Google is one of the world’s biggest and most valuable technology companies. It is the market leader in search and online advertising, although it continues to see growth and competition from companies such as Microsoft (Bing), Amazon, and Facebook. The company has continued to leverage its leadership in search and advertising, as well as its Android mobile platform. It, however, shows weakness in relying on its advertising business for revenue. There are opportunities for growth through the mobile platform, cloud computing, and its hardware business, particularly Pixel phones known for their superior camera capabilities.
Internet search worldwide today is synonymous with Google. Founded in 1998 by Larry Page and Sergey Brin as a college research project at Stanford University, the company has grown to become the world’s largest and most popular search engine. Headquartered in Menlo Park, California before moving to Mountain View, Google is today part of the Alphabet Inc. parent company, created after the restructuring of Google LLC. The company is one of the largest (fourth) technology companies in the world and among the most valuable companies worldwide. Google trades in the stock market as Alphabet Inc (ticker GOOGL), as is among the best-performing companies in the stock market, trading at $1,422 per share as of February 2020. However, despite such a strong stock performance, Google (Alphabet) can improve its performance by diversifying its revenue streams, look to the mid-range segment for growth, and monetize some more of its products.
The current organization of the world of business means that companies are consistently crossing their traditional industry borders. Known as digital natives, companies such as Google today are not defined or constrained by just one industry. Based on its products, Google cuts across different industry borders including the search, advertising, financial, cloud, and a consumer services company selling both software and hardware to its consumers (Ringel Hiller and Zietsma 315). Some of these products overlap by their industry definition, making Google a multi-industry player, in an environment that companies consistently cross borders.
Google’s main industries remain the search and advertising industries, which are the main source of the company’s revenue. In the search industry, its competitors include Microsoft (Bing search engine), DuckDuckGo, and Boardreader among others. Google is the market leader in online advertising capturing 74% of online advertising in the U.S. (Graham n.d.). The company’s competitors in online advertising include Adobe, Amazon, Facebook, AT&T, Comcast, and Oracle. Within the financial industry, Google offers services through its Google Wallet (later Google Pay) application on its Android platform, which allows mobile wireless payment. PayPal One Touch, Apple Pay, Samsung Pay, Venmo, Zelle, and Square Cash are among its competitors in the financial sector. For cloud computing, Amazon, Microsoft, IBM, Alibaba, Oracle, Tencent, and Apple are among the biggest competitors. Amazon is the market leader through its Amazon Web Services, capturing a 33% market share, even as Google is a distant third with an 8% market share (Richter n.p.). Google’s Chrome browser, Chrome OS, and Android mobile operating system are among the company’s consumer software services. Here the company competes with Firefox, Opera, Edge, and Safari among browsers, while Apple’s iOS is its main competitor in the mobile operating system. Google also sells hardware in Pixel phones, Chromebook, and Chrome cast, where it competes with the major smartphone and computer companies including Apple, Samsung, Dell, Asus, and Acer among others.
Google has both individual and corporate consumers. While its search business targets individual consumers, its advertising business is largely for corporate/enterprise consumers. Individuals in search, while the company’s customers, are themselves producers of data, which Google then sells to its corporate customers (Ringel Hiller and Zietsma 315). Individuals are additionally the company’s customers when they purchase the company’s phones, computers (Chromebook), and Chromecast devices. Aside from selling data and adverts on its widely popular platforms such as YouTube, Google, and Gmail, the company also offers the G Suite to its corporate customers, who access a collection of the company’s services including documents, Slides, and unique domain and email names.
Google has a unique organizational structure. Although the company has an executive team led by the company’s CEO Sundar Pichai, it follows a team-based corporate structure, where access to executives in the company is unhampered. The absence of cubicles, exercise, and weekly TGIF meetings allow the free flow of ideas despite the presence of standard corporate hierarchies (Wilson, Ramos & Harvey, 3). Employees’ ability to work outside their specialty and position when necessary has created an informal work atmosphere that has been a factor in the success of the company. The company’s main source of revenue remains its advertising business. According to Clement of Statista, Google’s revenue in the fourth quarter of 2019 amounted to $45.8 billion, up from $40.34 in the previous quarter. The company has continued to see growth in other areas such as YouTube (through YouTube Premium subscription and ads), cloud services, and its Pixel phones.
· Search engine market leader with better algorithms
· Great user internet traffic making it one of the most powerful brands
· Advertising leader in online advertising allowing it leverage over competitors
· Android and mobile technologies allow it to capture even more customers and continue its hegemony through its Android-bundled apps
· Google has a strong brand image, being one of the most valuable companies in the world
· There has been a constant hit on ads, the main revenue for the company that reduces its profitability
· The company relies only on one revenue stream, its other products being less successful
· The company relies so much on secrecy, which has been a concern for many experts
· There is an opportunity for growth in the Android operating system.
· Cloud computing offers an opportunity for growth as more business look to cloud computing
· Google’s Pixel devices also offer another opportunity to grow its revenue streams
· AI and robotics offer potential for even more revenue growth and entry into other markets
· Competitors such as Facebook are eating into Google’s advertising revenue streams
· Adblockers on sites are a threat to its revenues
· More people are looking to Amazon rather than Google for recommendations
Current Product and Marketing Strategy
Although Google has become synonymous with search, the company has many other products and services that it offers to its customers. Google’s products include Google Search; Google maps, Chrome (browser and OS), YouTube (world’s largest and most popular video sharing service), Google Pixel phones, Gmail (a free email service), and Chromecast that allows people to cast content from their phones to TVs through a Chromecast dongle. While these are some of the most popular products, the company’s AdSense and Android mobile platform are also widely used.
As a technology company, Google’s products are often consumed and used online. Users use Chrome to surf the Internet, Search to look for queries online, Photos to organize, save and share their photos online, YouTube to watch videos online, and Chrome OS to work online. The company’s Pixel, Chromecast and Chrome Books are perhaps the only product used physically by its consumers, which can they can buy from both online and physical stores.
Pricing is an additional part of the company’s marketing mix. Google uses different pricing strategies, including freemium and market-oriented pricing strategies. For freemium, the company offers most of its products for free such as Gmail. However, customers can pay for add-on services on free services such as Gmail for business, paid subscription for YouTube, and its advertising ventures such as AdSense. Google has used its market-oriented pricing for products such as Chromecast, Chromebook, and its Pixel phones, which have all been priced competitively in line with market prices for similar products.
As an advertising company, Google uses its services for promotion. It runs advertising using AdWords on its products such as Search and YouTube, pointing consumers to other Google services. It also uses AdWords as an incentive for others to use its services.
The online advertising market anticipates wider growth as more content consumption goes online. While traditional advertising through radio, TV, newspapers, and magazines take up the lion’s share of advertising, online advertising is experiencing exponential growth (Evans 38). Machine learning and AI and increasingly becoming part of the industry, driving more accurate targeted ads. The smartphone market, on the other hand, is headed towards saturation especially in the developed world and premium segment, although the developing world and the midrange sections continue to see growth. Google as a company continues to perform well, evidenced by a better performance of its stock and revenue. The company, however, continues to face challenges, as competitors such as Facebook and Amazon eat into its advertising market share. The company’s Android operating system has also been plagued with fragmentation, defeating its goal to bring the latest software to its consumers as its rival Apple.
To respond to these challenges, the company must implement several strategies. First, it has to diversify its revenue stream by effectively monetizing some of its products. YouTube has the potential to bring more revenues through subscriptions if the company can produce more shows and films to attract more customers. The company can also introduce more affordable and innovative offerings on its Pixel and Chromebook products. At their launch, Pixel phones attract premium prices, a segment that has seen stunted growth over the years and with known players that command customer loyalty such as Apple and Samsung. Google can leverage its photo prowess in the midrange section, and bring premium performance to the midrange section as many Chinese companies such as Xiaomi, OnePlus, and OPPO have done. Such a move has enabled the companies to experience growth in the Asian and African markets, which still have the potential for growth. Moreover, as the regions grow, they offer potential markets and opportunities for the growth of Google’s cloud services.
Clement, J. “Google: Quarterly revenue as 2008-2019.” Statista, 2020.
Evans, David, S. “The online advertising industry: Economics, evolution, and privacy.” Journal of Economic Perspectives, vol. 23, no. 3, 2019, pp. 37-60.
Graham, Megan. “Google says it competes with ‘lots of companies’ in advertising—here’s the hole in that argument.” CNBC, 2019.
Richter,Felix. “Amazon leads $100 billion cloud market.” Statista, 2020.
Ringel, Leopold, Hiller,Petra, and Zietsma, Charlene. Toward Permeable Boundaries of Organization? Emerald Group Publishing, 2018.
Wilson, Kristina, Ramos, Yaneli, and Harvey, Daniel. Google in China: “The Great Firewall”. Duke University, 2015.