The key factors behind Google’s early success were:
1) Their inventive search algorithm.
2) Their business model.
3) The management team.
They entered the market with a new technology that provided access to 1 billion web pages using an algorithmic search technology. Google’s business model included paid listings and related paid listings, which gave Google an advantage in selling advertising. Sergey Brin, Larry Page, and Eric Schmidt were the management triangle that brought Google to the lead of the web search industry. Their powerful business sense, groundbreaking ideas, and engineering and business experience have made Google the dominant company that it is today. They were able to enter the market and successfully achieve a well thought-out business strategy. In my opinion, they did everything right in their early years. What stands out as a strong tactic was building upon their algorithmic search technology. By focusing solely on licensing its search technology to Yahoo! and other third-party sites, Google was able to gain a strong grip in the web search industry. With Google’s introduction of cost-per-impression and click-through-rate, they became a threat. In analyzing what Google did wrong, I would say that they could have done a better job with customer service. Many customers and industry analysts observed that Google failed at providing customers with apt, tailored service.
I would say “yes” the search business would continue to become more focused as Google has conquered this industry and Yahoo can hope to maintain market share by offering editorial content that some users may be trapped into inspecting. But as current web surfers have become more refined and enabled to pursue out content in less conventional sites, Google’s independent style of search joined with its massive scale of indexed web pages leads to outcomes more suitable to users. This very scale of indexing grants a head start for Google that makes market entry near impossible. With Google now taking 85% market share, it certainly appears that it is a winner-take- all industry. With Google’s large lead and enormous means to throw at any new innovation it decides to take on, it would take more than a good idea to beat this titan. What would be needed is another disruptive technology that connects future users in ways that Google hasn’t tackled. The strategic dynamics of the search business involve using a search algorithm to provide users with a listing of the web pages in which they are searching. When the user enters a word or phrase into the search text box, a listing of web pages is displayed. Web search providers make their revenue in advertising that is displayed on the web page listing the results. Because Google’s was successful as a paid listing provider, it expanded into contextual paid listings. Contextual paid listings appear on web pages that provide editorial content. Other strategies are searching for product pricing, searching based on past searches local search and vertical search, desktop search online and offline database search and books and video. Alternative competitive strategies for the search business are searches for food, dining, entertainment, and transportation. I recommend searching for restaurants because it is a hot market right now and there is an opportunity for an increase in profits as more and more restaurants automate their food ordering process.
In renewing its deal with AOL, Google could afford to pay AOL more than 100% of the revenue generated from AOL searches. Google had an operating income of $2 billion as well as cash and equivalents of $8 billion. Microsoft’s maximum affordable bid for AOL’s search traffic failed in comparison. Microsoft had propositioned that it and AOL form a joint venture to sell advertising on their own sites and ultimately on other sites. There were discussions between Google, Yahoo!, and Microsoft in December 2005. In addition to the $1 billion, Google...
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