Google Inc as an Example of E-business Success - Case Study Example

Google Inc An example of Internet E-business Success Larry Page and Sergey Brin started Google, Inc., in 1998, as a small company whose search engine website attracted about 10,000 queries a day. The offices of Google were housed in a garage with a staff of three members including the two founders. Slowly it gained a reputation of providing the most relevant results and was extolled by all the biggest magazines. Yahoo started as a directory and it was also able to garner great successes in the Internet market in the initial years. Both these companies based their strategies on market research, e-commerce profitability and expanding customer base. However, Google was able to perform a higher business transformation than Yahoo in the last decade. Transformation is about developing strategies, which are designed to create a “forward thinking” business that keeps in touch with emerging technologies, consumer needs, and creates goals for the future. Such a process involves devising specific company’s staff, programs and policies which aid in the achievement of those goals. Google is considered a transformed e-business. Yahoo provides the same products and resources. However, it is not considered a transformed e-business mainly because it has not achieved an understanding of consumer trends and has not been able to incorporate consumer trends into their goals and strategies (Mills, 2007). The process of transformation that Google has orchestrated for its company is explained in this study. Transformation Process Google grew steadily since its inception in 1998 and made many improvements to its search engine, such as the Google Directory, Search through Wireless Devices, several language versions for those users who preferred to search in their own language, and Google Toolbar. These enhancements propelled Google to become the most popular search engine. At the same time, Google increased its revenue stream through a carefully devised “Keyword Targeted Advertising program,” and partnership deals with the world’s largest portals, like China’s NetEase and Japan’s BIGLOBE. Another device to attract small businesses was the AdWords program (“Google Corporate History,” 2007). At the end of 2000, Google was attracting more than 100 million search queries every day. Google continued with its partnerships and innovation to widen its user base. By the end of 2001, and Google had become a profitable company. Google’s search capacity has been evolving every year and it now includes the File Type search, Google Image Search, and Google Catalog Search. It also provides a Google Search Appliance, which is provided to company intranets, e-commerce sites, and university networks, all of which were firewalled before. Google also provides ‘Web Application Interfaces’ and “Google Compute” which have attracted a whole new base of customers into its fold. The most important factor in this transformation of Google has been the company’s efforts to recruit the most creative engineers, programmers, web masters and other personnel. At present Google provides Google Labs, Google Sets, Google Voice Search. In 2002, it also launched Google News, which provides a search of 4500 leading news resources around the world. Froogle was launched as the Product Search service in the same year. Google has continued to innovate in the shape of Blogger, which provides weblogs for all those who wish to share their life through online journals. Google AdSense program has provided a source of revenue for all the web site owners as well. Google also launched the Google Toolbar and Goggle Deskbar for easy access to users. The company provides web based mail service through Gmail. It provides free software for personal desktop search in the form of Google Desktop Search. It has been providing global Google Domains and currently provides it to more than hundred countries. Google has taken steps towards hardware area with new blue Google Mini provided through its own Google Store. Dynamic Online mapping is also provided through Google Maps. Google has been making increasing efforts to providing the best search facilities to its customers. This has been reflected in its transformation from a small online search engine facility to a much bigger company providing search in every field. It is still expanding its areas of search to include everything in its customers’ lives that may involve a search. The vision of Google is reflected in Google Earth, which provides a search of the earth from space. Google Talk has been another revolutionary technology which has made it possible for people to speak with each other, anywhere in the world, for free via their computer. Google has undertaken a major transformation with the facility of Google Book Search, which it has provided scanned public domain books to its users. They have also launched the Music Search feature for the music enthusiasts. Google Chat, Google page Creator, Google Finance, Google Calendar, Co-op, Desktop, and Notebook have been added to make the Internet experience easier, open and more entertaining for its users. At the same time it has been forming partnerships with a variety of companies, which include an advertising partnership with eBay, toolbar distribution agreement with Adobe, strategic alliance with Intuit, partnership with domain registration company GoDaddy.com and many others. Google is also providing services for teachers and educators in the form of the Literacy Project, Google Apps for Education, and Google for Educators. In 2006, Google acquired the immensely popular YouTube, an online video sharing community. Google has been including more and more value addition for its users. The company launched Google Website Optimizer, and also Google Docs and Spreadsheets, which is a web based word processing and spreadsheet application. In 2007, Google has partnered with China Mobile, Samsung, University of Texas at Austin library, Princeton university library, universities in Kenya and Rwanda. It has recently acquired Adscape, Trendalyzer software, DoubleClick. It has also ventured into providing free broadband service for homes through TiSP (“Google Corporate History,” 2007). Gabriel Stricker says in his article in Business Week, “Google is actually the first company with a brand that is built entirely of stem cells: able to grow and develop into whatever form it sees fit” (Stricker, 2007). Google’s transformation is taking it to areas which are to be dominated by world’s biggest companies. It is taking on AOL, Microsoft, Vonage, and Skype with its service Google Talk, in the area of communications. In the field of clearinghouses, such as Craigslist and eBay, Google is entering with its Google Base, and as yet unnamed “Google Money” (Stricker, 2007). Google is already giving competition to Apple’s iTunes with its Google Video, in the field of entertainment. As mentioned already, Google has entered the hardware field with its Google Mini, giving competition to IBM, Thunderstone, and Autonomy in this particular area. Google is entering all spheres of life which touch the Internet technology. Yahoo, which was started four years earlier than Google and was the market leader for a very long time even after the establishment of Google, has comparatively not grown so exponentially. Its transformation has been relatively slow. Elinor Mills in her article on CNet News, says that the reason for this lag depends on a variety of factors from personnel decisions to certain bad bets, such as the online media empire which failed (Mills, 2007). Yahoo did not take steps in a number of important areas for quite a long time. It did not meet the required effort to improve their search engine technology, Overture. This was their biggest mistake in that they failed to provide quality experience to their users and advertisers. Google built its share in the market at the expense of Yahoo and Microsoft. Yahoo did not make any efforts to transform itself for its users and, at the same time, to capitalize their strengths into revenue streams (Mills, 2007). It was only in 2007 that Yahoo began showing ads on its results page based on relevancy, a step that Google took in its infancy. Google’s revenues always kept up with Yahoo’s from the start. And after 2005, Google overtook Yahoo by posting revenues of $1.26 billion against Yahoo’s $1.17 billion (Mills, 2007). This gap has grown increasingly over the years so that today Google commands 55% share of the market has against Yahoo’s 27% (Mills, 2007). This gap owes mainly to the transformation process that Google undertook over the years and that Yahoo lagged in. Potential opportunities Google is creating many more opportunities for improvements and innovation. They have created Google Labs for the public to present the ideas on which they are working. They are giving people a chance to use Google’s new tools and to give their feedback about them. They have also given them the freedom to design their own tools and services, and share them with Google. Google labs are, at the same time, developing numerous tools and services to further transform into e-business. They have created online advertising opportunities for sellers of services and products, and connected them with consumers. Google is planning a Google Trips program in which they have created an opportunity for people to plan their trips on mass transit systems in the United States and worldwide. In this way, Google has found a way to harness the potential revenues from the mass transit systems through advertising. This also expands the customer base of the systems. GOOG-411 plans to provide a convenient phone search service for its users. This also has immense potential for generating revenues through advertisements from businesses which want to be included in this service. Google Reader is another new service that has been planned. Through this platform, users can connect to all their favorite websites and blogs through a simple personalized web page. It will also check all these sites for new content and update them. This is another source of revenue which has potential (“Google Labs,” 2007). Google is working on many other tools and services which will further expand and harness the unlimited capabilities of the Internet and make most of the public data accessible to its consumers. Other tools on which Google is working on are Google Code Search, Experimental search, Google Trends, Google Music Trends and Alert Services. All these tools are further additions to the revenue stream for the company. In producing these tools Google is harnessing more and more potential revenue opportunities. According to a report by Kate DuBose Tomassi in Forbes Magazine, there are some key opportunities for Google in payments, video advertisements, and in the partnership with Dell. The Google Payments system is providing a facility for customer-to-customer payments and in this heat is giving competition to PayPal. Video advertising is another key area of revenue which is being tapped by Google (Tomassi, 2006). Yahoo, on the other hand, has not been able to harness these revenue opportunities, since it has not been working as feverishly as Google in producing newer and more innovative tools and services. Strategies and Effects Google has followed certain strategies which have resulted in its present success. Their strategies are very innovative and different from the strategies employed by other companies, including Yahoo. Firstly, the Google staff realized that the end users are not experts. Keeping this in their mind, they have simplified the searching experience of their consumers. This has been a main factor in generating customer loyalty and has been a significant contributor to word of mouth advertising by satisfied users. The exponential rise in Google users can be attributed mainly to this simplified user interface. Google has locked on to this base of customers through its better searching experience. The interface is simple, pages load instantly, the placement in search results is never sold to anyone so that it results in better and more accurate results, and the advertising on the web page is relevant and does not distract from the results. Secondly, Google spends an immense amount of money on research. They are continually alert to resolve search issues. They’re also committed to making improvements to a service that is already considered the best on the internet at finding information fast and seamlessly (“Google Labs,” 2007). They have included more and more innovations in search tools, like Gmail, Google Desktop, Google Maps and many more to enhance the user experience. They have made their customers happy and this is the most significant factor in their success. Thirdly, Google is perhaps the only web site in the world whose stated goal is to have its users leave its website as fast as possible (“Google Labs,” 2007). This radical goal has led to it becoming a leader in search speed records. Google’s search algorithms have been devised to produce quick results. Google realizes and accepts that time is precious for its customers. This creates a better user experience for its customers and they keep coming back to it. Google has patented its PageRank algorithm, which harnesses the links provided by millions of individuals on different web sites which they think offer content of value on the same subject. Google analyzes these sites, which have been ‘voted’ by other webpages as the best sources of information, and provides rank to such pages. In this way it is able to offer the most relevant and best results for its users. This increases speed and quality of the searches and leads to further growth in satisfied customers. Google has also realized the potential of mobile technology. The growth of wireless technology is being harnessed by Google by providing search solutions over mobile devices. In this way it has expanded its base to customers which are always on the move. Google has commandeered an ingenious way to making profit through its search engines. They allow only the most relevant ads on their results page. In this way, Google does not compromise the user experience. Instead, it enhances the speed of the searches by providing them more sources to the information they are searching for through advertisement links. It generates revenues by offering its search technology to companies. As its customer base grows, it is able to generate more and more revenues. Google has continuously added to its capabilities by providing all the publicly accessible information through its search service. Google’s researchers are looking to more ways to bring into its fold all the information not readily accessible to the public, such as databases. Google is headquartered in California but has provided offices all over the world and maintains more than 100 Internet domains. In this way it is able to serve customers living outside the United States as well. It has made its search engine available in ten other major world languages as well. This has taken Google to some of the most far reaching corners of the globe (“Google Labs,” 2007). Google’s corporate culture is unique in all of corporate world. They have made employees their first consideration. They place emphasis on team achievements and pride in individual achievements. This creates a very challenging and fun atmosphere in the company, which has contributed to the company’s overall success. The company’s recruits its stuff from among the most creative and innovative thinkers in the world. It also provides the best experience for its employees in their office. Employee satisfaction is another major factor in creating the most successful Internet Company in the world. Google has always delivered more than expected, and does not stop there. It keeps innovating and evolving. It keeps track of its user base, and if there are any search issues it addresses them immediately. It also anticipates the future needs of its customers and all the other global Internet users. A company, which provides more than what is demanded or needed, is always more successful than its competitors who do not do the same. That is why Google is much more successful than Yahoo. Potential Risks According to Bogatin, Google has put itself in a position where it faces the risk of keeping continuously apace the changing technology in order to be competitive in a rapidly evolving the industry (Bogatin, 2006). Google also faces the responsibility to continuously evolve and maintain their key online systems in order that they remain reliable. Some crucial services like Google Payments, e-mail, and Google Check Out service require this more than other. As Google is growing very fast so it has to continuously evaluate and update its existing infrastructure and architecture in order to better handle the increases in user traffic. It must also continuously upgrade the complex systems it releases periodically. If that is not done, it could hamper the operational effectiveness of the systems and impede customer satisfaction. Another important risk is projection for this rapid and unknown amount of growth which Google has seen over the years. Bad projections could seriously hamper the future growth, by not planning effectively in terms of infrastructure and resources (Bogatin, 2006). Google relies on a lot of third party vendors for services, such as bandwidth, data centers. Any failure or limitation of the services could impact Google adversely. These vendors also need to be kept updated on the new upcoming services so that operations support can be devised beforehand. Google does not have any direct control over this portion of operations and hence, it could significantly hamper its vital services. Google needs to keep abreast of improving adblocking technology as well, so that its own revenues are not affected adversely by the blocking of display ads. Index spammers also provide an important risk to the integrity of Google’s search engines. Google researchers must keep developing their own anti spam programs to keep up with them. Another important risk is the concern over privacy of information. Google needs to be extra careful on this aspect. Another important issue is Click Fraud or any other fraud that may hamper Google’s revenues. Google also needs to be careful about patents and rights (Lohr, 2007). Lohr also says that Google needs to beware of threats within the company, such as the “Law of Large Numbers,” over spending, and quality of its employees, specifically engineers (Lohr, 2007). Conclusion Google has established a much better e-business as compared to Yahoo. This is mainly because of the transformation process it has undertaken throughout its evolution. The company has devised its strategies according to the consumer trends and needs. It has been a pioneer in the development of major Internet technologies. At present it commands the biggest market share in its field. Yahoo has not kept pace with the consumer needs and has lost out to its competitor, Google. Google is still expanding its e-business to many more areas. The major factors which have helped Google in becoming the world leader in search technology are: consumer satisfaction and employee satisfaction. The company recruits the best and most innovative minds from all over the world and gives the customer more than what they expect. Such value for their time and money brings the customer back again and again. This is evidenced in the phenomenal success of Google. Works Cited Bogatin, D. (2006, July 2). “The Google Risk List: 8 Vulnerabilities Impacting Google.” ZDNet. Retrieved December, 14, 2007 from http://blogs.zdnet.com/micro-markets/index.php?p=193 “Google versus Yahoo.” Retrieved from http://www.news.com/Google-rises-at-Yahoos-expense/2100-1038_3-6178164.html “Google Corporate History.” (2007). Google. Retrieved December 13, 2007 from http://www.google.com/corporate/history.html “Google Labs.” (2007). Google. Retrieved December 13, 2007 from http://labs.google.com/ “Friday Column: Transformation, (2007).” Conversational Reading. Retrieved December 12, 2007, from http://www.conversationalreading.com/2007/02/friday_column_t_1.html Lohr, S. (2007, October 13). “As its Stock tops, Google Faces Growing Risks.” NY Times. Retrieved December 14, 2007, from http://www.nytimes.com/2007/10/13/technology/13google.html?pagewanted=print Mills, Elinor. (2007) “Google Rises at Yahoo’s Expense.” CNET News.com, retrieved 10 December 2007 from http://www.news.com/Google-rises-at-Yahoos-expense/2100-1038_3-6178164.html Stricker, G. (2006). “Google Organizes the Globe.” Business Week. Retrieved December 14, 2007, from http://www.businessweek.com/innovate/content/apr2006/id20060411_490873.htm Tomassi, K. (2007) “Large Opportunities Seen for Google Payments.” Forbes. Feb 2007. Retrieved on December 14, 2007, from http://www.forbes.com/markets/commodities/2006/02/27/google-ebay-0227markets10.html Read More