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Google: Strategic Analysis

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Google: Strategic Analysis

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  • May 23, 2007
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_I. INDUSTRY ANALYSIS_

COMPETITION

The web search industry is characterized primarily by an oligopolistic competition within Google, Yahoo, Microsoft, and AOL. The Big 4 serve the entire market and share similar basic infrastructures and activities. So they compete in such segments as market share, technology and methods used, revenue, and share price.

High barriers to entry. Consolidated market with the high amount of R&D required.

Competition mainly on market share (differentiated product)

Google's website, Google.com had a 37% share of all U.S. searches in Q3 2005, Yahoo.com, its closest rival, had a 30% share.

Leveraging its own traffic and that of AOL, Ask.com, and other affiliates, Google garnered about 60% of U.S. search-related advertising revenue in 2005.

Outside the United States, Google.com held a commanding 68% share of all search traffic in Q3 2005.

In June 2000, one year after it was founded, Google's index of 1 billion web pages surpassed those of its rivals.

In 2000, Google replaced Inktomi as Yahoo's search engine.

Microsoft was threatened by Google's ad-supported software.

In 2005, Microsoft responded to Google's ad-supported software threat by proposing a joint venture with AOL to develop search related advertising.

High customer loyalty

See Exhibit x for detailed competition profile among the big players

PRODUCTS

Google's range of products fueled speculation about Google's strategic objectives.

Google had launched a flurry of products that had expanded its domain beyond web search including Gmail, Google Desktop, Google Maps, Google Book Search, and Google Talk.

Products like Talk and Gmail, along with personalization features offered on Google's home page, moved the company further into the domain of portals like Yahoo! And Microsoft's MSN.

Base, Book Search, and Maps along with a payment service acknowledged to be under development, suggested that Google could be targeting e-commerce...