business model of google

PROJECT REPORT

ON

MENTORSHIP REPORT SUBMITTED IN THE

PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE PGDM

Submitted By:

Mr. Abhishek Pandav

PGDM (2010-12)

Under the Guidance of

Mr. B. Ram Mohan

Mr. Ajay Bansal

Jagannath International Management School

Kalkaji, New Delhi.

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“A Study on the Business Model of Google”

ACKNOWLEDGEMENT

It gives immense gratification to place on records my profound gratitude

and sincere appreciation to each and every one of those who have helped

me in this Endeavour. I am ineffably indebted to Mr. B.Ram.Mohan and

Mr.Ajay Bansal for their conscientious guidance and encouragement to

initiate this study that helped me to accomplish this project. I extend my

sincere thanks for their cooperation and valuable suggestions from time to

time that made my study more meaningful. Any omission in this brief

acknowledgement does not mean lack of gratitude.

Abhishek Pandav.

PGDM 3A.

Roll no-1.

CONTENTS

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1. Methodology .....................................................................7

2. Introduction.......................................................................9

3. Background Note .............................................................11

4. Insight on Google Business Model ..................................14

4.1 Infrastructure Management ...........................................16

4.1.1 Parallel Processing .....................................................17

4.1.2 Page Rank Technology ..............................................19

4.2 Value Configuration .......................................................22

4.3 Capability .......................................................................23

4.4 Acquisitions and Partnerships .......................................24

4.5 Adwords ‐Revenue Generation Model ..........................25

4.5.1 Benefits of Adwords ...................................................26

4.6 Cost Structure ...............................................................34

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4.7 Distribution Channel ......................................................34

4.8 Ideas ..............................................................................35

4.9 Experiments ...................................................................36

4.10 Recruitment ..................................................................36

4.11 Value Proposition .........................................................37

5 Swot Analysis ....................................................................39

6 Criticisms ...........................................................................39

6.1 Click Fraud .....................................................................39

6.2 Security ...........................................................................40

7 Competitors ........................................................................40

7.1 Google and Microsoft ......................................................40

7.2 Google and Apple ...........................................................42

7.3 Google and Yahoo ..........................................................43

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7.4 Google and Amazon .......................................................43

7.5 Google And Facebook ....................................................44

7.6 Google and Cisco ...........................................................45

7.7 Google and IBM ..............................................................46

7.8 Google and Nokia ...........................................................47

7.9 Google and Mozilla ..........................................................47

8 The Road Ahead .................................................................48

9 Annexure .............................................................................49

10 References ........................................................................56


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Google’s mission is “to organize the world’s information and make it

universally accessible and useful.”

“Google- A modern management pioneer that has much to teach us about

how to build companies that are truly fit for the 21st century”.

The Future of Management, London Business School Professor, Gary

Hanel.

“As we go forward, I hope we’re going to continue to use technology to make

really big differences in how people live and work.”

Sergey Brin, CoFounder of Google.


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1. Methodology

Descriptive Case Study-

It covers the scope and depth of the case being covered. A theory formulated ahead of

time, is reviewed and debated upon, and serves as a design for the descriptive case

study. The contexts covered under a descriptive case study are as follows-

Initiation and Structure of the Organization

• Year of origin, who or what was the main source of support in creation of the

organization,

the source of funding, the legal grants, the organizational structure

Organizational Evolution

• How has the organization transfomed over the years.

• What were the events that led to the changes?

• What activities have been completed or are currently under way?

• The planning and implementation strategies

Relationship with other organizations

• Mergers, collaborations, partnerships with other organizations.

• Competition

Relationship with the Government


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• The organizations relationship with the Government, and how the relationship has

affected

the organization

Effect on Society

• The contribution of the organization to the society. The perception of the society about

the

organization.

• The corporate social responsibility of the organization

Policies

• How the organization deals with multiple issues. The policies of the organization with

respect to various social issues.


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Research questions

A descriptive case study methodology will be undertaken .The case would broadly focus

on the following aspects:

• A detailed approach to the business model of Google.

• Revenue generator model of Google.

• The changes in the business model of Google over the years alongside with increased

competition.

• Insights into the business models of its major products, and their relative contribution

to the revenue generated

• Comparative analysis of Google’s Business model with its competitors.

2. Introduction

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. The Google headquarters, the Googleplex, is located in Mountain

View, California. The company is running millions of servers worldwide. Who would

have predicted that two friends with an idea, working in a garage, would one day

revolutionize internet search advertising?


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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. Presently it has a

market capitalization of 179.41$bn.

Whenever a company becomes wildly successful in a brief span of time, it becomes an

object of fascination for corporate executives, students and even general public. It

becomes a new role model for business success. Google is still an young company and

it has yet to be tested by adversity. By taking a close look at Google’s business model,

important insights can be deciphered. Most of Google’s success can be traced to three

innovations, firstly a brilliant insight into the organization of information, secondly, a

creative act of imitation, and lastly a breakthrough in the engineering of computer

systems.


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3. Background Note

Exhibit 1

Google began as a research project by Larry Page and Sergey brin in 1996, who were

both students at Stanford University, California. They believed that a search engine

analysed the relationship between websites would produce better results. They realised

that the search engines that existed at that time were deeply flawed. Their search

engine was originally nicknamed “BackRub” because the system checked back links to

estimate the importance of a site.

The domain google.com was registered on 15th september 1997, and the company was

incorporated as Google Inc. on 4th September 1998 at a friends garage in Menlo Park,


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California. The name “Google” originated from a common misspelling of the word

“googol”, which refers to 10 to the power 100, the number followed by a 1 followed by

one hundred zeros. The total initial investment raised for the new company amounted to

almost $1.1 million, including a $100,000 check by Andy Bechtolsheim, one of the

founders of Sun Microsystem. After quickly outgrowing two other sites, the company

leased a complex of buildings in Mountain View at 1600 Amphitheatre Parkaway from

Silicon Graphics (SGI) in 2003. The company has remained at this location ever aince

and the complex has since come to be known as the GooglePlex.

Exhibit 2


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Google has a simple, clean, clear, minimalistic user interface, no frills, just the logo and

the search box- easy and fast to load. Bottom line is : If the user visits a search engine,

what he wants to get is simply that : just a search engine- search engine which is fast

and reliable. If the user wants a generalistic portal, he goes to a portal, not to a search

engine. Larry Page and Sergey Bri, the google executives, understood this, and this

was what they deleivered. The Google search engine attracted a loyal following among

a growing number of Internet users who liked its simple design and useful results. But

just serving free search results was not much of a business model. 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 clickthroughs, with bidding

starting at 5 cents per click. It imitated the concept from Goto, but Google perfected the

process. Another important reason for Google’s success is the design of its parallel

processing computer system. Housed in multiple data centre around the world, the

system is able to crunch numbers and process transactions at an extremely rapid pace.

This has given Google an edge over its competitors Microsoft and Yahoo. The future

competition among these companies will be fought as much on the power and the

efficiency of their machinery, as on the attractiveness of the services.


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4. Insight on Google Business Model.

Exhibit 3- Nine Bricks Business Model.

Source-http://www.hec.unil.ch/aosterwa/Phd/Osterwalder_Phd_BM_Ontology.pdf


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Exhibit 4

Source-http://www.hec.unil.ch/aosterwa/Phd/Osterwalder_Phd_BM_Ontology.pdf

“A Study on the Business Model of Google”15

4.1 Infrastructure Management.

Google requires large computational resources in order to provide their service. When a

client computer attempts to connect to Google, several DNS servers resolve

www.google.com into multiple IP addresses, and the client is directed to different

Google clusters. A Google cluster has thousands of servers and once the client has

directed to the server additional load balancing is done to send the queries to the least

loaded web server. In computer networking, load balancing is a technique to distribute

workload evenly across two or more computers, network links, CPUs, hard drives, or

other resources, in order to get optimal resource utilization, maximize throughput,

minimize response time, and avoid overload. This makes Google one of the largest and

most complex content deleivey networks.


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http://www.google.com/

Exhibit 5.

4.1.1 Parallel Processing.

Google runs on a distributed network of thousands of low-cost computers and can

therefore carry out fast parallel processing. Parallel processing is a method of

computation in which many calculations can be performed simultaneously, significantly

speeding up data processing. Google has three distinct parts:

Googlebot, a web crawler that finds and fetches web pages.


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The indexer that sorts every word on every page and stores the resulting index of

words in a huge database.

The query processor, which compares your search query to the index and

recommends the documents that it considers most relevant.

Exhibit 6.


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Googlebot, Google’s web Crawler.

Googlebot is Google’s web crawling robot, which finds and retrieves pages on the web

and hands them off to the Google indexer. It functions much like a web browser, by

sending a request to a web server for a web page, downloading the entire page, then

handing it off to Google’s indexer. Googlebot finds pages in two ways: through an add

URL form, www.google.com/addurl.html and through finding links by crawling the web.

Google Indexer

Googlebot gives the indexer the full text of the pages it finds. These pages are stored in

Google’s index database. This index is sorted alphabetically by search term, with each

index entry storing a list of documents in which the term appears and the location within

the text where it occurs. This data structure allows rapid access to documents that

contain user query terms.

Google’s Query Processor

The query processor has several parts, including the user interface (search box), the

“engine” that evaluates queries and matches them to relevant documents, and the

results formatter. PageRank is Google’s system for ranking web pages. A page with a

higher PageRank is deemed more important and is more likely to be listed above a

page with a lower PageRank.

4.1.2 Page Rank Technology


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http://www.google.com/addurl.html

We've developed an interesting trick that speeds up the first step: instead of storing the

entire index on one very powerful computer, Google uses hundreds of computers to do

the job. Because the task is divided among many machines, the answer can be found

much faster. To illustrate, let's suppose an index for a book was 30 pages long. If one

person had to search for several pieces of information in the index, it would take at least

several seconds for each search. But what if you gave each page of the index to a

different person? Thirty people could search their portions of the index much more

quickly than one person could search the entire index alone. Similarly, Google splits its

data between many machines to find matching documents faster.

How do we find pages that contain the user's query? Let's return to our civil war

example. The word "civil" was in documents 3, 8, 22, 56, 68, and 92; the word "war"

was in documents 2, 8, 15, 22, 68, and 77. Let's write the documents across the page

and look for those with both words.

civil 3 8 22 56 68 92

war 2 8 15 22 68 77

both words 8 22 68

Arranging the documents this way makes clear that the words "civil" and "war" appear in

three documents (8, 22, and 68). The list of documents that contain a word is called a

"posting list," and looking for documents with both words is called "intersecting a posting

list." (A fast way to intersect two posting lists is to walk down both at the same time. If

one list skips from 22 to 68, you can skip ahead to document 68 on the other list as

well.)


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Ranking

Google uses many factors in ranking. Of these, the PageRank algorithm might be the

best known. PageRank evaluates two things: how many links there are to a web page

from other pages, and the quality of the linking sites. With PageRank, five or six high-

quality links from websites such as www.cnn.com and www.nytimes.com would be

valued much more highly than twice as many links from less reputable or established

sites.

If a document contains the words "civil" and "war" right next to each other, it might be

more relevant than a document discussing the Revolutionary War that happens to use

the word "civil" somewhere else on the page.

Also, if a page includes the words "civil war" in its title, that's a hint that it might be more

relevant than a document with the title "19th Century American Clothing." In the same

way, if the words "civil war" appear several times throughout the page, that page is

more likely to be about the civil war than if the words only appear once.

Running a search engine takes a lot of computing resources. For each search that

someone types in, over 500 computers may work together to find the best documents,

and it all happens in under half a second.


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4.2 Value Configuration

Google is different. Google is expanding its area of participation in the value chain. In

other words, its search technology and infrastructure is merely a utility that allows it to

do what really bring over 90% revenue and income - advertising. Google is primarily an

advertising company, simply because it is the only company that allows any business to

start advertising online without any need for professional copy writers or graphic

designers or help from any advertising salesperson.

Nearly everything that the company does , including building big data centres, buying

optical fibers, promoting free wifi access, fighting copyright restrictions, supporting open

sourcesoftware, and giving away web services and data is aimed at reducing the cost

and expanding the scope of internet use. Simply put, Google wants information to

be free.

Even though the business model spells-out how a company makes money, and the

value propositions are what the company offers, not all value propositions have the

purpose to generate direct revenues. Reasons can be to, increase the value of

existing intellectual assets and capabilities, get access to new assets and capabilities,

create momentum for a new technology, lower cost of development, reduce risks, build

new markets, attract the best people, etc.

Google as an example


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Google generated 99% of total revenues 2007, and 97% of total revenues in 2008 from

advertising, still most of Google's value propositions are not directed towards its

advertisers.

Exhibit VII

Users A very large number of value propositions, often provided for free.

Network

Partners

Revenues in return for relevant ads on their sites.

Organization

s

Money saving proposition by outsourcing IT needs to Google.

Developers Providing platforms such as GWT for free to enable development of

rich content.

Employees Working conditions, “own time”, job security.

Google

Owners

Growth, financial performance.

Society Free tools such as blogs and localized versions of Google in

developing countries.

4.3 Capability

Complementary Advantage

Complements are any products and services that tend to be consumed together.For

Google anything that happens on the internet is a compliment to its main business.The

more the people use internet, the more ads they see, and the more money.The vast


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breadth of Google’s compliments and its ability to push the price of the compliments to

zero , is what sets it apart from other firms. It faces far less risk in product development

than other usual business does. It routinely introduces half finished products and

services as online “betas”, because it knows that even if the offering fails to win a big

share of the market, they will still generate advertising revenue.

The real secret to Google’s mystique is that of a company that understands the

possibilities of technological change, and where to look for the small companies with

big ideas that will change established business models. And in that way, it is following

in the time-worn footsteps of other acquisitive giants like Cisco Systems and Microsoft.

Like any other giant multinational, Google knows that if it needs to constantly add new

products and services to its business.

4.4 Acquisitions and Partnerships

Since 2001, Google has acquired many companies, mainly focusing on small venture

capital companies. In 2004, Google acquired Keyhole, Inc. The start-up company

developed a product called Earth Viewer that gave a 3-D view of the Earth. Google

renamed the service to Google Earth in 2005. Two years later, Google bought the

online video site YouTube for $1.65 billion in stock. On 13 April 2007, Google reached

an agreement to acquire DoubleClick for $3.1 billion, giving Google valuable

relationships that DoubleClick had with Web publishers and advertising agencies. Later

that same year, Google purchased GrandCentral for $50 million. The site would later be

changed over to Google Voice. On August 5 2009, Google bought out its first public

company, purchasing video software maker On2 Technologies for $106.5 million.


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4.5 Adwords- Revenue Generation Model

Most search engines provide two types of results listings in response to the same user

query: organic (also called "natural" or "free") listings, and paid listings (i.e.,

advertisements). Google keeps these two types of listings separate, and ads are noted

by the phrase "Sponsored Links" appearing above them. On Google, although both

organic and paid results appear in response to the same user query, the results are

independent of each other. The ranking of an organic search result has no bearing on

the ranking of any ads, and vice versa. This makes it possible for an advertiser to

perform well in the paid listings and have an ample online presence, even if their site

isn't present in the top organic search results.

Google introduced a smart, innovative and quite risky business model - Adwords - and

the pay per click concept. The risk proved winning, and the innovative business model

worked. Today Adwords is Google main source of revenues. AdWords analyzes every

Google search to determine which advertisers get each of up to 11 "sponsored links" on

every results page. It's the world's biggest, fastest , a never-ending, automated auction.

Thousands of advertisers worldwide use the Google Adwords program to promote their

products and services on the web. Advertisers bid in an open and competitive auction to

have their ads appear alongside the search results for particular keywords. They can

specify the geographic location and time of the day for their ads to appear .The adwords

program includes local , national and international distribution.


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4.5.1 Benefits of Adwords

Relevance

One of the biggest benefits AdWords offers is the ability to precisely target ads to users

based on their interest, as well as a number of other factors like location, language, and

demographic. The result is that the user sees highly relevant ads, which they are more

likely to click on. And because ads on search engines show only in response to a user's

query, the user is also more likely to be further along in the buying cycle, and more

likely to be ready to convert.

Return on Investment (ROI)

Online advertising is thoroughly measurable, making it easy to tell whether or not you're

meeting your advertising goals. Every user's click is tied to a particular ad, keyword, and

search query, all of which you can track and decide to improve whenever you like. If you

spot a trend, you can create, modify, or delete keywords, ads, and campaign targeting

selections within seconds. This allows you to be more responsive and more in control

when it comes to improving your ROI.

Reach

Every day, Internet users conduct millions of searches on Google. When you use

Google AdWords, you have the opportunity to capture any segment of that broad


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worldwide audience that's actively looking for products, services, information, and

websites. By giving your products or services a presence during relevant user searches,

you're ensuring that you're visible in a crucial point in the customer's buying cycle --

when the user is actively searching for what you're offering.

Pay per Click Advertising

Pay-Per-Click (PPC) is the best way to send immediate, targeted traffic to your website..

An advertiser has to pay every time his ad receives a click. The Advertisers decide the

keywords relevant to their offer that should display their ad and the maximum amount

they are willing to pay per click for that keyword.

Categories are ranked by the cost per click that advertisers generally have to pay,

weighted by distribution, and then separated into three bundles: high cap, mid cap,

and low cap. "The high caps are very competitive keywords, like 'flowers' and 'hotels,'"

Tang says. In the mid-cap realm you have keywords that may vary seasonally—the

price to place ads alongside results for "snowboarding" skyrockets during the winter.

Low caps like "Massachusetts buggy whips" are the stuff of long tails.

Placement Targeting

Placement targeting lets advertisers choose individual sites in the Google Content

Network where they'd like their ads to appear. A placement can be an entire website, or

it can be a subset of pages or ad units on a site, as defined by the site's publisher. For

example, a news site might offer advertisers the chance to place ads across their entire

site, only on its front page, or just in ad units on the upper half of its sports pages.


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Placement targeting gives advertisers even greater flexibility to control exactly where

their ads show.

Ad Rank

Ads are positioned on pages based on their Ad Rank, which is a combination of your bid

and a relevancy metric called Quality Score. The ad with the highest Ad Rank appears

in the first position, and so on down the page.

A Quality Score is calculated every time the advertiser’s keyword matches a search

query – that is, every time the keyword has the potential to trigger an ad. Quality Score

is a formula that varies based on the bid type, where the ad is showing, and targeting

type. However, the main concept remains the same. Because Quality Score measures

relevancy, a high Quality Score generally means that the ads will appear in a higher

position and at a lower cost-per-click (CPC).

Adwords cost

Google charges a one-time AdWords activation fee upon account creation to ensure

that our advertisers are committed to creating well-targeted advertisements. The fee

also helps cover the costs associated with creating, maintaining and, if applicable,

cancelling an account.

Google Search Network


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It includes Google search pages, search sites, and properties that display search results

pages, such as Google Product Search and Earthlink. AdWords ads can appear

alongside or above search results, as part of a results page as a user navigates through

a site's directory, or on other relevant search pages.

Google Content Network

It includes news pages, topic specific websites ( art and humanities, business,

entertainment, health, food, music, sports, technology, travel, etc) and other properties

such as gmail and The New York Times that allows to extend the reach of the ad

campaign to pages where users are actively engaged with the content, not just doing

searches. AdWords ads can appear on a webpage if the content and url of that page

match the keywords in the campaign.

AdSense is an ad serving program run by Google. Website owners or affiliates can

enroll in this program to enable text, image and video advertisement on their sites.

Revenue is generated on a per-click or per-thousand-ads-displayed basis and the ads

are administered by Google. AdSense program includes AdSense for search and

AdSense for content. AdSense for search was launched in first quarter of 2002 and is

Google’s service for distributing relevant ads from its advertisers for display with search

results on the Google Network member’s sites. AdSense for content launched in first

quarter of 2003, distributes ads from Google’s advertisers that are relevant to content

on Google Network members sites. If the page is about flowers, Google would place

ads related to flowers on that page. Google advertisers are required to pay Google a fee

each time a user clicks on one of the ads displayed on Google Network member’s

websites. Many websites use adsense to monetize their content. AdSense has been


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particularly helpful for delivering advertising revenue to small websites that do not have

the resources for developing sales program and sales people.

Exhibit 8

Exhibit 9 Some of the Partner Sites in Google Content Network

United

States

CNN,About.com,The New York

Times,Hollywood.com,Napster.com,Myspace,Linkedin,Orkut, You tube

Germany Youtube Automotive,Bikersjournel.de, Google Finance, Stockworld,

Myvedio, Netlog,Xing

United

Kingdom

HeraldTribune,TheIndependent,Euronews,Afterdawn.com,Softpedia,Last.fm

,Lyrics.com

Source: http://www.google.com/adwords/contentnetwork/partners.html#


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http://www.google.com/adwords/contentnetwork/partners.html

Exhibit X Adwords Terminologies

Keyword

The keywords you choose are the terms or phrases you want to prompt your ad to

appear. For example, if you deliver fresh flowers, you can use "fresh flower delivery" as

a keyword in your AdWords campaign. When a Google user enters "fresh flower

delivery" in a Google search, your ad could appear next to the search results.

Placement

Like keywords, placements are another way for you to control where your ads appear. A

placement is usually a website where you'd like your ad to appear. For example, if you

select www.example.com/sports as a placement, your ad could appear on that site.

Image ad

A graphical ad, which can be static or animated, that runs on the Google Content

Network. Also called a display ad

Campaign & Ad Group

AdWords accounts are organized into campaigns and ad groups. You start with one

campaign, which has its own daily budget and targeting preferences. You can have

multiple campaigns running and might choose to create one campaign for each product

or service you want to advertise. Within each campaign, you have one or more ad

groups, which are sets of related ads, keywords, and placements.

Impression (Impr.)


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The number of impressions is the number of times an ad is displayed on Google or the

Google Network. Monitor your impressions to see how many people your ad is shown

to.

Click

If a customer sees your ad and clicks on it to learn more or to do business with you, it is

recorded in your account as a click. Monitor your clicks to see how many people choose

to enter your website from your ad.

Clickthrough Rate (CTR)

Your clickthrough rate (CTR) is a metric that helps show how your ads are performing.

The more relevant your ads are, the more often users will click on them, resulting in a

higher CTR. The system calculates your CTR as follows: Number of ad clicks/number of

impressions x 100.

Cost-per-click (CPC)

Under the cost-per-click (CPC) pricing model, AdWords charges you for each click your

ads receive. You won't incur anycosts if your ad is displayed and users don't click it.

CPC bidding is the default for ads running on Google and the Search Network. Most

advertisers also choose it for their campaigns that focus on getting a direct response

from their audience, whether a sale, sign-up, or other action.

Maximum cost-per-click (maximum CPC)

The highest amount that you are willing to pay for a click on your ad. You can choose to

set a maximum CPC for individual keywords or for all the keywords within an ad group.


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Cost-per-thousand impressions (CPM)

With some campaigns, you can choose to pay for views of your ad rather than clicks.

The maximum CPM is the most you're willing to pay for each thousand impressions, or

views of your ad. CPM bidding is only available for campaigns that target the Content

Network and not Google search or search partner sites.

First page bid estimates

Your AdWords account will show a first page bid estimate for each of your keywords.

This metric estimate the cost-per-click (CPC) bid needed for your ad to reach the first

page of Google search results when the search query exactly matches your keyword.

The first page bid estimate is based on the Quality Score and current advertiser

competition for that keyword.

Optimization

An optimization is the process of creating/editing keywords and ad text (or adjusting

other parts of the account) to improve the performance of AdWords ads.


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4.6 Cost Structure.

Estimates of the power for over 450,000 servers range upwards of 20 megawatts, which

cost on the order of US $2 million per month in electricity charges.

AdSense Cost- The formula is familiar: Sell ads, in many cases around content Google

doesn’t own; turn over the bulk of that revenue to the owner of the content; repeat until

the end of time. Google’s business that runs ads around others contents and pays the

owners the bulk of related revenues. This business is less profitable then AdWords,

which runs targeted ads around Google’s search results. And there are indicators that

gap will widen.

4.7 Distribution Channel.

Exhibit 11.


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Exhibit 12

4.8 Ideas.

They use a process that lets ideas really thrive. Ideas come from everywhere. Some

people think that ideas come from top down. Some think they come from the bottom up.

They come from everywhere. Google has several active e-mails lists just for ideas. It’s

odd for a company of 200 people to have a miscellaneous mailing list. Employees

compile all of those ideas, discuss them, and prioritize them. This is a tool at Google

called Sparrow. It’s a typical web page, but it allows in page editing. These are basically

project ideas. There are also little widgets. They pop up a form and you can add new

ideas to the list. We literally have hundreds if not thousands of project ideas that we

consider and prioritize. If you make the capturing of ideas simple and low cost, a lot of

people will share ideas.


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4.9 Experiments.

Google launches its products quick and often. They believe that the easiest thing to do

is put it out there in public, listen to the feedback and see what people think is important.

Through Google Labs is a great tool to get, immediate responses to a particular idea

and revive early feedback on the projects. All these project are called Googlettes (baby

google) startups within the startups. Another example is Orkut, which is named after

one of Google’s core engineers. We have something we call 20% time. Orkut's is

actually the social coordinator for Google. But because of his social network interests,

Orkut dedicates his side time, his 20% time, to work on whatever he wants to work on.

Orkut started working on building this social networking site. He sent a mail out to the

miscellaneous list, and within hours, we had 1,000 employees signed up. This really

sparked people's imagination, thus Orkut was launched.

4.10 Recruitment

Many organizations have changed their pay or benefits in order to attract better

workers, but no one has changed every professional job in the company just so that the

work itself is the primary attraction and retention tool. Rather than letting work, jobs, and

job descriptions be put together by the "out of touch" people in corporate compensation,

Google's founders (Larry and Sergey as everyone calls them), HR director Stacy

Sullivan, and the leadership team at Google have literally crafted every professional job

and workplace element so that all employees are:

- Working on interesting work

- Learning continuously

- Constantly challenged to do more

- Feeling that they are adding value.

The key element of changing the work so that the work itself becomes a critical

attraction and retention force and driver of innovation and motivation is what Google


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calls "20% work." There is no concrete definition of what 20% work means, but

generally for professional jobs it means that the employee works the equivalent of one-

day-a-week on their own researching individually selected projects that the company

funds and supports. Both Google Groups and Google News products are reported to

have started as a result of personal 20% time But its greatest value is that it drives

innovation and creativity throughout the organization. At Google, innovation is expected

of everyone in every function, not just product development. The 20% time, along with

the expectation of continuous and disruptive innovation, has driven the company's

phenomenal success in product and service innovation. Yes, in this rare case, HR

activities and policies are actually driving corporate business success.

4.11 Value Proposition

From its modest start as a search-engine research project at Stanford University in the

mid- 1990s, the Google universe has expanded exponentially with new products and

services. It's already a word processor, e-mail service, smartphone, and aims to be a

storehouse of every printed word in human history. Google allows us to cruise the

streets of New York and Rome, or scour the surfaces of the moon and Mars. We can

track global flu trends, monitor our household energy usage or simply edit photos.

Google wants to own your every waking minute online--at home, while in transit, at

your workplace, wherever you happen to be. It makes connectivity so easy, on a

desktop, laptop or mobile phone. How much easier via a little-known business called

Google Applications that allows us to instantly share Google calendars, spreadsheets,

memos, reports, e-mail, corporate blogs, presentations and more--much, much more--

by storing them in Google's enormous data centers. These bundled office-suite services

make Google money on subscriptions, but they are also something of a Trojan horse to


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pull more people onto the Internet so that Google can make even more money from

ads.Google makes users ever more dependent on it to get through the day.

Exhibit 13 List of Google Products.

Desktop Standalone Applications Chrome,Earth,Pack,Picasa,Talk,Sketch Up, QuickSearch,Adwords Editor

Desktop Extensions Dashboard Widgets,Toolbar, Gears

Online Mobile Products Blogger ,Buzz,Calender,Gmail,News,Igoogle,Product Search,Reader,Picasa, latitude,Maps Navigation

Downloadable Mobile products Gmail, maps, sync,Talk,Voice, You Tube,

Web Products Account Management‐ DashboardAdvertising‐Adsense,Adwords,Optimizer,DoubleClick, Tv AdsCommunication & publishing‐ Apps,Blogger,Buzz, Calender,Docs,Gadgets,Gmail,Igoogle,Orkut,Picasa, Reader, Voice, Wave, YouTube

Development Android, AppEngine,Code,Chrome OS,

Mapping City Tour,Map Maker,Building Maker,Mars,Moon,Sky Map, Transit

Search Alerts,Base, Blog Search, Book Search, CheckOut,Dictionary, directory, Finance, ImageSearch, News, Product Search,Scholar,Vedio,Web History,WebSearch

Statistics Analytics,Gapminder,Trends

Hardware Google search appliance,Nexus one


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5. Swot Analysis.

Exhibit 14

6. Criticisms.

6.1 Click Fraud


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STRENGTHSKing of search.

Top 10 web brands in US.

Relevance ranking.Extra services.

Speed.

WEAKNESSOne main source of revenue only.

Lack of focus.Advertising- only from technological perspective.

OPPORTUNITIESUnmapped Countries.Reach new content.

THREATS.Possibility of censorship.

Users get confused.Print collection

become less visible.Information skills will

disappear.Legal trials.Click Fraud.

SWOT

Google has also been criticized by advertisers regarding its inability to combat click

fraud, when a person automated script is used to generate a charge on advertisement

without really having an interest in product.

6.2 Security.

There have been some concerns about national implications in Google Earth,

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.

Google Eath has been criticized by a number of special interest groups, including

national officials as being on invasion of privacy and even posing a threat to national

security.

7. Competitors

7.1 Google and Microsoft.

Microsoft is a company that has had one of the dominant impacts in the IT industry. So

without a doubt it is Google’s biggest adversary in 2011 and these two giants will be

locking their horns for market supremacy in areas such as search, collaboration tools

and browsers. Talking of these two giants, Google has reigned as leaders in search but

with release of BING in May 2009, Microsoft has raised a few questions amongst in


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Google’s management team. Microsoft has inked BING related deals with Twitter,

Facebook and Yahoo.

Microsoft collects sales and licensing revenue for its products, Google's business model

relies overwhelmingly on selling ads around its services. Despite its foray into so many

different sectors, a whopping 97% of Google's revenues still come from web- and

search-related ads. And for all the takeover deals it's done, Google has yet to come up

with an alternative revenue stream.

Google's attack on Office is likely to be much tougher and slower. The fact remains that

Microsoft has long-standing customer relationships across the globe, a network of

consultants and integrators, and a strong customer support system. Besides, Microsoft

is already making moves to the cloud, such as with June's launch of Office 2010. But

there are problems. First of all, the infrastructure costs for cloud-computing are

higher than traditional software. This could lessen the margins on Office, which are a

staggering 64%. Also, as Google gets more traction, there will likely be downward

pressure on pricing.

The Wall Street Journal reported that Google says Microsoft is waging a global proxy

campaign to cause trouble for Google with antitrust authorities around the world. As

evidence, Google points to two European companies -- both with ties to the software

giant in Redmond, Wash. -- that have filed complaints about Google with European

antitrust authorities.

Google Apps is designed to undercut sales of Microsoft products, including Exchange

and SharePoint. Microsoft has responded with Office Web Apps, free Web-based

versions of Word, Excel, PowerPoint and OneNote that are due out in 2010. Last but

not the least; the browser war between these two is giants are likely to heat up in 2010.


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So 2010 awaits the answer if ever so popular Microsoft’s premier browser’s market

share could be brought down.

7.2 Google and Apple.

Being from partners to rivals. Apple is one of the stringent opponents for Google in the

year 2011. Today, Apple and Google have been locking their horns in the field of

Smartphone, Mobile App Store, OS, Mobile Ad and Online Music and so on. Likewise,

Apple is more than up to the task of battling Google in these areas as well as browsers,

where Google Chrome competes against Apple Safari. But battle between will intensify,

as the market for the digital music and SmartPhones is all set for growth in 2010.

Google’s music search along with its partner MySpace and Pandora are looking to

compete with Apple itunes, which was the no 1 music retailer in US in2009. Further,

Google’s Android iPhones continues to grab hold of the market all round the globe.


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7.3 Google and Yahoo.

When it comes to search, one of the Google’s biggest competitors besides Microsoft is

Yahoo. Yahoo has been in the market with variety of products in areas of e-mail.

Messenger, News, Search and Analytic services. So without doubt it will be a fearsome

competitor for Google. In 2009, Yahoo made some improvements in 2009 by integrating

search with its rich content. Users can watch videos or stream music straight from the

Yahoo search results page.

All the competitors look to outperform Google in the market with different joint forces

being formed by their rivals.

7.4 Google and Amazon.


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In 2009, Google’s effort of scanning millions of out-of-print books and incorporating

them in online search did gain up some momentum and helped themselves to publish

over 500000 digital books for free to customers of Sony Reader and Barners and Noble

Nook, which is due in January. Further, there claims of opening up Google Editions ,an

e-book store, has opened up new rivalry with Amazon.

Amazon with his Kindle e-book reader is one of the leaders in e-book reader’s market.

The other area which Google is taking on Amazon is in cloud computing. Google’s Apps

Engine, a newbie cloud computing platform that allows developers to create their own

Web applications and run them on Google’s infrastructure will be competing with

Amazon’s Elastic Computing Cloud (EC 2) which has already grab hold of the market

since its launch in 2006. So it will be the battle of cloud computing and e-book

readership between these two giants.

7.5 Google and Facebook

Facebook is well armored with its mass appealing social networking site while Google is

equipped with its diversified product portfolio. But for both of these companies, the real

money is on ads. Google has around 90% of its revenue coming from the ads while

Facebook has over 70% of revenue coming from ads. So, putting both these biggies on

the same plate , we see that advertisement is cash cow for them. Both these companies


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bank on user data to move up the profit. Ultimately, that is what both these giants are

fighting for- increasing user base so as to increase the probability of increasing the

revenue.

With ever increase use of social networking and the rise of Facebook, Googles worry

seems to be viable one. Orkut offers Google Friend Connect, a tool for Web publishers

to add social networking content to their sites, in direct competition with similarly named

Facebook Connect. Meanwhile Facebook has sought out relationship with several arch-

enemies of Google, including Microsoft and Yahoo.

7.6 Google and Cisco.


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Google definitely has a tough challenge against Cisco. With years of experience on web

based collaborative platform, WebEx, and superior VOIP service. Cisco poses a threat

to Google’s wave and voice. In addition to this, Cisco also is looking to enhance its

video conferencing quality by focusing on collaboration through internet video, desktop

video and consumer Telepresence.

In addition to this, Cisco’s presence in Cloud is another leading edge it has over

Google. As Google is looking to take everything to the web, it certainly will face a good

competition from Cisco on this front.

Moreover, according to Networkworld, Cisco is looking to enter into Smartphone market

in very near future. Thus we might see Cisco giving a hard time to Google’s Nexus one

in coming days.

7.7 Google and IBM.

2010 is likely to reopen Google’s rivalry with IBM with the release of new collaboration

tools such as Google Wave. Google has stepped into the battlefield with its low cost


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hosted collaboration tools such as Google Apps. Google will compete against IBM’s

Lotus Lives, which has attracted more then 2 million businesses in the last 2 years.

7.8 Google and Nokia.

Today, Nokia has had grab hold of the phone market with 4 out of 10 mobiles sold. With

increase in use of smart phones, means the IT giants Google will be in rivalry with Nokia

in periphery of operating systems for SmartPhones. Symbian Open source operating

system will be competing with Google’s Android. Nokia with recent deals with Microsoft

is all set to bring office mobiles to Symbian devices.

7.9 Google and Mozilla.

With release of Google Chrome, Google has stepped into ever so popular browse

battle. Mozilla has been in the markets for years and now this step from Google is likely


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to create conflict of interest between these two. Of late the war between the two has

heated up even more. The battle has now gone to default search. Mozilla now has

shown intent to kick Google out from its default search engine status. The latest rumors

show that Mozilla is now eyeing a deal with Microsoft to make Bing its default search

engine in Firefox. This will result in double war zone; first the obvious browser war and

now the war over default searches.

8. The Road Ahead.

Google‘s chief executive Eric Schimdt predicted a massive shift of advertising revenues

from the fixed web to mobile platforms similar to that of print publications to the internet.

The change would happen because mobile advertising could be more precisely

targeted, making it more effective. When Google Inc. in January began to sell its Nexus

One mobile phone from its own web site, online retailers could be forgiven for worrying

the search engine giant one day might stomp all over them.

What’s more, Google’s vast store of knowledge about consumer behavior, and about

how that behavior is changing minute to minute, would give Google an extraordinary leg

up as a web retailer. “They know what people want through search, they know what is

hot. It’s almost an unfair advantage,” says Kevin Lee, CEO of search engine marketing

firm Didit.com LLC.

It’s not clear how far Google intends to press that advantage. But the company has said

that its Nexus One e-commerce site, Google.com/phone, will not be its last venture into

selling directly to consumers via the web. “It’s the first in what we expect to be a series

of products which we will bring to market with our operator and hardware partners and

sell through our online store,” Mario Queiroz, the company’s vice president of product

management, wrote in a blog post as the phone went on sale.


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Google Editions, meanwhile, is set for launch in the first half of the year. Customers who

buy ebooks from this Google store will be able to access the works through most

computer, phone or e-book readers. This device-agnostic approach sets it apart from

Amazon, which uses a proprietary e-book format designed primarily for its own Kindle

reader.

The plans in the works suggest Google is likely to focus on selling digital goods, such as

e-books and entertainment content, taking advantage of its vast web infrastructure and

massive amounts of data about online shoppers. Moving further into hard goods would

require Google to invest in warehouses and distribution networks, which would be a big

departure for this web-centric company.

Whatever direction Google takes, data from search will serve as a guide, and any

moves into retail likely will boost Google’s core business. Every click a consumer makes

when conducting a search and every word used in a Gmail message, helps Google

better understand what consumers are looking for, when they are looking for it and

where that search comes from. Google can use that data to stay on top of trends and

build ever more detailed pictures of various consumer types, advantages for any

retailer.

9 Annexure

Exhibit 15

Google Vision

Focus on the user and all else will follow.

It's best to do one thing really, really well.

Fast is better than slow.


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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 available.

The need for information crosses all borders

You can be serious without a suit

Great just isn't good enough.

Exhibit 16


Exhibit 17 Mergers and Acquisition

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51


52


53


54


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10. References.

1. Dr. John Sullivan, A Case Study of Google Recruiting,

http://www.drjohnsullivan.com/.

2. Nicholas G Carr, The Google Enigma, http://www.startegy-

business.com/.

3. Sergey Brin and Lawrence Page, The Anatomy of a Large Hypertextual

Web Search Engine, http://infolab.stanford.edu/pub/papers/google.pdf.


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http://infolab.stanford.edu/pub/papers/google.pdf

http://www.startegy-business.com/

http://www.startegy-business.com/

http://www.drjohnsullivan.com/

4. Rob May, Swarm Theory and Corporate Strategy,

http://www.businesspundit.com.

5. Brent Hummer, Greg Jones, Audre Wilde, steve Ellison, Google

Strategic Plan, http://www.dailyspeculations.com.

6. Sheriff Ramadan, Google Marketing Secrets, http://ezinearticles.com.

7. Stephen E Arnold, Where is Google Going,

http://www.googleguide.com.

8. Tom Taulli, Google takes another shot at Microsoft Office,

www.dailyfinance.com.

9. 10 Toughest competitor of Google,

http://technology.globalthoughtz.com.

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http://technology.globalthoughtz.com/

http://www.dailyfinance.com/

http://www.googleguide.com/

http://ezinearticles.com/

http://www.dailyspeculations.com/

http://www.businesspundit.com/

Documents

business model of google