GOOGLE INC.

Section B Group 2
Arun | Gomathy A| Sravanti | Ankit | Rachna |

Questions

Key factors behind early success

Do you expect the search business to become
more concentrated ? Is search a winner takes
all business ?
In addition to enhancing its core search
business should Google also branch out into
new arenas

Full fledged portal like Yahoo

Target Microsoft desktop software hegemony
Becoming an e-commerce intermediary like e-bay ?

Case Facts

Google Inc. started its business with a search algorithm in

1998
Internet search market in 1998:

Presence of Yahoo! and other internet search engines

Internet acted as a universal platform
Market not a natural monopoly because servers, network,
intellectual property can be procured by any company easily
Yahoo! used Altavista algorithm prior to Googles development
of Page Rank system
Multi-homing costs for consumers were negligible as they can
easily use any search engine on the internet
Strength of network effects are not specific to a particular
search engine as all content was universally available on the
internet

Key factors behind early success - Internal

Google:

Introduced paid listings that were sold on cost-perimpression basis

Contextual listing- Adsense
Free software to optimize paid listing campaigns by
consumers Google Analytics
Ranked listings based on CPC bids and listing relevance
Acquisition of DoubleClick
Personalized search results
Targeted small and medium businesses to advertise online
Achieved 38% more revenues per search than Yahoo! due to
better search algorithm
Use of custom Linux based servers to facilitate fast searches
Experienced CEO to lead company - Schmidt

Key factors behind early success

External

Market

Emergence of new revenue streams through

searches by placing paid advertisement listings
on search pages
Strength of network effects increased due to the
dependence of ad listings and revenues on the
search engine
User preferences changed to expect fast
searches, user-friendliness, relevant results in
searches

Search business as Winner takes it all

Search as a 2 player business: customer & advertiser

Advertiser/Content
Provider

Parameter

Customer

Multi
homing cost

Low- Can easily switch to LowCan

advertise
other search engines
multiple search engines

Transaction
partner
variety

High preference for variety; High Need to reach

need a large selection of maximum
number
of
content
customers

in

High As customers prefer High- Provision of multiple

Differentiate the most relevant results in streams
to
display
d
searches,
so
search advertisements, eg: text,
functionality algorithm is of paramount banners, in search results, in
Search business is heavily influenced by network effects
importance
websites, etc

Stronger the network, more the benefits to customers

and advertisers

Googles Ventures
Successful

Unsuccessful

Google Drive

Google+

Gmail (Offered cloud before

cloud became the buzzword)

Orkut

Android

Google Wallet

Google Scholar
Google Now
Google Chrome
Over the years Google has entered into a number of ventures
targeting various consumers and their then latent needs such as
venturing into lenses and covering Indian elections. Some of these
have worked for Google while some have failed miserably. However,
given the risk appetite of the founders it is not surprising that they
continue to innovate and enter spaces outside their comfort zone
and often unprecedented.

Googles future strategy

Google should go ahead with its mission of

organizing worldwide information
Their core asset is accumulated information of the
customers and the content hosted on the web
Such a repository of information provides
numerous opportunities to create value for people
in helping them achieve their potential
For example: one of their objectives is to
provide internet connectivity to the remotest of
places in order to provide basic services to
people and in turn earn revenues through
advertising Remote Internet Access by High
Altitude Balloons