stock price more
than quadrupled. On August 19, 2004 the number of shares outstanding was 172.85
million while the "free float" was 19.60 million (which makes 89% held by insiders). In
January 2005 the number of shares outstanding was up 100 million to 273.42 million,
53% of that was held by insiders, which made the float 127.70 million (up 110 million
shares from the first trading day). The two founders are said to hold almost 30% of the
outstanding shares. The actual voting power of the insiders is much higher, however, as
Google has a dual class stock structure in which each Class B share gets ten votes
compared to each Class A share getting one. Page says in the prospectus that Google has,
"a dual class structure that is biased toward stability and independence and that requires
investors to bet on the team, especially Sergey and me." The company has not reported
any treasury stock holdings as of the Q3 2004 report.
On June 1, 2005, Google shares gained nearly four percent after Credit Suisse First
Boston raised its price target on the stock to $350. On that same day, rumors circulated in
the financial community that Google would soon be included in the S&P 500. When
companies are first listed on the S&P 500 they typically experience a bump in share price
due to the rapid accumulation of the stock within index funds that track the S&P 500. The
rumors, however, were premature and Google was not added to the S&P 500 until 2006.
Nevertheless, on June 7, 2005, Google was valued at nearly $52 billion, making it one of
the world's biggest media companies by stock market value.

On August 18, 2005 (one year after the initial IPO), Google announced that it would sell
14,159,265 (another mathematical reference as π ≈ 3.14159265) more shares of its stock
to raise money. The move would double Google's cash stockpile to $7 billion. Google
said it would use the money for "acquisitions of complementary businesses, technologies
or other assets". On September 28, 2005, Google announced a long-term research
partnership with NASA which would involve Google building a 1-million square foot
R&D center at NASA's Ames Research Center, and on December 31, 2005 Time
Warner's AOL unit and Google unveiled an expanded partnership—see Partnerships
below.
Additionally, Google has also recently formed a partnership with Sun Microsystems to
help share and distribute each other's technologies. As part of the partnership Google will
hire employees to help in the open source office program OpenOffice.org.
With Google's increased size comes more competition from large mainstream technology
companies. One such example is the rivalry between Microsoft and Google. Microsoft
has been touting its MSN Search engine to counter Google's competitive position.
Furthermore, the two companies are increasingly offering overlapping services, such as
webmail (Gmail vs. Hotmail), search (both online and local desktop searching), and other
applications (for example, Microsoft's Windows Live Local competes with Google
Earth). Some have even suggested that in addition to an Internet Explorer replacement
Google is designing its own Linux-based operating system called Google OS to directly
compete with Microsoft Windows. There were also rumors of a Google web browser,
fueled much by the fact that Google is the owner of the domain name "gbrowser.com".
These were later proven when google released Google Chrome. This corporate feud is
most directly expressed in hiring offers and defections. Many Microsoft employees who
worked on Internet Explorer have left to work for Google. This feud boiled over into the
courts when Kai-Fu Lee, a former vice-president of Microsoft, quit Microsoft to work for
Google. Microsoft sued to stop his move by citing Lee's non-compete contract (he had
access to much sensitive information regarding Microsoft's plans in China).

Google and Microsoft reached a settlement out of court on 22 December 2005, the terms
of which are confidential.

While the company's primary market is in the web content arena, Google has also
recently begun to experiment with other markets, such as radio and print publications. On
January 17, 2006, Google announced that it had purchased the radio advertising company
dMarc, which provides an automated system that allows companies to advertise on the
radio. This will allow Google to combine two advertising media—the Internet and radio
—with Google's ability to laser-focus on the tastes of consumers. Google has also begun
an experiment in selling advertisements from its advertisers in offline newspapers and
magazines, with select advertisements in the Chicago Sun-Times. They have been filling
unsold space in the newspaper that would have normally been used for in-house
advertisements.

During the third quarter 2005 Google Conference Call, Eric Schmidt said, "We don't do
the same thing as everyone else does. And so if you try to predict our product strategy by
simply saying well so and so has this and Google will do the same thing, it's almost
always the wrong answer. We look at markets as they exist and we assume they are pretty
well served by their existing players. We try to see new problems and new markets using
the technology that others use and we build."
After months of speculation, Google was added to the Standard & Poor's 500 index (S&P
500) on March 31, 2006. Google replaced Burlington Resources, a major oil producer
based in Houston that had been acquired by ConocoPhillips.. The day after the
announcement Google's share price rose by 7%.
Over the course of the past decade, Google has become quite well known for its corporate
culture and innovative, clean products, and has had a major impact on online culture. In
July 2006, the verb, "to google", was officially added to both the Merriam Webster
Collegiate Dictionary as well as the Oxford English Dictionary, meaning, "to use the
Google search engine to obtain information on the Internet."

Philanthropy

In 2004, Google formed a non-profit philanthropic wing, Google.org, giving it a starting

fund of $1 billion. The express mission of the organization is to help with the issues of
climate change (see also global warming), global public health, and global poverty.
Among its first projects is to develop a viable plug-in hybrid electric vehicle that can
attain 100 mpg. The current director is Dr. Larry Brilliant.

Acquisitions

Since 2001, Google has acquired several small start-up companies, often consisting of
innovative teams and products. One of the earlier companies that Google bought was
Pyra Labs. They were the creators of Blogger, a weblog publishing platform, first
launched in 1999. This acquisition led to many premium features becoming free. Pyra
Labs was originally formed by Evan Williams, yet he left Google in 2004. In early 2006,
Google acquired Upstartle, a company responsible for the online collaborative word
processor, Writely. The technology in this product was combined with Google
Spreadsheets to become Google Docs & Spreadsheets.

On October 9, 2006, Google announced that it would buy the popular online video site
YouTube for $1.65 billion. The brand, YouTube, will continue to exist, and will not
merge with Google Video. Meanwhile, Google Video signed an agreement with Sony
BMG Music Entertainment and the Warner Music Group, for both companies to deliver
music videos to the site. The deal was finalized by November 13.
On October 31, 2006, Google announced that it had purchased JotSpot, a company that
helped pioneer the market for collaborative, web-based business software to bolster its
position in the online document arena.

On March 17, 2007, Google announced its acquisition of two more companies. The first
is Gapminder's Trendalyzer software, a company that specializes in developing
information technology for provision of free statistics in new visual and animated ways
On the same day, Google also announced its acquisition of Adscape Media, a small in-
game advertising company based in San Francisco, California.
Google also acquired PeakStream Technologies.

Products and services

Google has created services and tools for the general public and business environment
alike, including Web applications, advertising networks and solutions for businesses.

• Advertising
99% of Google's revenue is derived from its advertising programs. For the 2006 fiscal
year, the company reported $10.492 billion in total advertising revenues and only $112
million in licensing and other revenues. Google is able to precisely track users' interests
across affiliated sites using Double Click technology and Google Analytics. Google's
advertisements carry a lower price tag when their human ad-rating team working around
the world believes the ads improve the company's user experience. Google AdWords
allows Web advertisers to display advertisements in Google's search results and the
Google Content Network, through either a cost-per-click or cost-per-view scheme.
Google AdSense website owners can also display adverts on their own site, and earn
money every time ads are clicked. Google began in March 2009 to use behavioral
targeting based on users' interests.

Google has also been criticized by advertisers regarding its inability to combat click
fraud, when a person or automated script is used to generate a charge on an advertisement
without really having an interest in the product. Industry reports in 2006 claim that
approximately 14 to 20 percent of clicks were in fact fraudulent or invalid.
In June 2008, Google reached an advertising agreement with Yahoo!, which would have
allowed Yahoo! to feature Google advertisements on their web pages. The alliance
between the two companies was never completely realized due to antitrust concerns by
the U.S. Department of Justice. As a result, Google pulled out of the deal in November,
2008.

• Software

The Google web search engine is the company's most popular service. As of August
2007, Google is the most used search engine on the web with a 53.6% market share,
ahead of Yahoo! (19.9%) and Live Search (12.9%). Google indexes billions of Web
pages, so that users can search for the information they desire, through the use of
keywords and operators, although at any given time it will only return a maximum of
1,000 results for any specific search query. Google has also employed the Web Search
technology into other search services, including Image Search, Google News, the price
comparison site Google Product Search, the interactive Usenet archive Google Groups,
Google Maps, and more.

In early 2006, the company launched Google Video, which allowed users to both upload
videos, and search and watch videos from the larger Internet. In 2009 uploads to Google
video were discontinued.

Google has also developed several desktop applications, including Google Desktop,
Picasa, SketchUp and Google Earth, an interactive mapping program powered by satellite
and aerial imagery that covers the vast majority of the planet. Many major cities have
such detailed images that one can zoom in close enough to see vehicles and pedestrians
clearly. Consequently, there have been some concerns about national security
implications; contention is that the software can be used to pinpoint with near-precision
accuracy the physical location of critical infrastructure, commercial and residential
buildings, bases, government agencies, and so on. However, the satellite images are not
necessarily frequently updated, and all of them are available at no charge through other
products and even government sources; the software simply makes accessing the
information easier. A number of Indian state governments have raised concerns about the
security risks posed by geographic details provided by Google Earth's satellite imaging.

Google has promoted their products in various ways. In London, Google Space was set-
up in Heathrow Airport, showcasing several products, including Gmail, Google Earth and
Picasa. Also, a similar page was launched for American college students, under the name
College Life, Powered by Google.

In 2007, some reports surfaced that Google was planning the release of its own mobile
phone, possibly a competitor to Apple's iPhone. The project, called Android, an operating
system provides a standard development kit that will allow any "Android" phone to run
software developed for the Android SDK, no matter the phone manufacturer. In
September 2008, T-Mobile released the first phone running the Android platform, the G1.

Google Translate aka Google Language Tools is a server-side machine translation

service, which can translate 35 different languages to each other, forming 595 language
pairs. Browser extension tools (such as Firefox extensions) allow for easy access to
Google Translate from the browser. The software uses corpus linguistics techniques from
translated documents, (such as United Nations documents, which are professionally
translated) to extract translations accurate up to 88 percent. A "suggest a better
translation" feature appears with the original language text in a pop-up text field,
allowing users to indicate where the current translation is incorrect or else inferior to
another translation.

On 1 September 2008, Google pre-announced the upcoming availability of Google

Chrome, an open-source web browser, which was released on 2 September 2008.

On 7 July 2009, Google announced the project to develop Google Chrome OS, an open-
source Linux-based operating system in a "window of opportunity".
 • Gmail
Gmail is a free webmail, POP3 and IMAP service provided by Google. In the United
Kingdom and Germany, it is officially called Google Mail.
Gmail was launched as an invitation-only beta release on April 1, 2004 and it became
available to the general public on February 7, 2007. As of July 2009 it has 146 million
users monthly. The service was upgraded from beta status on July 7, 2009, along with the
rest of the Google Apps suite.
With an initial storage capacity offer of 1 GB per user, Gmail significantly increased the
webmail standard for free storage from the 2 to 4MB its competitors offered at that time.
The service currently offers over 7350 MB of free storage with additional storage ranging
from 10 GB to 400 GB available for $20 to $500 (US) per year.
Gmail has a search-oriented interface and a "conversation view" similar to an Internet
forum. Software developers know Gmail for its pioneering use of the Ajax programming
technique.
Gmail runs on Google Servlet Engine and Google GFE/1.3 which run on Linux.

• Enterprise Products
Google entered the Enterprise market in February, 2002 with the launch of its Google
Search Appliance, targeted toward providing search technology to larger organizations.
Providing search for a smaller document repository, Google launched the Mini in 2005.
Late in 2006, Google began to sell Custom Search Business Edition, providing customers
with an advertising-free window into Google.com's index. In 2008, Google re-branded its
next version of Custom Search Business Edition as Google Site Search.
In 2007, Google launched Google Apps Premier Edition, a version of Google Apps
targeted primarily at the business user. It includes such extras as more disk space for e-
mail, API access, and premium support, for a price of $50 per user per year. A large
implementation of Google Apps with 38,000 users is at Lakehead University in Thunder
Bay, Ontario, Canada.
Also in 2007, Google acquired Postini and continued to sell the acquired technology as
Google Security Services.
 Part – 2
Answer of the case study questions.

Q -1. Evaluate Google using the competitive forces and value chain models.

Answer:

Five forces affecting competitive strategy: Harvard Business School Professor Michael
Porter identified five forces that drive competition within an industry:

1. Threat of entry by new competitors -Many new entrants effectively decreases

profitability

2. Intensity of rivalry among existing competitors - Sometimes rivals compete

aggressively and sometimes rivals compete in non-price dimensions such as innovation,
marketing, etc.

3. Pressure from substitute products -The more substitute products, the more customers
can put the firm under pressure to lower their prices

4. Bargaining power of buyers - Buyer concentration to firm concentration ratio.

5. Bargaining power of suppliers - Suppliers of raw materials, components, and services

(such as expertise) to the firm can be a source of power over the counterattack on Google.

There are several information systems that companies may apply their business strategy
to, in hopes, of achieving a competitive advantage. Two of these models that will be
examined are Porter’s Competitive Forces Model and the Business Value Chain Model.
The first Schmidt put forth to Wall Street just last week in his 2006 Q4 report that Google
is “now presenting a much larger business mission.” This mission is geared towards
monopolizing the internet market and its different spectrum. In typical Google fashion,
however, the Google spin presented was rosier than the reality. Google can easily reach
150 billion dollar cap in the next five years because it has the opportunity to improve
their product in so many different ways.
Q-2: What are Google’s sources of competitive advantage? How does it provide value
to its users?

Answer:

In this article, we take a closer look at the competitive advantages of Google Search and
try to find out whether Google is really beatable.

Google's Competitive Advantages

1. Free SEO Labor

Google's work force is not limited to their PhDs and 15,000 talented employees in
Mountain View, New York and Dublin. SEOs from all around the world can be
considered a free labor force for Google. In order to get their sites promoted on the
world's number one search engine, SEOs optimize their sites according to Google's rules,
register their sitemaps and ping Google's services whenever a new page is created.

2. Extra data - Google Co-op, Image Labeler, etc

With its customized search service, Google Co-op, users don't only create vertical a
search engine - they also give Google very valuable domain-specific information.
3. Google knows everything about your site
Google made a very smart acquisition back in 2004. They bought Urchin and converted it
to a free traffic analysis add-on for your site, Google Analytics. Today many sites use it
to get a better understanding of their traffic. But a side effect of this tool is that it
potentially gives Google access to important data about your site.

4. Google knows a lot about you - Personalization

Gmail, Google Toolbar, Google Docs and others. They all give clues about your
personality, your interests, likes and dislikes. Consequently, you end up with more
personalized search results. For example: if you are the type of person who searches for
programming info in Google Search, discuss KDE's latest bugs on GTalk and Gmail, visit
Freshmeat and Sourceforge all day and long with your Google Toolbar-powered Firefox
-- well then Google will not consider your Python, Tomcat, Apache queries as zoological
but programming related

5. Google offers UNIVERSAL search

Google does not only crawl the Web, photosphere, press releases and books. It also
crawls the real world with Google Earth. And Google Map's Street View lets you drive
around big cities like New York and San Francisco, from your browser. Now with
Universal Search, you can reach all of these services with a simple Google search.

6. Google has psychological dominance

The fact that Google is such a widely discussed topic makes you think that it is
indispensable. Psychologically, you feel that you lack it when you try other search
engines. Especially if your query is indefinitely motivated - e.g your purpose is more
about researching than finding - then you always want to try your search on Google as
well, even if you were already satisfied with other results elsewhere.

7. Google is everywhere
Ok, let's say you decided to switch search engines. You still have obstacles, such as:
• If you use one of the Google network services, like Gmail, you always have
Google top of mind;
• If you go to CNN.com, you have Google in the toolbar (on the US version at
least); so why bother with entering a new URL for search?
• If you use Firefox, Safari or Opera, then Google is your default search provider,
home page and feed subscriber.

8. Google has lots of cash

As of today, Google's market valuation is more than $150 Billion. They have lots of cash
reserves (although not as much as Microsoft) and their profit margins are very high. In
other words, Google is financially very healthy and they have the power to snap up any
innovation developed externally.
Q – 3: What problems and challenges does Google face in this case? What
management, organization, and technology factors are responsible for these problems
and challenges?

Answer:

Problems

• When it comes to the building competition, part of what they’re trying to do is

diversify beyond Internet search advertising, but they are also trying to make their
offerings more inviting and sticky to users. One of Google’s shortcomings is that
even though users like its search offering, they don’t spend a lot of time on it.
We’re seeing Google trying to provide more personalized services — enabling
users to sign in, use e-mail, and access content that’s preselected and determined
by the user.

• Click fraud is a difficult situation. I don’t know what is being done to stop click
fraud on Google Web sites and on its AdSense network, which is advertising
technology used by third-party, or other company, Web sites. They have to invest
in technology and people around the concept of click fraud to ensure that it
doesn’t happen. At some point, this will become an issue that people will talk
about in 2006.

Challenges

According to this article, Google Checkout customers are facing immense problems with
the software just before the Christmas season. Some key facts are:

• Delay in processing the transaction and sending confirmation to the vendor site.
This delay leads to delay in order processing and sometimes "out of stock"
conditions.
• Google checkout does not send the customer back to the vendor site as PayPal
does. That makes the vendor lose customers who might come back and shop more
on the vendor site.
• If the order needs to be cancelled, the process of refunding the customer is not
easy.

Vendors like J&R Electronics have suspended Google Checkout after they were
overwhelmed by the service. Approximately 1% of orders have been cancelled due to out
of stock conditions because of delays using Google Checkout. For a holiday season, that
can be really bad for a vendor.
Q – 4: Does Google’s business strategy effectively address these challenges? Explain
your answer.

Answer:

In our point of view, Google’s business strategy effectively addresses these challenges.
Google is trying to evolve from just a search engine company to all-round electronic
information Service Company which is driven by searching and advertising. They are
doing so through the following two aspects:

Competing against existing companies with traditional services

Services like Google News, GMail and GTalk fall into this category. And they have
already become a huge threat to traditional big fish in the sea such as CNN, BBC,
Hotmail and MSN Messenger.

Exploring new hot spots to expand its own business scope

Services like Google Earth, Google Maps, Google Transit and Google Video all have
promising market potential due to the large user base that Google has already maintained
through its basic searching service. However, all these new services will still be
combined with Google's advertising to generate profit.

Becoming an advertisement magnet both on and off the Internet

From Google's latest move to acquire a radio advertising agency dMarc Broadcasting
Inc., Google is approaching other media as well. However, its attempt to place ads in
print publications as part of an experiment has not been proved to be very successful.
Q – 5: how successful do you think Google will be in the future?

Answer:

Google has had a mightily impressive first 10 years, going from being just the kernel of
an idea between two undergraduates to being a company ranking alongside such giants as
Microsoft, Yahoo, and Apple. The New York Times has a brilliant set of comparisons
between where Google is at now and where Microsoft was at the same age.

Google has come a long way in its first decade, but there is surely much more to come.
According to BBC News, the trio in charge of Google, CEO Eric Schmidt, and co-
founders Larry Page and Sergey Brin has made a pact to stay together for at least 20
years, meaning the company is likely to go from strength to strength over the course of
the next decade or more.

While search is still the backbone of the company’s success, Google is also reaching out
to other segments of the technology world. There’s Android, the mobile phone platform,
Chrome, its new cloud computing-style Web browser, and a whole range of applications
wrapped up in Google Apps which could help revolutionize the way we all organize and
share content on the Internet.

Google has had a very short but fruitful past so far, so we are convinced its future is
likely to be long and even more fruitful.

Conclusion

Beating conventional wisdom is not so unusual. Commodore, Lotus, AOL are examples
of previously dominant tech companies that eventually fell by the wayside. So even
though Google looks very strong and rock solid to many of us, it can be beat. But it will
take more than technology and marketing alone, because as the above discussion shows -
Google is strong in a lot of different ways.