Google was started in January 1996, but officially launched in 1998 by Larry Page and Sergey Brin, in Menlo Park, Calif, during their PhD research project while students at Stanford University, California. Over years, Google has emerged to be the world’s most popular search engine in the internet. This position and popularity has enabled Google to make huge profits, and it has also resulted into outsize influence across the online world. The purpose of this document is to advice on the future directions that Google need to follow in order to avoid being phased out by the emerging popular social sites like Facebook and other search engines like Yahoo, Rankdex and Baidu from China (Shankland 1).
Google has continued to aim high over years, as a company, its ambition has far exceeded the confines of the internet in search and in advertising as well. The company holds to its mission in seeing itself as an organisation that avails world information to its users. This has made Google universally accepted and also useful to its member’s daily lives.
Google has built up many data centers around the globe, which are interconnected by a well built and powerful network. This is in line with its hopes and also with hopes of instantly connecting its users with high resolution satellite pictures from every corner of the globe, and the skies above. In the same spirit, Google has made entire world of text books, in and out of print, available online, and the company has also emerged as the leader in the distribution of online video, through YouTube, which the company acquired back in 2006 (The New York Times 2).
Concurrently, Google has taken its advertising system efforts offline. This has been done with an aim of capturing portions of large ad markets in Mass Medias, including radios, televisions, and newspapers. The company is recently investing heavily in the mobile phone technology as a replicate to its online business success in the wireless world.
The company has also built an array of online software programs; this includes Gmail, word processing, and spreadsheets. These are aimed at becoming the building blocks of its new paradigm of web based cloud computing. In this particular one, it will have Google at its center, unlike the one dominated by the popular Microsoft PC world.
This unbounded ambition by Google has received both praise and criticism. Critics say that it has acted as a cavalier approach to copyrights. This has put Google at its odds with other growing list of industries such as Holy wood, book publishers, telecommunications, and e-commerce. Google’s quest for collecting as much data and information as possible and availing it to its users and their online experience has prompted fears that the company is becoming a potential threat to the consumer privacy.
Google has dominated in the search advertising, which is one of its core businesses. This accounts for more than ninety percent of its total annual revenue. However, the company has continued to face fierce competition from other currently emerging social media sites like tweeter and Facebook. Facebook is in its efforts to turn scores of sites into surprises. In its new ambitions of turning the site into satellites across the internet, users will be able to interact with their Facebook friends. This is a potential threat to Google in that, with its immense growth, Facebook will enable information exchange over the social network, this will include Google users as well, who majority are Facebook fans. This will wall them off from the search engines. This will also result to lucrative territory for adds, therefore denying Google some of its existing privileges.
Google is also facing a fierce competition from the Microsoft’s Bing, which handles a sizable slice of web searches in the United States, although it is a little low-at 12.7 percent- as compared with Google which enjoys a 62.6 percent. For sometimes now, Bing’s share has been growing, so has Yahoo’s, while that of Google has been shrinking. This is a complete red frag for a company which aims at surviving the competitive world.
Google’s financial performance
2011 Third Quarter Earnings
Google has continued to report very attractive financial results. The company has continued to chug along in its central business, search advertising, creating some comfort. However, the company has been spooking its shareholders by charging ahead in its high-priced acquisition and in new businesses. Its third quarter earnings have surpassed analysts’ expectations by reporting a revenue increase by 33 percent and a net income rise by 26 percent (Y Charts).
The company reported a third quarter net income of $8.33 a share, or $2.73 billion. This is an increase, up from $2.17 billion, which translates to $6.72 a share, in its last year financial report. Google’s gross profit excluding the cost of stock option and other related tax benefits, in the third quarter was $9.72 per share, surpassing the analysts’ projection that was aimed to hit $8.74 per share (Forex pros).
The company reported a revenue increase of $2.43, after rising from $7.27 billion in the year ago quarter, to the current $9.72 billion. With payments to the advertising partners excluded, the net revenue was $ 7.51 billion, up from $5.48 billion above what the analysts had projected to be $7.2 billion (The New York Times).
The stock price of Google has fallen by 8 percent this year. This has been contributed by the investors’ reaction due to several factors. Among these factors include the company’s aggressive hiring, high priced acquisitions, antitrust investigations, deteriorating economic conditions, and the Facebook challenge.
Change in readership
The co-founder of Google, Larry Page, took over the position of the chief executive officer, in April 2011. This was a succession from the company’s long time serving chief, Mr. Eric E. Schmidt. The executive chairman remains Mr. Schmidt, who also serves as the adviser to Mr. Page and Mr. Brin Sergey. Mr. Sergey is also a co-founder and the Google’s serving president of technology.
Mr. Page had also served as the president of products in Google Company in its early days. He relinquished the role in 2001, while Google was still a private company. According to him, this move was aimed at streamlining, stating that he had been selected as the best decision maker. This was as a result of the pace of decision-making and also the company scaling.
The main problem is that the company had ballooned so drastically. The company has grown to more than thirty thousand employees, with revenue of $27.3 billion in 2011. By the standards of the Silicon Valley, the company had become sclerotic. With this triumvirate, the top management- Page, Brin, and Schmidt had to agree the way forward before anything else could be done. The resulting glacial pace of decision making and the unwieldy management were noticed, particularly in the Silicon Valley. This was due to the startups overtaking the behemoths in just a few months. These turn of events and occurrences have put Mr. Page, as the company’s chief executive, into a fix, and facing a number of challenges on several fronts.
Google has remained successful and immensely powerful, however, the company is an aging giant that is moving at a far much slower pace than it used to when it was fresh and hot during startups. The company has started losing its employees to the new emerging companies, which are still at hotter start-ups. The company is also being pushed hard by government regulations, and by its other immediate competitors like Apple, Facebook, and Amazon. These companies are all competing for the now limiting peoples’ online time. While Google remains successful in new ventures like mobile phone technology and display advertising, the company should turn its focus into other technologies and businesses like television.
Mr. Page has made a lot of changes, big and small, since he took over the top office in Google. He turned down more than twenty five projects which he termed as not popular enough. He planned and controlled the company’s biggest venture by billions. The Motorola mobility bid, worth $12.5 billion (Guru Focus 2). This is one of the boldest moves the company has ever made. The bid has positioned the company in a good position to enter into the hardware business.
The time has come for the company’s top head to borrow from other successful executives strategies, like the late Steven P. Jobs and Mayor Michael R. Bloomberg. He Mr. Page must put his personal imprint on the corporate culture, from dispiriting excessive use of email to embracing quick, unilateral decision making, especially by him as the team leader, whenever the need be.
The future of Google Company is being designed in the company’s top secret lab, referred to as the Google X. this is an undisclosed place in the bay area location. At this lab, Google is tackling a list of one hundred shoot for the star ideas. In the list of these ideas is coming up with a refrigerator that is online connected to the internet, with sensors that can determine when a commodity is running out and automatically placing orders. The other surprise that the secret lab might introduce into the social network is a dinner plate that could post what you are eating to your preferred social network. The company is also aiming at coming up with a robot that can go to the office and serve an individual who is resting at home, and also on the list is an elevator to the outer space.
Making this idea as secretive as it is can’t be the ultimate security for its ideas; other companies are in the line with equally creative ideas. Google should also concentrate on realizing its conceptualized ideas. For instance the driverless car that was unleashed in California in the year 2010. The idea should be turned into a new business venture to keep the company in the truck of technological development. Although it has been unimpressed by the innovative efforts of Detroit Automakers, the company should work hand to match such company’s spirits, it is a competitive world out there where if one sleeps on an idea today, it will be realized by someone else tomorrow. Google can introduce such ideas elsewhere where they have not yet been introduced, like in the United States.
Although the company has developed rapidly into one of the most prominent corporations, technological startups are fiercely biting on its heels. The secretive lab is reflecting the company’s ambition to being a place where development and ground- breaking research are taking place, in line with the Xerox PARC, the developer of the modern PCs back in the early 1970’s.
Google Inc. (Google) has had its focus on the improvement of the way in which people connect online with the information. The company has in the past, generated the bigger portion of its revenue, through online advertisements. The company directed its main focus on areas like advertising, search, platforms, operating systems and enterprise. Many businesses have been using its AdWords program to promote their products and services, therefore focusing mainly on advertisement. Google's third party that comprises the Google network uses the AdSense program to deliver relevant ads that enhance the user experience besides generating revenue. Google has acquired a number of companies in its recent past. In February 2010, it acquired On2 Technologies and Aardvar Inc. Later in the same year, at around August 2010, Google acquired Slide Inc. on December 2010, Widevine technologies Inc. In 2011, Google Inc. has acquired PushLife and Zagat, in April 2011 and September 2011 respectively (Shankland 1).
On 16th November 2011, Google introduced a number of music features inclusive of a download music store. This has extended its reach as an entertainment hub and also enhancing its social networking ambitions. This has placed Google in a better position to compete with other entertainment hubs, like the iTunes (Shankland 1).
Google music is one of the services that will enable Google to sell music in full albums as well as in individual tracks. This will enable its customers to store files in cloud accounts. Through Google+, Integration with Google's nascent social network, Google will enable its customers to share music online by offering friends a single chance to listen to any purchased truck. With such services, Google will be offering a music store with sharing capabilities. This will place Google in a better position to compete with the likes of Amazon, Apple and Facebook as well (Shankland 2).
Google has dominated the internet search and advertising over a year, which is evident to any internet users and investors. However this puts Google on another spotlight in its innovations. This is mainly because, most of areas it is getting involved in leads to a head on competition with its investor companies. This has put Google Company in a position of repeated antitrust inquiries for a number of years in the recent past. This has been the case mainly in its dominant regions like the United States, Europe and Asia. This antitrust has intensified mainly because Google has expanded into new ventures, mainly in comparison shopping, travel search, local business reviews, and entertainment. In these new ventures, it competes directly with the very same Web sites it indexes in its search engines.
Google’s Chairman Mr. E. Schmidt, was put on task to testify, before a senate panel, about how Google produces its search results. That was back in September 2011. He was also tasked to verify whether Google favors its own business, hunt customers, and thwarts competition. On his response, Schmidt confirmed that even though Google has engaged in diversified ventures, the company puts its consumers first. He verified that there has been a lot of friction in web business, especially on businesses being upset on the way the search engine ranks are, Google emphasizes not on lock ins, but on loyalty. In verifying this, he demonstrated the freedom there is for users to switch between search engines at will. He explained that Google uses open source technology and it maintains transparency about how its search engine operates, more vividly than any of its competitors.
On the panel’s observations, the chairman of the panel senator Herb Kohl from Wisconsin, stated that Google’s mission seems to have changed over the years. This is due to its aggression in acquiring companies such as Zagat and Motorola Mobility. This is not in line with its major goal which has been to get the user off Google’s home page and on to the listed website in the slightest time slot possible. Mr. Kohr stated that Google has continued to favor its business over others in displaying search results, and has ventured into other businesses like advertising and mobile phone market.
On the antitrust debate about Google, hearings held by the judicially subcommittee on Antitrust Competition Policy and consumer rights. Although the intension was not to build a case but to raise the pressing policy questions and explore the arguments from both sides, Mr. Kohl stated that it was one of several ongoing inquiries into Google’s resent behavior. Main emphasis was put on the federal trade commission’s broad involving investigation on Google practices (Ingram, Why a Google antitrust investigation is a mistake).
Google has made a significant development, which is evident. In a bid to engage and maybe take control over Android booming business, Google has created a very important platform to sell its business. In the same efforts, Google acquired Motorola Mobility Holdings on August 2011 (Guru Focus). This was in a bid by Google to increase its mobile business. This cell phone business was split from the Motorola, at a cost of $40 a share in cash terms. This is equivalent to $12.5 billion. The Motorola manufacturer’s phone now runs on the Google Android software. This has enabled Google fit well into the mobile business industry as smartphone Technology adoption increases.
In similar efforts, Google introduced a social networking service called the Google+ project. This happens to be very much alike with Facebook, giving its biggest leap on the Facebook dominated field. The product which has been, for sometimes, on pilot test only to a selected group of Google users allow users to discuss and share photos, links, and status updates.
On this note, the federal trade commission opened an antitrust investigation. This mainly focused on the heart of Google business, the search the advertising system, which accounts for $29 billion in annual revenue. In response, Google defended its position stating that it had received subpoena and a notice of the civil investigative demand, from the earlier commission.
The company also met challenges in its Google book search; this happened earlier on March, 2011. This was a planned multibillion project that had its efforts in digitizing every single book in print. Unfortunately, the federal court in new York denied Google this chance by rejecting its class-action settlement of one hundred and twenty five million dollars, terming this as a deal that went too far in granting Google excess rights to exploit books without prior permission from the original copyright authors and owners.
Google has been greatly successful in its core business, the search engine services and advertisements. This has enabled the company raise billions of revenue making Google one of the most profitable online companies. This has also enabled the company acquire other companies in their efforts to expand their core business, and also to engage in other profitable ventures like mobile business and android software for smart phones. This has contributed quite a big deal in maintaining the company’s profitability. Over years, Google has made billions of profits and the company has grown tremendously.
However, Google has received both praise and rebuke from its competitors. The company has also found its head management in questioning, on its changed business tactics and behaviors in the federal courts and judicial commissions. This has been mainly due to the company’s antitrust claims.
In this regard, Google needs to go back to its drawing board in order to secure a bright future in the industry with many existing potential competitors like MSN, yahoo and Bing in the search engine business, and also from Facebook and tweeter in the social networks, without leaving behind the likes of the iTune in the entertainment industry. The company needs to come up with products and services that will enable it compete equally with its competitors, without breaching the trust from its investors, and competing directly with the same companies in their search indexes (The New York Times).