GOOGLE -mania Strategic Analysis

The Vision To make search engines so powerful they would

understand "everything in the world".

The Mission To organize the world's 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

The Industry Stats

Country Analysis

Country Users (Mn) Usage Growth (2000-2007)

US 210.00 120.80%

China 162.00 620.00%

Japan 86.30 83.30%

India 42.00 740.00%

Brazil 39.15 682.8%

World 1173.00 225.00%

QUESTION?

IS GOOGLE IN THE RIGHT BUSINESS?

Lets Look at Products and Rev Model.

Google Products (>60)

Standalone Applications

AdWords EditorGmail Notifier

Hello PackPhoto Screensaver

PicasaSecure Access

GTalkSketchUp

Desktop ExtensionBlogger Web Comments

Browser SyncDashboard Widgets

Send to PhoneToolbar

Communication & publishing

3D WarehouseBlogger

Calendar, Docs& Spreadsheets

DodgeballFeedBurner

Gmail, OrkutYouTubeReader

Mobile ProductsBlogger Mobile

CalendarGmailNews

iGoogleReader

Maps Mobile

Web SearchMaps

Ride FinderAnalyticsDirectory

Google MiniSMS

Search Mash

AdvertisingAdSenseAdWordsAudio Ads

Click-to-CallGrantsTV Ads

Core Products & Revenue Model

• Core Products – Search and Adwords.

• Revenue Sources -• Contextual Ads - Adsense.• Adwords.• Licensing Google search.

• Approx – 10 Billions Dollars.

Internet Advertising - 2007

Global - 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 Predictions

Global - By Zenith Optimedia

Internet Advertising Trend and Predictions

Global - 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 BnGoogle is doing 138.1 Mn search per day

Porter’s Five Forces Model for Google Search

Rivalry factors:• Few players of relatively smaller size industry is growing at rapid pace•Product differentiation is lowSwitching cost is lowExit barrier is low•Switching cost zero•Informational Complexity due to secrecy of internal algorithms

Entry barrier:•Entry barriers due to brand identity and scales is high

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

Substitution threat:•Mobile search. But due to less sophisticated technology threat is far away few years •Switching cost is LOW

Supplier bargaining power :• Supplier concentration is low• Switching costs is low• Threat of forward integration is low• Importance of volume to suppliers is high

QUESTION?

• WHAT MAKES GOOGLE?

ANDAR KI BAAT

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.• It's best to do one thing, and do it well.• Fast is better than slow.• Democracy on the web works.• You don't need to be at your desk to need an answer.• You can make money without doing evil.• There's always more information out there.• The need for information crosses all borders.• You can be serious without a suit.• Great just isn't 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)

Continuous Innovation

Biz Model

• User Info• Social Networking• Page Rank• Relative Importance• Customization• Contextual Advertising

• competitive advantage comes from its core competencies in computer hardware and software engineering

Value Chain

Dynamic View

Resource Endowments

Resource Commitment

Activities

Buying many sites,Opening offices in many Countries, Huge investment in R&D, Continuous investment in increasing Database

Searching for various avenues, Continuous innovation, Developing people, learning new technologies

QUESTION?

• WHAT IS GOOGLE PITTED AGAINST?

THE BATTLE ZONE

Competitive Landscape

Search

Competitive Landscape

Advertising

Competitive Landscape

Video Blogging

Competitive Landscape

Social Networking

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.

Top Competitors

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.

Strengths Analysis

Weaknesses Analysis

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

Office SuitesOther Software Apps.

Pay Per Use office

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 acquisitions

2004 2005 2006 2007 2008

XunleiAdscape – Video Game advertising

TrendalyzerTonic Systems

MarratechGreenBorder

PanoramioFeedBurnerPeakStream

ZenterGrand Central –

VOIP

dMarc Broadcasting–

Radio Advertising

Measure MapUpstartle

@Last SoftwareOrion

Neven VisionJotSpot

YouTube- Video Sharing

Endoxon

2Web TechnologiesPhatbits

Urchin S/W Inc.Dodgeball

ReqwirelessCurrent Comm. Group

AndroidSkia

Akwan InfoTechAOL (5% stake) -

Internet

5 year Performance

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 World 25%

The Growth Share Matrix

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.

Recommendations

• Balance Scorecard

Have we left any QUESTIONS unanswered?

“THE POWER OF GOOGLE IS ENPOWERMENT.”