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| - | ====Google Checkout==== | + | And I was just wodnreing about that too! |
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| - | Google complements its advertising with its Checkout service, a tool designed for small businesses to facilitate online shopping at their sites. A fraction of each sale is paid to Google. Checkout also expands Google's reach further and offers the company additional advertising opportunities. | + | |
| ====Google Chrome==== | ====Google Chrome==== | ||
Revision as of 17:25, October 28, 2011
Google Inc (NASDAQ: GOOG), a global information technology leader, specializes in how people access and interact with information. Google provides the leading search engine along with many online services such as Gmail, Adsense, and Chrome. In fiscal year 2010, Google reported $29.3 billion of revenues and $8.5 billion of net income. Google operates in over 50 countries with unique domain names for each country. Internet advertising is the fastest growing segment of the advertising market, but still only represents 8% of total U.S. advertising dollars -- suggesting considerable room for further growth. To tap these opportunities, Google has used the profits from its paid search business to support innovative projects such as Google Editions and the Android Market.
Business Overview
Google’s search tools allow users to efficiently search through vast amounts of web-based information, organizing and delivering results based on relevance. It also has a long and growing list of products in many other areas of computer applications. Consumer usage of its products is free, financed through advertising (96% of 2010 Revenues) and licensing (3% of 2010 Revenues) sales.
Co-founders Larry Page and Sergei Brin created Google's core PageRank technology to archive and organize Internet webpages and develop a searchable database. The basic tenet of PageRank is that when one website links to another, the first website is endorsing the second. Pages are then "ranked" according to the ecosystem of all web pages archived by Google. While the company has since utilized numerous other ranking systems, PageRank still remains a central technology. Google also creates search products for photos, videos, and specific websites types such as blogs. Google does not charge consumers for its search capabilities, receiving most of its revenue from advertising and a small portion from licensing its search technologies to enterprise companies.
Business Segments
In fiscal year 2010, Google reported $29.3 billion of revenues and $8.5 billion of net income. CEO Eric Schmidt attributed this to strong growth in its emerging businesses as well as increased integrated campaigns across search, display, and mobile from large advertisers[1]. Google's main business segments include Online Advertising, Mobile Advertising, and Future Initiatives.
Online Advertising: Paid Search
The company generated 96% of its 2010 revenue from advertising, the inventory of which is sold both directly to customers as well as in conjunction with advertising agencies serving large clients. Google's two primary advertising products are AdSense and AdWords--both paid search products. The company uses its core search technology capabilities to place ads on its eponymous search engine as well as through a network of third-party websites. What distinguishes Google's "paid search" advertising business is that it is performance-based (advertisers only pay when someone clicks) and ads are contextual (e.g., a DVD ad typically shows up when someone searches for "DVD"). This cost-per-click (CPC) basis distinguishes Google from most online and traditional media advertisers, both of which charge advertisers for impressions, or the number of users who are presented with an ad.
- AdWords
Advertisers can have their ads displayed when particular words are entered into Google's own sites, including its namesake search engine. Since words are often bought by multiple advertisers, Google utilizes an auction format to determine the order of ads (typically, the higher bids will result in ads with higher, better positions). Through the auction platform, advertisers specify the maximum amount they would pay per click.
- AdSense
AdSense embeds advertisements into websites that have signed up to be included in Google's network. The product displays ads based on the context of the content on a particular website; for example, financial service ads would be placed onto sites about personal finance. AdSense is hosted by non-Google websites, so Google has to share a portion of its revenue with them through revenue-sharing agreements.
Google has formed long-term revenue-sharing partnerships with websites to provide text-based ads through its AdSense product. In other words, Google provides an inventory of ads, websites provide content and an audience, and the two parties split the advertisers' fees. Google has relationships with MySpace and many other entities owned by Fox, as well as eBay's Skype, Intuit, and New York Times' About.com.
Online Display Ads
In addition to paid search, the second major type of online advertising is display ads, which consists of graphical ads embedded into web pages. Paid search is often considered direct marketing while display advertising is typically considered brand marketing. Google 's acquisition of DoubleClick, a display ad-serving technology company, allows advertisers to manage and track their display advertisements. With this feature, Google has expanded its online advertising business beyond paid search to display advertising. Google has also acquired Teracent, a company that customizes colors, language, and other elements of a banner ad, depending on who is viewing it. Google will pair Teracent's technology with DoubleClick's ad-placement expertise and its own flagship search ad program,santosh AdWords [2]
IJWTS wow! Why can't I think of tihngs like that?
Platforms and Applications
Gmail
Gmail is Google's free e-mail service, which it uses as a platform for displaying targeted ads within e-mails. A recent addition to Gmail is Internet phone service feature whereby Gmail users can make free calls within the U.S. and Canada for free and for modest fees internationally[2].
Google Apps
Google provides users with a number of business applications free of charge, including word processing, spreadsheets, and desktop search. The programs increase web traffic and are part of larger trend away from software as a package, towards software as a service. Although it is free, businesses, government agencies, and schools pay Google about $50 per user each year to access a premier edition of Google Apps that includes more storage and IT controls over user accounts[3]. Google acquired DocVerse, a small Internet company that facilitates the conversion of Microsoft Office files, in an effort to bolster the operability of its Google Apps[4].
Google Book Search
Google Book Search, launched in 2005, is a plan with several major US universities to scan and copy millions of books from their libraries and make them searchable on the Web. This was viewed by the Authors Guild and the Association of American Publishers (AAP) as a massive copyright infringement, and consequently lawsuits were filed against Google. After two years of negotiations, an agreement was reached in 2008 calling for Google to pay 125 million dollars (30 million will go to creating the Book Rights Registry, 45 million to paying authors and publishers whose books have already been scanned without permission and the remainder to reimburse legal fees) to establish an independent "Book Rights Registry,", allowing for the partial digital viewing of millions of books[5].
This ariltce keeps it real, no doubt.
And I was just wodnreing about that too!
Google Chrome
In an attempt to drive access to their advertising-driven assets and out of concern that existing browsers would not support its Web applications, Google began developing its own browser in 2006[6]. Through Google Chrome, Google is is the third most popular web browser in terms of unique visitors, behind Microsoft's Internet Explorer and Mozilla Firefox. Of the three most prominent web browsers, Chrome is the fastest-growing, more doubling its active users in the past two years[6]. The browser has also launched Apple and Linux OS versions, further widening its reach.
In addition to being the name of Google’s web browser, Chrome is also the name of a web-based operating system (Google OS) which was launched in 2010. Chrome OS is the first ever operating system dedicated to the internet, meaning that computing is almost exclusively based on internet-based computing applications. Google also plans to open a Chrome apps store for outside developers to make alterations to Google’s Chrome OS as they see fit.
Google Plus
Google+ is Google's latest foray into social networking. This service was launched on June 28, 2011 to a limited audience, as an invite-only testing environment.[7] This product was built as a layer that not only integrates different Google services - such as YouTube, Google Buzz, Maps, etc. but also introduces new "social" features. The new features that stand out are: Circles, hangouts, Sparks and Huddles.
Circles allows users to organize contacts into groups/streams for sharing selective information. The drag and drop interface allows users to form circles based on the level of interaction or acquaintance with other users.
Huddle is a mobile only feature, available on Android, iPhone and through SMS for other devices. It serves as a mobile communication platform for users on the go.
Hangouts, tagged as one of the most interesting features of Google+ is used to facilitate group video chat. It supports a maximum of 10 people.
Sparks is a mash up of Google Alerts and Search, which allows users to tailor their incoming stream to highlight specific interests. In addition, it allows users to share these streams with one another. poop
Please teach the rest of these inrtenet hooligans how to write and research!
Google Wave
Google Wave launched in October of 2009 on a limited invite-only basis, and seeks to merge email, instant messaging, wikis, and social networking. Although Google Wave is no longer being actively developed, it remains in service.
YouTube
YouTube is a video sharing site that allows users to upload and view videos. On October 9th 2006, Google acquired the YouTube service in a 1.65 billion stock-for-stock transaction. According to the company, YouTube has doubled its revenue in the past three years (2007-2009), but has yet to break profitability[8]. The site is used as a platform for registered users to upload personal content as well as for TV and movie companies to release trailers. The company has run into legal issues around copyrighted videos, namely a lawsuit from for more than a billion in damages in which Viacom accused Google of exploiting its copyrighted content for profit.
Despite a user base of of 488 million in 2010, YouTube continues to spearheaded new initiatives to drive more traffic to its video sites[9]. In 2010, YouTube introduced a video editor enabling users to combine and trim videos with ease[9]. Google has also announced that it would launch a pay-per-view movie service in collaboration with Hollywood studios to release new movies on YouTube on the same day as the DVD, charging $5 per movie for access[9].
Others
Additionally, Google has introduced or acquired a number of other products that are available to consumers free of charge. Google Health is a website where consumers can upload, save and track their medical records. The new site raised concerns with many over the privacy that consumers will have once their medical records are stored on Google's servers[10]. Google has also attempted to build an alternative to Wikipedia called Knol, where articles are written by professionals and experts instead of being fully open to the public. It has also tried rivaling Facebook through Orkut, a social networking site that has gained traction in India and Brazil[11]. While these endeavors remain popular, Google has not yet determined a way to monetize most of these products.
Future Initiatives
You've hit the ball out the park! Inrecdbile!
Google Android Market
In an effort to compete directly with Apple's ITunes, Google will launch the Google Android Market, allowing users to download music directly to their Android mobile devices.
Google Fiber for Communities
Google is planning to build "experimental, ultra high-speed broadband networks" throughout United States. In its first iteration Google aims at delivering 1Gb/sec fiber-optics broadband network to at least 500,000 people. Kansas City has been designated as the starting city for this experiment.
Trends and Forces
Google's Advertising-Based Business Model is Susceptible to Economic Cycles
Advertising is a major revenue driver for Google, with 96% of its revenue coming from advertising. This dependence is a concern in a down economy since advertising is generally the first source of cost-cutting for companies[12]. Google has seen an increase in the number of paid clicks generated by an increase in aggregate traffic and the continued global expansion of their products, advertiser base and user base. The decrease in the average cost-per-click paid by advertisers was primarily the result of the strengthening of the U.S. dollar relative to foreign currencies.[13]
Google's Web Presence Stands to Gain from Growing Internet Traffic
Since 2000, the number of worldwide Internet users has more than doubled. However, certain regions have grown faster than others. Google seems to be positioning itself to grow even more substantially internationally and as the slowdown in the US, especially in the Financial Sector, continues to put pressure on earnings, and advertising Google is poised to hold its own and continue to deliver top notch results. The US market is responsible for around 48% of Google's revenue by geography while 39% comes from the rest of the world (the UK brings in around 13%).[14]
Google's Free, Advertising-Supported Offerings Prove Highly Disruptive
Google has completely transformed the world of advertising in its efforts to connect users to information. Its free offerings have been highly disruptive to well-rooted industries, provoking frequent legal conflict. Viacom is seeking damages in excess of $1 billion from the posting and distribution of copyrighted materials on YouTube. With the 2004 launch of Google Book Search, authors and publishing houses reacted to the millions of copyrighted books being downloaded for free. The Authors and the Association of American Publishers sued Google for copyright infringement in 2005. Through a settlement, Google continues to make books digitally available, to the chagrin of publishers and book retailers such as Amazon. With the launch of Google Earth, the appeal of America Online's MapQuest basically disappeared overnight. Google's Android-based smartphones, equipped with free GPS navigation services, have upended the need for TomTom, which comes at a charge to consumers. Google's Gmail, Google Apps, and Chrome also competes directly with Microsoft's Hotmail, Office Suite, and Internet Explorer respectively[11].
Google's Mountain of Cash Allows it to Acquire New Technologies through Buyouts
Google’s Executive Chairman, Eric Schmidt, stated that the company expects to do one small acquisition a month in lieu of hiring new staff.[15] Google has historically maintained a steady pace of acquiring small companies, and now that the worst of the economic downturn is behind, the company will continue its acquisition strategy. Google acquired several companies in 2010--about one small company per month. It acquired On2 Technologies for $125 million, which is a producer of video compression technology. Google also acquired the mobile advertising network AdMob for $750 million, which enables Google to sell mobile advertising on the iPhone and other mobile platforms. Other recent purchases include Picnik (a photo editing website), Slide (a social networking widget software), and Like.com (a shopping comparison site). Google is likely to continue its trend of acquiring small companies to continue innovating at a fast pace.
Competition
Although Google in its broadest perception has gained an unparalleled marketplace acceptance, in the narrower search market its competitors are Yahoo! (YHOO) and Microsoft (MSFT), which is currently expanding into the online search and advertising business within the US and Baidu.com (BIDU) in China. Yahoo, founded four years before Google, was historically the leading online search site, but in January 2009, Google made headlines by overtaking Yahoo in unique users per month. Relative to Yahoo!--and almost any company--Google's expenses are quite low. The expense breakdown suggests different priorities for the two companies: Google's highest cost sector is product development, at 9%, while Yahoo! allocated 20% of revenues for sales. And while Google spreads its costs evenly among the three principle areas, Yahoo!'s expenses are clearly concentrated in sales, with development and administration trailing far behind.
Because Microsoft has many sources of revenue beyond advertising, it is difficult to compare it in more detail to Google and Yahoo!.
With a plethora of social networking websites and platforms making their way onto the internet, Google faces stiff competition from websites such as Facebook, Twitter, Groupon and LinkedIn.
Google's Android smartphone operation system is also in direct competition with Apple (AAPL) , Microsoft (MSFT) and Research in Motion (RIMM) in the fast-moving, competitive smartphone market.
As Google expands into e-commerce and Local services using its Google Offers, Checkout, and Wallet , it is also encroaching on an estalished player in Groupon as well as Facebook's Deals.
Sources
- ↑ "Google Announces Second Quarter 2010 Financial Results," Google Investor Relations, 07/15/10
- ↑ "New Gmail Phone Service Could Boost Google Stock by 3%," Trefis, 09/15/2010
- ↑ ["Google Apps is More Valuable than YouTube and Gmail Combined," Trefis, 12/09/2009]
- ↑ "Google Welcomes DocVerse," Google Enterprise Blog 03/05/10
- ↑ Google settles copyright dispute with authors, publishers (AFP) news.yahoo.com released October 29, 2008
- ↑ 6.0 6.1 "Google Rekindles Browser War," Wall Street Journal 07/07/2010
- ↑ [1]
- ↑ "YouTube Ads Turn Videos Into Revenue," The New York Times, 09/02/2010
- ↑ 9.0 9.1 9.2 "Google Gains on Boom in YouTube Users," Trefis, November 25, 2010
- ↑ Google gets into Health, www.forbes.com, retrieved May 27, 2008.
- ↑ 11.0 11.1
- ↑ GOOG 2008 10-K pg. 19
- ↑ GOOG 2009 10-Q1 pg. 27
- ↑ GOOG 2009 10-Q1 pg. 28
- ↑ Google CEO sees one small acquisition a month released September 23, 2009
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