Assigment 7: Google is a highly successful Internet business. Recently they have broadened their scope with a multitude of new tools. Research Google’

Google is a highly successful Internet business. Recently they have broadened their scope with a multitude of new tools. Research Google’s business model and answer the following questions below. You may add additional information not included in these questions.

Questions:

Questions :
Explain Google’s business model.
1. Who are their competitors?
2. How have they used information technology to their advantage?
3. How competitive are they in the market?
4. What new services do they offer?
5. What makes them so unique?
6. How competitive are they in the international market?



Solution:

1. Who are their competitors?

Google is one such name in the Technology arena that is well poised to rule. Talking of past decade, it’s been all the way up for Google and undoubtedly they have been ruling the internet economy. Google have had its impact in the industry with more than 150 products and will continue to grow with its ever increasing portfolio of products. This is likely to happen but for these 10 companies which have poised some serious competition to Google.


1. Apple

Being from partners to rivals, Apple is one of the stringent opponents for Google in the year 2010. 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’s iTunes, which was the No 1 music retailer in United States in 2009. Further, Google’s Android will have tough time as Apple’s iPhones continues to grab hold of the market all round the globe.


2. Microsoft

Microsoft is a company that have had one of the most dominant impacts in the IT industry. So without a doubt it is Google’s biggest adversary in 2010 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 few questions amongst in Google’s management team. With features such as ranking search results based on relevancy to other users, Microsoft has inked Bing-related deals with Twitter, Facebook and Yahoo.

Microsoft continued to enhance Bing, adding image search and mapping. But in response Google have unveiled real time search. In December, Google also added a photo search capability, a dictionary and a translator that finds relevant content in 40 languages. Entering 2010, Google still dominates search, with more than 70% of the market. Apart from search, the battle is likely to focus on cloud based collaboration tool.

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. So 2010 awaits the answer if ever so popular Microsoft’s premier browser’s market share could be brought down by Google’s Chrome.


3. Amazon

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 Barnes & 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 its Kindle e-book reader is one of the leaders in e-book reader’s market. The other area where 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 (EC2) which has already grab hold of market with its several upgrade after its release in 2006. So it will be a great battle to watch when these two giants fight for market supremacy on Cloud computing and E-book readership.



4. Facebook

Facebook, probably the most popular stuff in the internet right now, has attracted
350 million active users in just six years and is subject of interest for the guys at Google too. In 2010, Google and Facebook rivalry is likely to heat up based on question that where will people find there information in future in Search or Social Network? With ever increasing use of social networking and the rise of Facebook, Google’s worry seems to a viable one. So, in 2010 Google with its ORKUT will be in battle with Facebook.

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 relationships with several arch-enemies of Google, including Microsoft and Yahoo. So its for sure that this battle is worth taking a note off in 2010.



5. Twitter

No doubt if Facebook is in rise, than it’s no difference with Twitter. If social networking is the way to go, then Google will certainly find Twitter in its way. Twitter, a micro-blogging site, has in a way revolutionized the way we communicate these days.

So, Google’s Friend Connect will face tough competitions for Twitter’s Connect in 2010 as Twitter looks to move up the rank in the areas of Social Networking. Other areas where these two find themselves competing are Real time search. Google’s real time search and Twitter’s will be trying to outperform each other in 2010. So, this battle will be a good one to watch for in 2010.



6. 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 to create the 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 rumours on the internet show that Mozilla is now eyeing to get a deal with Microsoft to make Bing as its default search engine in Firefox.

This may not impact Google immediately but eventually this move, if comes true, is likely to decrease Google’s share of the search market. Hence, Google now has Mozilla on a double war zone; first the obvious browser war and now the war over default searches.



7. Yahoo

When it comes to search, one of Google’s biggest competitors besides Microsoft is Yahoo. Yahoo has been in the market with variety of products in areas of email, Messenger, News, Search and Analytics 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.

Yahoo also helps users find travel deals and compare product prices. Further, Yahoo has recently added Twitter to its search Page and if a joint search and advertising deal between Yahoo and Microsoft is approved by federal regulators. This could prove costly to Google so the 2010 is the year to watch as other competitor look to outperform Google in the market with different joint forces being formed by their rivals.



8. Cisco

Google definitely has a tough challenge against Cisco. With years of experience on web based collaborative platfomr, 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 intenret 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 the very near future (actually by mid-2010). Its recent acquisition of Pure Digital and Flip shows Cisco’s intent to take video to the mobile phone. Thus, we might see Cisco giving a hard time to Google’s Nexus One in the coming days.



9. IBM

By now it’s quite crystal clear that 2010 will the year where big internet giants will be trying to gain whole lot of market share that will be up for grab in areas of collaboration tools. So, 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 battle field with its low cost hosted collaboration tools such as Google Apps. Google will compete against IBM’s Lotus Lives, which has attracted more than 2 million businesses in the last two years.


10. Nokia

Today, Nokia has had grab hold of the mobile 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 Mobile to Symbian devices. With claim of releasing improved version of Symbian in 2010 means Google Android will have to face off tough battle. But, Google’s Android is poised for major developments in 2010 and with commitments from Acer, Sony Ericcson, HTC and Motorola this will be a worthwhile battle to watch in 2010 and years to come.

So, at this point one may feel Google has tough battle to fight in 2010. Most of the arch rivals are gearing up to poise serious threats either single handed or with collaboration. So, 10 line ups of interesting battle is all set to keep the 2010 interesting enough for us to watch and keep the Google on their toes.





2. How have they used information technology to their advantage?


Arguably the most popular search engine available today, Google is widely known for its
unparalleled search engine technology, embodied in the web page ranking algorithm, PageRanki
and running on an efficient distributed computer system. In fact, the verb “to Google” has
ingrained itself in the vernacular as a synonym of “[performing] a web search.”1 The key to
Google’s success has been its strategic use of both software and hardware information
technologies. The IT infrastructure behind the search engine includes huge storage databases
and numerous server farms to produce significant computational processing power. These
critical IT components are distributed across multiple independent computers that provide
parallel computing resources. This architecture has allowed Google’s business to reach a market
capital over $100 billion and become one of the most respected and admirable companies in the
world.

MARKET ENVIRONMENTS
Search Engine
Internet search engines were first developed in the early 1990s to facilitate the sharing of
information among researchers. The original effort to develop a tool for information search
occurred simultaneously across multiple universities is shown in Table 1. Although
functionalities of these systems were very limited, they provided the foundation for future webbased
search engines.


Search Industry
During the 1990s, the Internet experienced exponential growth with thousands of new web pages
being created daily. Online document search became the chief method of navigating the everexpanding
World Wide Web, as Internet users sought useful information among the largely
disorganized pages. As a result, the online search industry was born.
Early web-based search engine had roots in university-based research, with the exception of
AltaVista . WebCrawler was known as the first search engine to perform full-text web
search as opposed to searching library indices. In 1996, increased competition between search
engines triggered the search engine size wars, as the companies competed to index the largest
number of textual documents over the Internet. AltaVista was the first forefront search engine
winner, becoming the most successful and widely adored search engine in the mid 1990s.

The focus of information technology at Google for both software and hardware is speed and cost.
These two metrics are valued more than any other criteria such as reliability of machines or highperformance
enterprise computing hardware. Ultimately, the result must transform a response
time of user query using Google’s search engine to be completed within a one second time-frame.
Started in Larry Page’s dormitory room, the information technology at Google has transformed
into a full-blown large cluster PC network that functions similar to a computing grid.iv Even
though information technology infrastructure has changed dramatically over the years, the model
of IT use at Google has stayed the same. This model follows the original principles adopted by
the co-founders of building a prototype system that uses commodity hardware and intelligent
software. The shift of computer industry with PCs becoming commodity electronic hardware
over the years has worked in favor of Google’s IT strategy in getting the best cost performance
ratio (Patterson & Hennessy, 2004). Thus, instead of purchasing the latest microprocessors,
Google IT performs calculations to look for the best value of processing power per dollar and
purchasing many PCs that are only a few months old in the market, but at a much lower
discounted price. This is suitable for Google because the framework of their search engine is
built around parallelizing many user query requests across multiple machines and if more
processing is required, the system can simply increase more machines to serve even greater user
requests. The overall price per performance is more important than individual peak
performances, and this enables Google to achieve superior speed at a fraction of the cost rather
than using a few, but expensive high-end server systems. The end equation for Google’s IT in
selecting machines is calculated by the cost per query, and is derived by the sum of capital
expenses and operating costs divided by performance. For accuracy, the calculation takes into
inherent effects due to hardware depreciation and maintenance repairs. At the data centers, the
primary cost factor is capital expenditure credited to hardware, followed by personnel and
hosting costs.


3. How competitive are they in the market?


Google vs. Microsoft

Even as Microsoft won a victory recently against its new and increasingly agile young competitor Google in the case of Kai-Fu Lee, Google continues to nibble at the margins of Microsoft's more existential questions - the need for its software in the first place in an age when Web development architecture has taken the "Web 2.0" route offered by schemes like AJAX.

On the Lee case, Microsoft has said it wants the case to be decided in the state of Washington, where a judge ruled last month that the hiring can proceed, with the stipulation Kai-Fu Lee cannot recruit from Microsoft. Google is attempting to keep the case in California where non-compete agreements are said to be viewed with less rigidity.

Microsoft initially filed suit in Seattle's King County Superior Court in July, claiming Kai-Fu Lee violated that agreement when the search giant hired him. Google then countersued Microsoft in California, in an attempt to have the noncompete clause declared invalid.

The battle for Kai-Fu Lee, a former vice president with the software giant, underlines a growing animosity between the two companies, with Microsoft CEO Steve Ballmer allegedly pitching such a fit after losing one executive in 2004 that he threatened to "kill Google" over the continued poaching of Redmond's top brass, even flinging furniture and dropping more F-bombs than I've heard tell in awhile.

Well, Microsoft won its latest round in the fight that has at la

Well, Microsoft won its latest round in the fight that has at last made explicit the smoldering rivalr
ry between the tetween the two otherwise mostly indirect competitors.

But announcements between Google and Sun have indicated Google's interest in helping partners like Sun compete head to head with Microsoft in the office suite market with the recent release by Sun of OpenOffice.org 2.0 - a significant upgrade to the prior version which, if reviews are to be believed, is a virtual replacement (for free under the open source GPL) for MS-Office. According to Jonathan Schwartz, Sun's president:

“OpenOffice.org is on a path toward being the most popular office suite the world has ever seen; providing users with safety, choice, and an opportunity to participate in one of the broadest community efforts the Internet has ever seen. As a member of that community, I’d like to offer my heartiest congratulations.”

For sure, it gives Sun a new lease on life after a very tough few years after being the dot in the dot-com crash. McNealy was in full effect with his "network is the computer" mantra, so much exemplified by Google's strategy. If you can call it that: Eric Schmidt, who used to work for Sun and is now Google's CEO (after jumping ship a few years ago from the sinking Novell) even mentioned how he delights in the absence of a strategy... well, I guess. No matter how underwhelming the actual announcement, it creates powerful symbolism in the marketplace where Microsoft has left an opening.

Still, OpenOffice.org has Microsoft running scared from OpenDocument - a revolutionary file format that could at last end the Word/Excel/PowerPoint tyranny even more than PDF has done. Which is why, perhaps, Microsoft licensed PDF support for next year's release of the the updated MS-Office suite. But their enthusiasm for SaaS (Software as a Service) is palpable amid McNealy’s remarks about Windows being the last, sad representative of the old client/server computing world and is ”so last millennium.”

Microsoft's reaction to the announcement took the move in stride, but the evidence lies in nothing less than Google's patents that they've got Microsoft squarely sighted in, as it "builds a patent fence" around search and takes on Yahoo first, then leveraging cutting edge user interface design technologies present in Google Maps (which could challenge PowerPoint) and Gmail (the RTF technology already offering about 70 percent of the functionality behind Word). Deployed on the "Googleplex" platform Google has created as its supercomputer-like infrastructure, calling into question Microsoft's very necessity isn't far around the corner.

Of course, Microsoft has seen such threats before - when Netscape challenged the idea that an OS was even necessary and applications could be run in Sun's Java within the browser. We all know how that ended... despite continuing market share battles with Mozilla Foundation's open source alternative to Internet Explorer (which I use myself), in Firefox.

But Redmond won't go down for the count easily. They've just reorganized decisively to take on such threats. And, while Microsoft might not have invented the idea of "embrace and extend"; they do seem to have perfected it.



4. What new services do they offer?

Our Experimental Fiber Network

Imagine sitting in a rural health clinic, streaming three-dimensional medical imaging over the web and discussing a unique condition with a specialist in New York. Or downloading a high-definition, full-length feature film in less than five minutes. Or collaborating with classmates around the world while watching live 3-D video of a university lecture. Universal, ultra high-speed Internet access will make all this and more possible. We've urged the FCC to look at new and creative ways to get there in its National Broadband Plan – and today we're announcing an experiment of our own.

We're planning to build and test ultra high-speed broadband networks in a small number of trial locations across the United States. We'll deliver Internet speeds more than 100 times faster than what most Americans have access to today with 1 gigabit per second, fiber-to-the-home connections. We plan to offer service at a competitive price to at least 50,000 and potentially up to 500,000 people.

Our goal is to experiment with new ways to help make Internet access better and faster for everyone. Here are some specific things that we have in mind:

* Next generation apps: We want to see what developers and users can do with ultra high-speeds, whether it's creating new bandwidth-intensive "killer apps" and services, or other uses we can't yet imagine.
* New deployment techniques: We'll test new ways to build fiber networks, and to help inform and support deployments elsewhere, we'll share key lessons learned with the world.
* Openness and choice: We'll operate an "open access" network, giving users the choice of multiple service providers. And consistent with our past advocacy, we'll manage our network in an open, non-discriminatory and transparent way.

Like our WiFi network in Mountain View, the purpose of this project is to experiment and learn. Network providers are making real progress to expand and improve high-speed Internet access, but there's still more to be done. We don't think we have all the answers – but through our trial, we hope to make a meaningful contribution to the shared goal of delivering faster and better Internet for everyone.

As a first step, today we're putting out a request for information (RFI) to help identify interested communities. We welcome responses from local government, as well as members of the public.


5. What makes them so unique?

Google's Unique Advantage

Needless to say, it all adds up to a lot of Google on the brain. Google, at the moment, is held up as the gold standard of software companies. They have achieved massive success and are the company almost every developer wants to work for. Ask someone in the software industry which company they want to emulate and they will likely say Google.

Obviously, if it was easy to emulate Google, everyone would have done it or would be doing it by now. The more I think about Google, the more and more I think it is going to be impossible to emulate them. Certainly you can steal some of their ideas and what they’ve pioneered and put it to use in your company, but outright copying Google is going to be near impossible.

Having touched on Google’s corporate culture, let’s look at something else that makes Google even more unique: how it grows.

One thing that has become evident to me is that Google grows in an organic fashion, unlike any other company I know of. Google develops tools that are internally useful and then releases them to the world. Google does not develop products to sell to the world. Google does not have external contracts, at least in the traditional sense, as far as I can tell.

Let me elaborate on this. Google is obviously best known for search and for ads associated with search. This is in essence Google’s one true product. It is the one feature Google developed for the outside world. When Google developed search it was no different from a small company. It is what Google has done since then that makes Google different.

Google doesn’t answer to any external power. They don’t have anyone they have to deliver a product to. There is no contract with a deadline. Due to not having any external dependencies, Google can continuously iterate over a product until it reaches a state of near perfection. It can stay in internal testing as long as Google wants and no one is going to care. See Gmail, Google Maps, etc. This then allows Google to use the perfect form of the agile process. Continuous iterations and testing and development, continues improvement. Then as Google sees fit, release the products. As they get better and better, more people use them and more money from ads come in. It’s beautiful.

It’s also unlikely any other company is going to be able to pull this off. Google hit on the formula for ads before anyone else. They now have such a commanding lead in that arena that to compete with them you need deep pockets of money of your own. That makes it difficult to launch a company and follow Google’s lead of avoiding external dependencies and having the near perfect product development process.

At this point, you might be screaming at me that I’m wrong, because Google does have external contracts, especially for serving up ads on other sites. But notice that Google’s contracts are different from most companies’ contracts. Google isn’t developing a product for these companies. All they are doing is giving them an existing product that Google has already completed and released. Development on that product might still be happening, but it happens within Google, not within the realms of the contract. Google is still free to develop how ever they want.

For almost everyone else, you’re going to have to create a product and then drive sales of that product or else sign a contract and then deliver a custom product to the customer. You’ll have external dependencies that will force an outside reality upon you that Google simply doesn’t have. You can argue that Google is dependent upon ads, but at this point Google has captured such a large share of that market and is steadily capturing more of it, that it really isn’t a dependency for Google. Sure, Google should probably diversify, just in case the ad market tanks, but at this point Google has so much money they can afford to take their time.

So now you see. It’s unlikely you or anyone else is going to emulate Google. Kiss that dream goodbye.

However, that doesn’t mean you can’t learn from Google. Copy the good things that Google does and adapt them to your business. What you shouldn’t do is force the practices of Google on your business simple because they are what Google does. Google is a product of a very specific evolution and your business will be the product of a different evolution.

And when your developers come to you and say that they want to be exactly like Google, you now have an argument to explain why your business can’t be exactly like Google.

Still, there’s nothing preventing you from being the next great company after Google. That prize is still there for the taking.


6. How competitive are they in the international market?

The assertion that Google has a lot to learn in its international efforts couldn't be more over-stated. Google has had success in the international environment, including greater market share than in the domestic market, that every Internet company would covet. This analysis delves deeper into Google's international efforts.

Having studied Google abroad somewhat significantly, I believe this article provides a very naïve view on Google’s success abroad. Absolutely, Google, as any American company, needs to be extremely aware of the impression they make when entering foreign grounds, as the risk as being seen as arrogant – the ugly American – is omnipresent. And, yes, Google should continue to grow their in-country teams significantly in order to best overcome cultural and sales hurdles and take advantage of unique opportunities and the gigantic world market that is growing at a quicker pace than the U.S. market. Recent stats point to European e-commerce in a position to surge past U.S. e-commerce.

Yet, don’t attempt to fool anyone here: Google has enormous international market share. Though I’m on a plane and not able to access these stats immediately, I believe that Google has approximately a 10-point higher share of search in Europe than they do in the States. I attended an online and multi-channel retail conference in London earlier this year, and Google was constantly mentioned, and never in a bad light. I am attempting to arrange a dinner in Paris later this year or early next with top French e-commerce companies, and Google is the likely sponsor, due to their relationship with the French agency that I am in contact with and their relationship with the likely invitees. Google is dominant in most countries, with their distant following to Baidu in China and the Russian example in the article notable exceptions.

In the UK, Amazon.com and eBay have also taken off after some early slips and command a dominant share of the market. Of course, they face hurdles, most notably eBay’s fraud and trust problem, but these American brands have also experienced tremendous success abroad. And there are other huge hurdles across Europe, such as Germany’s reliance on non-credit card payments and their language and cultural barriers. The European Union is still quite segmented, and pan-European plays will rarely be successful. Yet, the world continues to flatten, and American brands can have success abroad with fewer hurdles as can international brands have success in the States.

Google has had success with other products abroad, most notably its Orkut social network which has bombed domestically to its MySpace, Facebook, and LinkedIn brethren, yet has taken off in huge countries such as India and Brazil. So, sure, Google should be sensitive to cultural sensitivities and will face different regulatory environments abroad, but the truth is that Google has been remarkably successful internationally in large part due to the international word-of-mouth generated by their product and feature set.