Timeline

2001 - 2001
Zeitgeist, 2005 - 2005
1995 - 1997 Image and Catalog Search, Additional core business
BackRub search engine developed more partnerships enhancements
1999 - 1999
Growth & expansion 2003 - 2003
AOL/Netscape’s selected Blogger, AdSesnse,
search service Toolbar, Deskbar

1995 2006

2000 - 2000 2004 - 2004

Built in innovation, Brand of the Year , Picasa,
partnerships with Desktop Search, Domains,
various businesses SMS, Groups, Prints
1998 - 1998 2002 - 2002 2006 - 2006
Google Inc. started in Plug & Play software, Video Store,
Menlo Park, California Google compute, AdWords, Labs, Pack
Labs, News, Froogle
 The Company
• Started by licensing its search engine to
third party sites eg. Yahoo!
• In Dec. 1999, they started using the Paid
Listings Model ”Sponsored links that
appeared either adjacent to or
interspersed with web search results for
specific keywords.
• In March 2003, Google launched
Contextual Paid Listings
 Corporate structure
• Top Management: Sergey Brin, Larry
Page, Eric Schmidt
• Went for an IPO April 2004 with a dual
class equity structure
– Class B 10 votes
– Class A 1 vote

(Top management would own 1/3 of shares but

control 80% of votes to allow for stability over
long time horizons.)
 Corporate Values
• Don’t be evil.
• Technology matters.
• Make own rules.
• Managing innovation part of culture.
• Never settle for the best.
 Management Policy
• To hire the right people for the job
• Facilitating efficient team dynamics and
communication
• Encourage creativity
• To make decisions based on data
• “Don’t be evil”
 Brief overview of problem
• Over the past few years, Google has
grown immensely and is still growing.
Product innovations has expanded its
domain beyond search into domains like:
– Portals (Google vs. Yahoo, MSN)
– Planned Payment Service (Google vs. EBay)
– Ad Supported Software (Google vs. Microsoft)

What moves should Google make

next?
 Competitor Analysis
Competitor Competitive Strategic
Advantage Direction
- Leading “full -Steering searchers to
Yahoo! Yahoo!’s own services
fledged” internet
- Human intervening in
portal search results

Microsoft - Dominant in the PC - Developing

software industry “software as services”
(Windows, Office etc.) (Windows Live)

eBay - Largest ecommerce - Acquired Skype to

facilitator leverage on VoIP for
- Owns Paypal e-transactions
 Differentiation Strategy
• Had a corporate structure which allowed quick decision
making & encouraged innovation unlike competitors
• Higher focus on innovation , 20% policy, resulted in
products like Orkut, Google news
• Offered free software to marketers so they could
optimize their investment in Google
• No adoption of commercial agendas unlike competitors,
focus only on improving algorithms for better results
• Focused search engines like Froogle which are for
specific products, these were free.
• Faster, better search with many enhanced features like
search history , language flexibility etc.
 Differentiation Strategy
Google Microsoft Yahoo

CTR model, assist CTC model CTC model

marketer Lesser assistance Lesser assistance
Owned by Owned by many Owned by many
essentially 3 shareholders shareholders
people
Higher quality Poor search High quality but
search results results not as good
Focused on A portal, operating A portal, competed
search engine system with many in many business
business business lines lines
 Porters 5 force model
• Entrants to paid listings business faced considerable
expenditure & need competent software developers.
• Suppliers: Companies placing ads on Google, get higher
revenue splits , better results , more guidance etc.
• Buyers: better, faster, higher quality & speed of results
reducing chances of users to shift search engine.
• Rivals: Diversified firms, not as competent as Google in
search engines, fierce competition as low switching cost
• Substitutes: other media of communication , given the
target market of e-advertisers, rapid increase in online
access & surfing time, these hardly proved to be a threat
Porter’s Five Forces
Model of Industry New entrants faced
heavy investment &
Competition technological
superiority to enter

Advertisers got higher Users got better,

revenue splits , better faster, higher
results , more guidance quality & speed
of results

Diversified firms, not

as competent as
Google in search other media of
engines, fierce communication , given
competition as low the target market of e-
switching cost advertisers, increase in
online access & surfing
time, these were no
threat
 Resource Based Approach
• Resource based model emphasizes the use of a firm’s unique
resources to target and apply them to new markets
• Unique corporate structure
• Strategic alliances e.g. partnership with AOL
• Strong focus on innovation
• Unique 70/20/10 corporate strategy
• CTR advertisement rate model
• Superior search engine & other products like Gmail
• Superior software tools & services
• Strong support to advertisers & personalized search to users
 Second Mover Advantage
• Google entered e-search market after Yahoo this helped
them improve search results using algorithms
• Google developed a CTR model which was an
improvement over Overture’s CTC model
• Developed “contextual based advertising” where listings
appeared on editorial pages like blogs, news etc.
• Developed many new products like Froogle, Gmail ,
personalized home page before their competitors
• Developed brand ads & video ads which attracted brand
advertisers
 Competitive Advantage

• Google should offer personalized features like

personalized search, search history
• Expand service range add features like desktop search ,
base , search Gmail,
• Higher quality of accurate search results obtained faster
• Competitive rates to advertisers & better services like
Google wallet, to increase their sales and reduce costs
• Google should lock itself as dominant design preferred
by customers & firms who would incur switching costs if
they changed their search engine
 Technology Paradigm Shift
• A new technology getting its start away from the mainstream
of a market, and invades the main market, as its functionality
improves over time
• Firm which develops a technology that changes they way an
industry functions gets majority of market share of that
industry
• Google discovered 2 killer applications
– Page rank algorithm to improve search results
– CTR paid listings model

It leveraged on these 2 competencies to make Google a

favorite with buyers and advertisers and changed the way
online search is conducted
 What we do is search. Yahoo is a
portal with a myriad of specialized
services. What Google does is
sufficiently limited. It's not really
targeted at what Yahoo or AOL is
trying to do. Our business strategy is
not to compete, because we want
them as customers …
Eric Schmidt, CEO Google
 Other Future Offering
• Extension of existing services in order to diversify

• Close potential gaps in service provision

 Further partnership with AOL (biggest service provider in
America)

• Create as much awareness as possible

 Brand awareness plays a major role in search engine
selection
 Yahoo pays 900 million to ‘facebook’ to capitalize on the
youth market, Google has ‘orkut’ which can be further
developed to this purpose

• Very successful with project to provide free WiFi in San

Francisco and Mountain Valley (California)
 Extend such projects worldwide
To zoom in…4 Alternatives
to Venture into
• Focus on Comparative Advantage:
 Develop superior search solutions + monetizing
through targeted advertising
 Make it the trusted third part info escrow agent for
all the world business
 In line with its aim of organizing all of the world’s
information

• Portal Building
 Consolidating content
 Up to date and subjective searches
 Classified by relevance
• eCommerce
 Build trusted networks to provide intermediary
function as an online payment inter phase (like
PayPal)
 Extending to purchasing journals, copyright articles
via Google Channels

• Extend Functionality
 Compete head on with Microsoft as rumored
 Desktop searches, office alternatives (provide
support to development of open source initiatives like
Open Office)
 Provide interfaces compatible with Linux users to
extend market base
 Why not build their portal?
• According to Eric Schmidt, CEO of Google, Google is not
in the portal business.
• Data also show that using websites as portals is the
least important factor for respondents (internet users),
among factors such as relevant results, speed of
website, best features and the way results are
presented.
• There are already 2 big players in the Portal business,
namely Yahoo! and MSN, due to high market
commonality and high resources similarities, Google
should practice mutual forbearance and not enter the
portal business to prevent counter attacks by Yahoo! and
MSN.
• Yahoo! has first mover advantage- loyal customers, who
may find it difficult to switch to another portal format.
Google may find it difficult to take the market share away
from them.
 Why build their own portal?
• Google has enough expertise to enter
portal business.
• Portal can be use as a complement
service to their search engine.
• May be a relatively easy investment.
Why not focus on ecommerce?
• Already has big player Paypal
– 87million accounts in US
 Why focus on ecommerce?
• Next big thing
• Have enough capabilities to create a
payment service
• Because Google Wallet is coming out
• Competitors are not into it yet
 Why not build their own OS?
• Not consistent with Google’s philosophy
– “Its best to do one thing really, really well”
– Google does search best
• Difficult to compete with Microsoft
– Microsoft already has positive feedback loop
– High installed base of users
– High switching cost
 Why build their own OS?
• Possible in the long run
– Given that Google gain the technology
Why should Google focus on Core Competency?

• Shows a consistent image of the Google

• Porter’s 5:
- Low threat of new entrants
- Rivalry: defend against competitors due to better
search functions
- Well-positioned relative to substitutes because of
brand loyalty
• Market Commonality – high
Resource similarity – high
have mutual forbearance
should focus on their core competency to avoid from
multi-market competition
 The 70,20,10 Rule
• 70% should be on Core business
– Focus on search
• 20% should be on projects that extend the
core
– Portal, eCommerce
• 10% should be on new business
– OS and other radical ideas