Iii) Google

. Google has become an engine of change. It started as a powerful Internet-based search engine. In fact, it has "democratised" information by allowing the free flow of information, knowledge and ideas. It has continually reinvented itself via innovations such as Gmail, Assense, Google Earth, Google Maps, Google News, Google +, etc.

"...the company excels at IT and business architecture. It continually conducts experiments to test its system, and then improvises and improves, and it has a backbone of people who are actually analytical..."

Richard Branson, 2008

. In addition to being the world's number 1 search engine, it is expanded to other industries like media, telecommunications, consumer electronics, advertising (it is the world's number 1 advertising company), publishing, automobiles, etc. In 2014 it had around 40 products. It focus is on developing new ways to work, play and organise digital information.

· Dynamics in digital marketing are changing - there is a swing away from desktop to mobile as the fastest growing area of digital advertising; it is around half of mobile ad spending (2014) but these ads have less impact than targeted social media ads

 

· Google has been losing market share to the likes of Facebook, ie Google market share is falling below 40%. Facebook, which has a higher ad market share on mobiles than on desktops, has seen its click-through rate triple since 2013.

 

· Other players are getting into mobile advertising, eg

 

- Snapchat (a popular photo-sharing app is launching ads)

 

- Yahoo! is trying to boost its mobile offerings with its acquisition of Flurry

 

Google is re-inventing itself as it owns

 

. YouTube which has 1/5 of US digital video ad revenue; attracts 1 b. users monthly; its music videos are very popular (2014)

 

. Android internet software (from mobile phones to tablets, home appliances, watches, automobiles, health monitoring, TV, etc)

 

. Google wallet (collecting customer transaction data & replacing credit cards for purchases via smart phones), etc

 

. Driverless cars

 

. Uber (on-line, non-licensed car booking services)

 

. Skybox Imaging (satellite operator & fibre-optic cabling connection including submarine cable linking Asia to the US)

 

. Robotics

. purchased Magic Leap (US$ 542 m. - augmented reality technologies)

. cardboard viewer (2016) (virtually reality via app)

. Project Fi (phone service launched in 2015) to compete against Verizon, AT&T and other US wireless service providers; it is attempting to blend several communication tools and multiple ways of calling people like cell phone calls, online (VOIP), etc into a single phone number and service. It has limited use as only in the USA using Google's Nexus 6 phone. It will allow for a greater overlap with Google's expanding world of devices and services. It will mix traditional wireless technology, where calls are rooted through cellular towers, with the wireless Internet service found in Star Bucks, airports, etc. Also, it is teamed with Sprint and TMobile to provide the traditional wireless service and will allow talk and text on phones, tablets or laptops. It is considerable cheaper than the traditional cellphone carriers.

In late 2015 Google changed its name to Alphabet and in Jan 2016 was the first time its market capitalisation exceeded Apple.

Some problems facing Google (The Lex Column, 2015) are

i) anti-trust investigations like EU anti-trust investigation into Android, ie the EU anti-trust regulator's claim it has illegally abused its market dominance (2015)

ii) search revenue is slowing down from around 13% to 8% currently and losing market share to rivals like Baidu and Microsoft

In 2014 Google mobile ads had dropped by 17% in two years. Google owned around 80% of the US$ 2.24 b. search market.  By 2016 the revenue generated by US mobile market turns around US$ 18 b. but Google's share had dropped to under 70%.  The difference is explained by how we are more fragmented in the way we search, ie Google gives us the answer to everything but won't necessarily be able to help us find the best restaurant in one click.  Thus the rise of the niche apps. Even though Google is losing market share, it is not losing its revenue.
It is estimated that people are spending 34 hours monthly using the Internet on smart phones compared with 27 hours on desktop

iii) revenue from desktop searching still exceeds mobile search; smart phone users search less and when they do they tend to do it within apps

iv) increase capital expenditure, eg from US $3.3 b. (2012) to US $11 b. (2014)

In summary

Google started as an Internet-based search engine with information-based services. Their mission is to organise the world's information and make it universally accessible and useful. It has expanded to other industries like media, telecommunications, consumer electronics, advertising, publishing, automobiles, etc. They have around 40 products (2014) like YouTube (video sharing service), Panoramio ( map-based photo sharing), Scholar (academic papers search), Blogger (blogging platform), driverless cars, Chromocast (television streaming), Google Glass (wearable technology), etc. They continue to look at new ways to use digital information. Their concept of innovation is about creating change in a way that creates value like making users' lives easier.

"...start-ups have a bias for disruptive over incremental innovation, so it's those people who can change entire industries with a new product..."

Maile Carnegie as quoted by Paul Smith, 2014a

 

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