Online advertising down

NYTimes today  - down 2.4% compared to last year. Talks about low value/commoditisation of advertising networks and that blogs/video will eventually work as advertising conduits.

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Former employee on Google management style

Came across this blog from a former Google employee

http://steve-yegge.blogspot.com/2006/09/good-agile-bad-agile_27.html

Ignore the first few paragraghs and scroll down to the section titled "The Good Kind".

He describes the practice of "Theory O" inside the Google world......

Google Local Gets Broken Into

Sept 2008 - yes last month. Looks like Google Local was subjected to 'social engineering security attack'. Slightly like Pallin and Yahoo eail.

Article from Miriam Ellis in Search Engine Guide

Quote:

From my perspective this is like a scenario where Google has the keys to your shop, they agree to watch over it for the afternoon. On their coffee break they stepped out and forgot to lock the door. During that time, a thief broke in, stole some flowers and left his calling card taped to the door.

Google, returned for the afternoon after coffee and upon closing, forgot to alert you to the theft and they left the thief's calling card where he left it, covering your sign on the door.

Google gets no pass on this one.

Google Answers - RIP

http://answers.google.com/answers/

Competing on the Edge - Shona Brown

The book referenced earlier, 'Competing on the Edge' by Shona Brown. Shona Brown is the 'Senior Vice President, Business Operations' at Google.

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Google Scenarios

Greg has done a lot of scenario building based on scanning.

However not letting any details get in the way I'll take a crazy stab at scenarios. Didn't look at 'strategic gap' (Ansoff) or market growth rates specifically.

Optimistic scenario: Positive marketing environment and transition to on-line spend grows internet advertising market. Google diversifies into other media, becoming a single source supplier for many customers. Development of web-platforms e.g. the Chrome browser, Gears, Andriod lead to ubiquity of the web and in particular web-search. Google's applications successfully become content drivers adding to conversion into clicks. Applications become carriers for Google's advertising and thereby capture a large proportion of software spend. Google provides an end-to-end solution for marketing, tying themselves into marketing supply chains. Google also manages to provide a purchasing directory, thereby tying themselves into consumers supply chains.

Pessimistic scenario: Google gets surpassed by searchme.com with advertising conversions falling to negligible levels (20% of existing?). Worldwide economy falters with marketing spend fulling dramatically in key Google markets, e.g. U.S.. Internet media consolidates into a model more resembling a traditional publishing model with a few significant players - not Google. Hubris at Google results in them spending to 'invent their way out of trouble' compounding the liabilities that expensive fixed-cost platforms have become. Specialist providers have picked of effective platforms such as YouTube, which was never quite consolidated into a coherent part of the Google organisation. Google is forced to charge $25 a year for gmail, obtain revenue through ever more detailed profiles and on-sell 'anonymised' content profiles to Sharman Networks and Mark Zukerberg which coupled with rising unreliability results in mass defection and the sale of the Google brand for $1 to Murdoch.

Gmail-Picassa-Docs etc/storage options:

10GB - $US20/yr | 40GB - $US75/yr | 150Gb - $US250/yr | 400Gb - $US500/yr

Neutral scenario:

These are the revenue growth figures from the Google 2007 Annual report:

Revenue	2002	2003	2004	2005	2006	2007
Y/Y Growth rate	409.00%	234.00%	118.00%	92.00%	73.00%	56.00%

Clearly the rate of growth is decreasing. As Hamel says – rapid growth leads more quickly to constraints to growth.

I was looking in the y/y growth rate crystal ball. Our hypothesis is that the growth rate needs to be high so as justify share price (P/E 21 in this financial market), to justify expectations and offset a high rate growth rate in costs (69%, 2007). Admittedly the first line starts at a high 50%. Data came from Google investor site.

I can't imagine the 2008 annual growth being too much higher than the Q2 growth rate of 39% given global economics. Growth rates should be able to be compared quarterly, ignoring seasonal factors. Open office 'power regression' (guess that is the -1.19 bit) give me an equation f(x) = 4.56x^-1.19 and an r value of 98 as the closest fit to these numbers. Equation gives 45% growth for 2008, 38% for 2009 and 20% for 2014.

If we took the negative model and mapped linear, Google would be negative in 2007 (r = 0.77).

For costs, I could not get a good model, the 2003 figure probably should be discarded. In 2005,2006, 2007 the rate of growth actually increased to sit at approximately 70%. This is higher than the growth in revenue at 56%

Divergent:
a) Google finds the long-lost patent for the hyperlink and purchases it. It uses this patent and address translation software to become the middle-man in all accesses to internet resources.
b) Big media and authoritarian regimes limit access to freely available sources. The only access is through media company or national portals.

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Our Central Theme - Future Sighted Google

I guess it did come down to Hamel - companies are often criticised for being short-cited. Not Google - they are always looking at 'blue sky' and repeating the success with targeted search advertising with something else equally impressive.

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Could be yet another interesting diversion for us if we had another month or 2 to do the report. Anyway, test the hypothesis that 'Google is not big overseas'. Could be a cultural thing that they demonstrated they didn't get with street-view. Could be just that being big globally is hard.

O'Brien: Why we'll all soon forget about Google's Android

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Innovation and Risk Taking at Google

Shona Brown is the 'Senior Vice President, Business Operations' at Google.

She wrote Competing on the Edge: Strategy as Structured Chaos:

Brown has made a career of arguing that anarchy isn't such a bad thing--which is why Page, co-founder Sergey Brin, and CEO Eric Schmidt hired her in 2003

(Fortune Magazine)

(Adam Lashinsky. Fortune. New York: Oct 2, 2006. Vol. 154, Iss. 7; pg. 86)

This reference fills in some gaps as to how Google runs its operations. It fits in with our analysis that Google is 'Theory O' and 7s/congruence are tied to their take on the environment and
disruptive innovation:

The way to succeed in "fast-paced, ambiguous situations," she tells me, is to avoid creating too much structure, but not to add too little either.

Our basic narrative of maturity and managing financial and brand risks and how to maintain oversight/governance while still maintaining the devolved organisation structure.

Google is  reminiscent of Enron 'Smartest Guys in the Room' in organisation structure and outwardly ethos.

John


Yes - I still have my posts about 7s in drafts - will also add to report.

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Interactive/digital marketing growth rates

Post from Kate - fits into scenarios. Marketing growth supposedly trails economic growth (ref needed), so growth in digital may continue growth path (ref needed). I suspect not as quickly as in the past though:

CMOs report reduction & shift in marketing spend to digital

According to recent research by Epsilon "Chief Marketing Officers at many of the biggest brands in the nation [USA] are seeing a major shift in the marketing landscape. Almost two-thirds (63%) of the 175 marketing executives surveyed see an increase in their spending on interactive/digital marketing while 59% report a decrease in traditional marketing spend."

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Evolutionary Advantage

I was researching Google organisation structure and came across this interesting perspective on Google from leading corporate strategy theorist Gary Hamel - circa 2006 (Opinion – Wall Street Journal).

Hamel discuss Google novel management system (evolutionary advantage) which attributes to why it revenues grew (which it has) and could grow more. He compares 4 Evolutionary risk factors that typical businesses fail at against that of Google.

The 2nd last paragraph about the evolution of Google is quite a convincing summary – so much so that it made me question that maybe Google is on the right track with its strategies??? and should we be considering in our report that no changes should be made???

This article would be a good cross check on some of our ideas

http://online.wsj.com/public/article/SB114601763677436091-RZdaVtvykRAz4EhCKs0KervA0Eo_20060503.html?mod=blogs

Google Sites Supporting Google AdSense

Google Sites Supporting Google AdSense

Analysis by product makes it seem a myth. The 70-20-10 rule mentioned in the Google annual report that is. Maybe it is different by expense?

"We are still keeping to our long-standing plan of devoting 70% of our resources to search and advertising. We debate where we should classify our Apps (Gmail, Docs, etc) products but they
currently fall into the 20% of resources we devote to related businesses. We use the remaining 10% of our resources on areas that are farther afield but have huge potential, such as Andriod."

The report says 'search and advertising' but most of the search applications don't have any advertising and there is not much revenue from search. I can only see the main search engine and gmail with advertising. The rest nothing...

Android could push mobile use and lead to more visitors, visiting the main search engine site more often and consuming the advertising - the mobile version does have the advertising? The book search does not currently have advertising and as such does not fit into my view of the current e-business model at all.

I started doing the whole-product diagram. I knew of this from Moore although it is similar to the
Kotler 'Three Layer Product Model'. I ended up with 4 as I had 'enablers' which are not actual features but are important to Google. Also, maybe, I didn't study it hard enough. Most of the products on the Google product list I didn't find a spot for.

This has thrown the idea that everything fitted nicely together around advertising (the 70) into disarray. Help - how does it all fit together?

Full Size


Google Product descriptions

Product	URL	Advertising	Competitors	Description	Price	Competitive play	business case
Alerts		No				compliments search
Blog search		No
book search		No	reuters, proquest, amazon			compliments search
catalogs		Yes – but free	salmat au – lasoo.com.au	shopping catalogue site		compliments search
custom search engine		No		search proliferation
desktop		No
directory		No
earth		No
finance		No
gears		No
images		No
language tools
maps
personalised search
product search
scholar
sketchup
toolbar						Positions the search engine countering owners of applications control
web accelerator
web search
Ads
adsense
adwords
analytics
Applications
apps		Yes – gmail				Entry + education + business + partner (portals) editions
blogger		No – user option through adwords				Develop on-line communication – potentially replace office documents
calendar		No				Develop on-line practise
checkout		No	PayPal, card providers, bpay (Aus), Western Union			Payments play? Become an e-commerce player
code						Potential for advertising. Support software development . Potential access to software creators. Perhaps an 'app-store' concept will develop?
Docs & spreadsheets		No				Develop the habit of using web-applications? Demonstration?
gmail		Yes – gmail			$USD20/yr = 10Gb, $50/yr/account professional
groups		No – only google products				?? - brand?
labs						brand/innovation. Improvements to applications
news		No
notebook
orkut		No	facebook			Facebook has adverts, sells stakes in business to content sharing partners
pack						Desktop version of picassa
picasa		No
picasa web albums		No			Storage
reader
talk
translate						Value-add to search
video
webmaster tools
youtube		No – only google products				Value-add to search
Enterprise
earth for enterprise/google pro
maps for enterprise
Mini
Search appliance
sketchup pro
Mobile
Mobile
dodgeball

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Microsoft launches 'frequent clicker program'

Up the competitive ante in search - Microsoft air miles plan to attack Google - Financial Times

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Does Google Need to Reign in it's ambition

Solving everything is not strategy.

San Francisco Chronicle describes how solving global warming, mapping the moon might be 'non-core'. Google founders respond by saying that such things will not divert significant resources.

Positives for being involved in environmental initiatives are managing sustainability issues from i) huge amount of energy that Google uses in data centres ii) good PR.

"Martin Pyykkonen, an analyst with Wunderlich Securities, said he wasn't worried about Google getting distracted by its expansive portfolio. In terms of products, Pyykkonen said Google's strategy is to throw spaghetti at the wall and see what sticks."

I could not find more basis to Pyykkonen quote - time to go for sirius I guess.

Also here blogger Battelle

"2008 will be the year Wall Street gets frustrated with Google. The company has incredible numbers, and will continue to impress, but analysts, tired of bidding up the stock, will start to question the company's myriad ocean-boiling projects - after all, it's merely trying to reinvent Health, Energy, Telecom, IT (both consumer apps and OSes), and a few other major portions of the GDP"

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Google Buys mungawumba bank - maybe

Might be a bit of gratuitous fun rather than serious scenario. Mungawumba is not real. Diversification strategies brainstorm for the disruptive model?

Google (GOOG) today announced that it would purchase mungawumba bank . "We have taken a look at the banking systems, and today they are mostly I.T. systems, much like all the other applications such as gmail".

The benefits from the merger include:
- banks are really I.T. business these days. Google, coming from a software platform world, has a high level of capability in developing I.T. platforms.
- Google has cash - $15b in cash which could be used to (partially) capitalise a bank - if Buffet is to be believed a good use of Google capital.
- Google could combine a banking business with a e-commerce payments platform - think PayPal. Google already has Google checkout a competitor to PayPal.
- Google could use banking platforms to augment marketing platforms. Think credit card rewards. They *could* combine banking platforms with 'tailored advertising' - providing advertising to people who could do something with it. I think that would be a long way off, they would have to be very careful that people didn't think their financial data was getting away. Microsoft is providing rewards for people using its Live site.

Against:
- Both banking and marketing are cyclical businesses and correlated against economic performance. The current environment demonstrates the cyclical nature of the banking industry and it's relation to economic performance. Economic performance is highly correlated to marketing spend although at this stage in the growth of on-line advertising, the effect on on-line advertising and Google itself is unknown. Financial Times says higher.  PWC via Guardian says lower - up 20% not %38%.
- Google has in recent times had trouble maintaining enterprise levels of service.
- conflicts between banking privacy and selling advertising.
- Banking compliance, regulation. Knowledge of banking (other than Google Checkout)
- Risk management

I was going to take a punt on potential investments. Google is similar in size (market cap $US130b) to a large bank (JPMorgan, Chase & Co - $US157b) (Goldman Sachs market cap $US50.41b)

Financial services of a type is possible. PayPal as a competitor in this market (and maybe Yahoo)- Google seems to be a weak competitor based on market share and features. Opt-out is required for information not to be shared between Google affiliates.

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Google sells a company - performics

http://googleblog.blogspot.com/2008/04/selling-performics-search-marketing.html

They sold 'performics'  - search engine marketing service. Which I am not sure, but guessing is like any of the myriad 'SEO' - experiment with buying adwords, working out what works and tweaking the site to maximise 'natural results'.

I thought it might show strategic direction - but it does not show they built something that became irrelevant - performics came via acquisition to double click. Does not show rejection of a segment - which would be a huge strategic signal. They just think that 'guaranteed results in marketing your product via search engines' would effect the competitive tension in the click advert markets. If they helped people tweak their sites for natural results effect, it would result in lost confidence in the results, and possibly greater exposure as to how to beat the system.

So minor importance I think. Ideas?

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Google future of the internet

http://googleblog.blogspot.com/2008/09/next-internet.html

The purpose of posting this is informing ourselves as to where they see changes happening and what effects there will be on their strategy.

- on-demand/interactive features provided by the internet will spread to other media (video)
- internet as a software platform
- mobile and ubiquitous computing.

I can see that they have been backing up an expected take-up in ubiquitous computing with a strategy that includes 'people management' - empirically. David Carmichael is one of the people I know who now work at Google. They bought out a Sydney University commercialisation company.

Now the information that you would need to know for ubiquitous computing?

And Google will be there, helping to make sense of it all, helping to organize and make everything accessible and useful.

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Stallman on "Cloud Computing" aka GMail

Stallman argues that use of 'cloud computing' at least should be questioned - questioning whether 'cloud computing' is 'a marketing hype campaign'. Quotes Larry Ellison, the founder of Oracle as saying that it is "fashion-driven".

Fits in with Clarke's issue relating to privacy clauses. Stallman continues:

"One reason you should not use web applications to do your computing is that you lose control," he said. "It's just as bad as using a proprietary program. Do your own computing on your own computer with your copy of a freedom-respecting program. If you use a proprietary program or somebody else's web server, you're defenceless. You're putty in the hands of whoever developed that software."

Sorry Roger - I turned off my last mail server last week. CO2 you know - and the hum was driving me nuts.

Negative scenario - people turned off from using on-line applications. Stallman is 55 (according to the above article) - it would be interesting to know how much credibility he has with 'the facebook generation' - gen-y and after.

Positive scenario (for Google) - now I don't have a mail server, so I have a Google habit. Revenue.

Posted to Google.

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Google clipping the viewers ticket - disruptive scenario

Disruptive scenario - ie not business as usual.

Reading the notes from the interview with Clarke - and thinking why the AFR might not be accessible to crawl-bots. I would guess that it is because it is one of the few subscription sites on the web. Following on it would make sense for Fairfax to publish a site-map to Google and if people really want the article they will either pay-per-view or buy a subscription. Aside - I note that AFR took away the pay-per-view option.

Continuing, I would expect that Google is in a strong position as a content intermediary to broker pay-per-view. I am guessing that people would be more inclined to create an account with Google, on the expectation that they could use it in more places than just a single content provider.

Ouch - would like to put that thought back in its box. I'll get kicked off the web.

John

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Telstra on-line advertising revenue grows by 50%

He is some empirical evidence that on-line, in its current state of market growth is relatively recession proof. Will see how it effects our scenarios.

2nd point is that Telstra might be a competitor to Google. Has it's own content sites.

"More experienced companies are coming to see that online and mobile advertising offers much greater return on advertising investment and more accountability, which is vital in trying economic conditions,'' Mr Milne said.

"Our results so far this year indicate that online and mobile advertising is bucking the trend reported by traditional print and television sectors, which are watching their revenues shrink.''

John

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The notes from interviewing Roger

hopefully this will keep the colour difference when I cut and paste from word ...


Do you think that Google will encounter increased resistance and interference in its business strategies from the EU, the UN, USA (Justice Department) in regard to how it pushes the legal “boundaries”?- data/search privacy (Google reduces its data anonymisation from 18 to 9months)- censorship by pressure from national governments (Google at the behest of a number of western governments has filtered out Nazi sites)- censorship via business pressure from national governments (Google does very well in China because it censors “sensitive to the government” sites from hits – e.g. free Tibet)

· There are four possible areas that could lead resistance against Google (see bottom) most are ineffectual. Controls by the Regulators (one of the four) has been lukewarm at best. EU’s Article 29 has “forced” Google to reduce the length of time it keeps data to 9 months when it should have aimed for the life of a search session.Google has/is very adept at being able to impose censorship (as with the People’s Republic of China and not share any of the blame – partially on its catch-cry “do no evil” when it can be argued it does evil – simply doing nothing is tacit acceptance of evil.

With the increased concern over privacy and conflict with freedom of information do you think that Google has “painted itself into a corner” from a business perspective? i.e. is Google in danger of losing flexibility which is a key asset for any organisation.

· Not Yet. This may happen when there is a competitor in the market that really wants to challenge Google for position.

With Google applying censorship do you think that this will compromise its search engine and make it more vulnerable to a better tool (censoring will impose a time burden that the new tool will be able to exploit)?

No. The development team working on improving the search engine would be acutely aware of the potential for slowing response times and guard against that. Restructuring the hit list can be argued as evidence of this.

Is imposing a penalty to organisations like KinderStart censorship or a legitimate business response to protect its revenue source from being compromised?

· Google’s action is legitimate countermeasure against “gaming the system”.

Will Google be forced to affect its own search tool if a finding as in the KinderStart case went against Google? Thus the courts have in effect damaged Google’s ability to protect its revenue sources and to innovate and develop its products?

The courts may in the future make findings against Google but everything to date has not affected Google’s approach to its business and the methods it has used to protect same.

Undertaking a service to provide a digital index of every newspaper (from local to national) globally provide a great temptation to potentially manipulate items to the advantage of another party (a la George Orwell’s 1984)? Does this represent an attempt to “undermine” most national collections of their own newspapers?Are there controls that we should impose to ensure the security of a potential national asset?What are your views?Is this another form of censorship as initially it can be seen that western nationals newspapers would be the logical choice to digitise – thus a censoring of those who are not from a first world nation.

Can be seen as a process to undermine the Press. However the Media and Google have a very good relationship. This could be because the media see that they are losing sway via print and that Google offers an alternative that they can use to maintain presence and revenue feeding off Google’s Advertisement revenue empire. The danger with digitising all the newspapers is that people are lazy and that the amount of veracity checking will reduce – national collections can be seen to “cut their losses” and not keep their own data and become totally reliant on a third party – Google.Only three newspaper sites are “protected” from crawlerbots –
WSJ (Wall Street Journal),
AFR(?? Australian Financial Review), and the
FT (Financial Times)

-----

There are only four groups that can potentially can force Google to change its ways:
1. National (and International) Regulators;
2. The Media;
3. Individuals en masse (though this needs an event to promote universal condemnation); and
4. Public Interest Groups (of two forms).
Public Interest groups Business Aligned
PI EFF
EPIC (European) CDT
APF
Canadian
EFA
Public interest groups have been gaining traction in discussions with Google – heightened when some of their launches have missed the target.

Google have been consistently failing to understand local (national/regional) cultures. In launching Street view in Australia although warned of concerns over a number of items – such as displaying women’s refuges, people, aboriginal communities, private places – such as private roads, infants schools etc, they published without taking counsel. This created an unexpected backlash and caused a “hasty” retreat. Mechanism for requesting data be removed from the street view is hidden in the help function – not obvious. Removal is not instantaneous in some cases items remained for days. The current removal process still identifies issues as it highlights that something has been removed – Google now have to work on removing the blank space so to give the impression of continuity – not yet done.

Major weakness:
· Googleplex (the Senior Management) understands technology but not culture and to a major extent people from a social perspective (as in community structures (cities, states, nations).
· Believes that technology can solve everything and they ride roughshod over the rest. A sign of immaturity.
· Would benefit from appointing “culture gurus” to advise them on local sensitivities before launching – and thus creating bad publicity
· Upsetting the media could also become a major issue – but is currently managed very well. Currently Google has neutralised public bad perceptions though its media savvy and associations.
· Google has a very weak statement – when you can find it privacy statement with their products. The privacy statements are not consistent across their product range.
· Google has not looked at its algorithm with Business Intelligence (BI) – Microsoft and IBM are paying serious attention to this new market space – that was created by Google’s push for a simplistic search approach.

Big Brother Google
Stages:
1. Content Discovery ServicesGoogle have the largest coverage reference listhave the smartest precedence algorithm (for sorting the results)designed for the lowest common denominator and one of the reasons for its successmultiple constrained searches (images, blogs and Froogle)does provide multiple extension services (Answers and Scholar)
2. Content ServicesGoogle EarthGoogle BaseYouTube/Google VideoGoogle NewsGoogle Library/Print
3. Data about Users“We are moving to a Google that knows more about you” Google CEO 10 Feb 2005 – very Big Brotherishachieved via:-search terms, IP-addresses, click trail, click throughs, email accounts (Gmail), cookies, desktop, free wireless IAP, Ad syndication (AdSense), Orkut (the Google Facebook), consumer profiles, psych profiles from online games, Google now owns a tool for ad placement in games, face recognition (within images)

Google Mythology “Do No Evil”Protecting users’s privacy is very important to Google … No!
DIY Privacy Protection
Google’s Privacy statement

How Vulnerable is Google on Search?

Answer - seems static an invulnerable to minor advancements in other engines. Some potential for hubris.

Read Write Web

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Questions for Roger Clarke

· Do you think that Google will encounter increased resistance and interference in its business strategies from the EU, the UN, USA (Justice Department) in regard to how it pushes the legal “boundaries”?- data/search privacy (Google reduces its data anonymisation from 18 to 9months)- censorship by pressure from national governments (Google at the behest of a number of western governments has filtered out Nazi sites)- censorship via business pressure from national governments (Google does very well in China because it censors “sensitive to the government” sites from hits – e.g. free Tibet)

· With the increased concern over privacy and conflict with freedom of information do you think that Google has “painted itself into a corner” from a business perspective? i.e. is Google in danger of losing flexibility which is a key asset for any organisation.

· With Google applying censorship do you think that this will compromise its search engine and make it more vulnerable to a better tool (censoring will impose a time burden that the new tool will be able to exploit)?

· Is imposing a penalty to organisations like KinderStart censorship or a legitimate business response to protect its revenue source from being compromised?

· Will Google be forced to affect its own search tool if a finding as in the KinderStart case went against Google? Thus the courts have in effect damaged Google’s ability to protect its revenue sources and to innovate and develop its products?

· Undertaking a service to provide a digital index of every newspaper (from local to national) globally provide a great temptation to potentially manipulate items to the advantage of another party (a la George Orwell’s 1984)? Does this represent an attempt to “undermine” most national collections of their own newspapers?Are there controls that we should impose to ensure the security of a potential national asset?What are your views?Is this another form of censorship as initially it can be seen that western nationals newspapers would be the logical choice to digitise – thus a censoring of those who are not from a first world nation.

Porter's 5 forces for Google

Repost from James original in full.

Force	Impact on Google
Supplier/Power	Google is regionally not globally dominant. Competition Elimination and Substitution: Microsoft embedding their search tool into their Explorer browser. Threat of forward integration – Google search may not perform as well with new software releases from Microsoft and Apple.
Barriers to Entry (Potential for New Market Entrants)	Yahoo & Microsoft have radically improved their search engines and can on pass/deploy their search tool through their products. There is no such thing as the perfect search engine – thus a better search engine invented by another will critically affect Google – mayhap even mortally as 40% of the company revenue comes from advertising which is driven through the search engine. Online marketing and the rules governing what is good and bad practices (e.g. cloaking <reference>) are still evolving – this could affect Google’s current technology and philosophy. Switching costs are mostly related to hardware (storage of indices and speed of information return) and accuracy related (webbots/crawlers) Search tools are easily scalable. While there is currently not a great degree of ‘legislative interference’ this will most likely change <web reference to Google and Big Brother>
Competitive Rivalry (Degree of Rivalry)	<Level>. Rules/ethic have not been defined so the environment is easily exploited or manipulated. Currently there are only a few rivals (Microsoft, Yahoo) so the degree of rivalry is more oriented to an oligarchy – this could bring attention of UN or individual countries as a restriction of trade in the future. Switching costs for most of the search tools are nothing. Brand identity is important (if not paramount – Google has made the language as a noun and a verb) Rival search tools are not dissimilar to Google’s tool. Search tools are also used without overt referencing (which impinges on their discoverability) – eBay’s search tool is Google. Improving on the search engine and its features is a significant task for a large number of highly skilled IT technologists.
Treat of Substitutes (Product & Technology) Development	High. Switching costs are negligible Buyer inclination to substitute is primarily driven by speed and accuracy of the result and also by the overt pushing of ads that are included with the search results and pages. Users of the search tool are demanding more services and complexity or sophistication with the search tool to remain ‘loyal’ to its use. Ad Revenue is directly related to use - - even the loss of a small percentage of use can mean significant revenue loss to Google or the other search generating companies. Technology requires extremely skilled staff – high degree of competition for a limited pool. Loss of company/trade secrets if skilled staff more from one search generating organisation to another.
Buyer Power	Use of the search rankings is a significant leverage point by the owners of search tools in bargaining. Loss of ranking has in the past led to costly legal arguments – equivalent of e_defamation_of_character or denial of services <add references> Users of the search tool are becoming more sophisticated and demanding other services also for free. Substitutes are available – and for the same price: free No real reviews are undertaken on what features the web community would like to see so each search company employs researches to straw poll/guess directions. Two client groups – web community wanting to search/locate items and the organisations selling products – have to satisfy both client groups equally. Threat of backward integration?

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Strategic Options Breakdown

I was thinking of a way to breakdown the strategies so that we can break up the analysis job. Not really trying to be a 'master of lists'.

I think temporal is the most interesting with Google:

i) 1st order - Porter and competitive behaviours. Direct resources and constraints.
ii) 2nd order - capabilities. New product development.
iii) 3+ order - market creation.

Originally I was thinking of competitive and R&C with a bit of other stuff that does not quite fit in:

a) Competitive strategies - marketplace oriented. Porter, BCG.
b) Customer focused - resources and capability models. Based on 7s.
c) Everything else - which are in my quick review 2nd order things. Market creation, diversification across markets.

Google
a) would have things like partnering with Yahoo, tying customers in with adsense and analytics
b) work to realign a technical capability to marketing challenges
c) develop search engine use on phone, develop software distribution mechanism supported by embedded advertising. Development of software as a service.

Google outlines the future of searching

http://itnews.com.au/News/85040,google-outlines-possible-future-of-search.aspx

OK I did a flurry of using the work PC at lunch time ...

Google outs Microsoft and assimilates with Yahoo
http://itnews.com.au/News/84989,google-ceo-says-ready-to-move-ahead-on-yahoo-deal.aspx

Yahoo-Google opposition to the "merger": http://itnews.com.au/News/84826,opposition-mounts-to-googleyahoo-search-tieup.aspx

Google moving into data centres that use wave power (the green part of triple and sustainability credentials)
http://itnews.com.au/News/84782,google-applies-for-floating-data-centres-patent.aspx

Microsoft buying back shares - on the light on not getting Yahoo

We could also use this in our analysis http://itnews.com.au/News/85237,microsoft-plans-debt-issue-40b-share-buyback.aspx

I will see what I can turn up on this for Google

and on the paranoia front that we were discussing

about Google being a tempting target: http://itnews.com.au/News/85078,eff-sues-bush-cheney-et-al-for-att-spying.aspx

Android Announcment

The announcement video.

I might have found out about the live version via twitter. Hope the on-demand version is accessible from the same link. Hopefully they will edit it to 5 minutes.

- open platforms: interesting from a competition perspective. Also may make telecommunications companies competitors. Both platform and network open? Do we expect similar changes as per AOL and e-world? Announced phone is network locked and subsidised. Didn't last long with iPhone. E.g. Hutchison has lost $m (not sure of breakdown) in Australia building portals. No MS exchange application - direct feature comparison with iPhone. Intend for all this to be developed by third parties (push email aka Blackberry, sync apps).
- disruptive innovation
- why did Google invest in mobile platform? Good question for me. It is a platform at least 2 steps removed from advertising. 16% of people use mobile internet in U.S. Market making strategy.

- change is facilitated through the open platform. Contradiction to competitive barriers? Developer 'ecosystem' adapts with changing customer needs and environment.

Logical conclusion is that pure bulk of internet access is important to Google.

John

Firefox customisegoogle plugin

Bit of a risk for Google - removes the advertising from the results page.

Customise Google

Could be a reason for having Chrome rather than supporting Firefox. Counter to the 'Not invented here' idea.

John

Stakeholder circle

Yes finally our outside access works ...
http://www.mosaicprojects.com.au/Stakeholder_Circle.html

Possible future #3: Disruptive Technology Effects

Back to the 70,20,10 rule - Google is spending 10% of their resources on research type activities.

Disruptive technologies appear to be both an opportunity and a risk for Google. For example upcoming search engines may replace the Google search engine from its highly visited position. This would remove the core of its advertising network and increase Google's dependence on third party web-sites for exposure to its advertising. This is clearly a highly valued resource given the billions Google has spent acquiring sites such as youtube and partnering with sites such as MySpace.

From Google's annual report:

If we do not continue to innovate and provide products and services that are useful to users, we may not remain competitive, and our revenues and operating results could suffer.


The launch of the iPhone 3G is a recent example of how new technologies benefit Google.

Google clearly has a mobile technology road map, and is addressing mobiles directly through the creation of the Android platform. An unusual strategic approach given that it is open and they don't own a supporting hardware business.

There are a broad range of other Google explorations which to me sometimes make me ask why is Google doing this? The example of sharable applications cited in a previous post to this blog are another example.

Here is an overview of android.

Blogged with the Flock Browser

Possible future #2 Brand

One of the key risks to Google is branding.

Nielson puts it quite abruptly:

NIELSEN: By loosening up their reputation, by sort of still maintaining this feeling of, "Oh we're just two kind of grad students hanging out and having a beer and having a grand old time," not you know, "We are 16,000 people working on undermining your privacy."

Increasing size and need for revenue growth to support market expectations puts pressure on the image of benevolence and trust that Google fosters.

Google's brand was valued at $66.4b in 2007. If people are to use services such as gmail then trust is an important factor. This is trust in a lot of respects, not just privacy but also reliability.

I think this is a second important area that we need to investigate.

Yahoo video this time:

Google Fails Privacy tests @ Yahoo! Video

More reliability: Gottapi, O'Reilly 2006.

Blogged with the Flock Browser

Possible future #1 Slowing Growth

For the Tushman congruence analysis I need some strategic challenges - more on that later.

The first part of the report - description of the strategic future.

Google has continued growth  built into the expectations of its shareholders. Current P/E is almost 30, even in an environment where the average stock prices have decreased  - NADAQ from 2700 to 2100. MSFT has a P/E of 13.5. Yahoo has a P/E of 27 although its price is up significantly on due to attempted merger activity which have now morphed into partnering with Google.

   
If revenue does not increase at a significant rate, then the increasing costs of maintaining their own site network may result in a loss. They have the costs of consolidating a large number of businesses (analysis needed).

Google does list in their annual report a number of pretty big picture risks. Again more information is required on how big Google expects to get. This ties in with my possible future #2 where Google hurts it's brand.



Notes: Claburn How Google Might Fail

Blogged with the Flock Browser

Interesting very interesting

Gentlemen
look - what we were discussing: http://www.icharter.org/insight/msft_yhoo_google.html

My PC died yesterday so am at work trying to recover the work I had hoped to have ready for you ... I have done some work on the paper - but not as much as I had planned will post to the uni site so you can have a look

James

Roger Clarke a lecturer who taught some e-business classes I was in was an undergraduate, has written several papers on Google, including What's Google Really Up To?

Two points relevant to strategy are regarding competitive position and potential futures of Google.

Competitive position. Discussion of cross-leveraging of business units. Competitive advantage through leverage of legal (copyright) and proprietary knowledge of consumers. Forces include changing consumer expectations towards information availability and attitudes to information gathering.

Future of Google. Will commercial challenges damage the value that people derive from Google. Will this be a destructive conflict?

Analysis

Gentlemen
I have done some more analysis and posted it to google docs. Greg you should see what it does to the 3 phase diagram lol
I am working on the structure of the report as well and will post that as soon as I can. ... work's been demanding
James

BCG on Google Services

I have carried out a BCG assessment on Google's top 20 products (predominately based on some Market Share analysis) below;

If anyone can contribute with regard to more information on each of the product's market growth rate that would be great.

Search dominance is not lasting - possible reason #2

For the first time I am convinced that there might be a better search engine. Or at least different search engines for different purposes.

I was musing about how sometimes I will only know what I am looking for when I see it. Well - try this out.

Searchme.com

Cuil is well - cool - but in my opinion, not as cool as searchme.

Cheers
John

Possible reason #1 that Google does software at all

A basic congruence analysis would indicate that out of Google's 19,000 employees more than 1% of them are technical people - probably not supporting the core marketing business.

Here Google CEO Eric Schmidt talks about how he expects software to become viral. What he means is that people will change the way they consume software. Software will come in small packages and you will discover it 'socially' or by referral. Does this tie software and Google's position as an internet marketing company together?

What is Google?

What is Google?

Is it a venture capital firm for tech startups? I don't think so. See this interview by Scobleizer. Microsoft is suffering from disruption because they have a 'business' model for developing applications and Google just does it. Why?

Why does Google even play in the same application space as Microsoft? Most of Google's revenue comes comes from advertising - 99%.

Google have a 62% U.S. market share in internet search advertising. 80% in Australia. This is a market that has been growing at 50-60% per annum and is forecast to continue growing at 30-40% per annum.

Why did they create Google docs when Microsoft has the dominant office environment? Our market analysis would indicate this was a bad idea. Perhaps as an internet applications company it makes more sense for them to create their own browser - but Microsoft Internet Explorer still has 72% of worldwide market share . Shouldn't they be trying other strategies like partnering?

Haven't they just forced a competitive challenge from Microsoft? Microsoft then has to be seen to tackling Google's dominant position - they have 8.5% of the U.S. search advertising market. Double looser.

Google 2007 Annual Report

Online version - http://investor.google.com/documents/2007_Google_AnnualReport.html

PDF Version - http://investor.google.com/pdf/2007_Google_AnnualReport.pdf

A start of Porter's five forces

Gentlemen
after a frustrating day at work I have managed to get away from the work mess and enter my scratchings for a Porter review.
I have published on our uni site: http://wt3.mbt.unsw.edu.au/wt3_2008s2/wt_system/SeminarRoomPT.cfm?class=31&SR_TID=882

Bee on
J

Google SWOT

Full SWOT analysis posted to our webteach site (i.e. now includes Opportunities and Threats)

http://wt2-3.mbt.unsw.edu.au/wt3_2008s2/wt_system/file_send.cfm?filetosend=8801B537E8ABBF905088DE686246495474002527&filetosendalias=GoogleB%5FGA110908A%2Edoc

Google unveils "white space" airwaves plans

In my reserach on S&W came accross another Google "disruptive innovation" which has huge potential

http://www.reuters.com/article/technologyNews/idUSWAT00918220080324

Google Strengths and Weaknesses

Have published a word doc to webteach outlining key strategically significant strenghs and weaknesses of Google.

http://wt2-3.mbt.unsw.edu.au/wt3_2008s2/wt_system/file_send.cfm?filetosend=92A85F78E277F189EE8A407D7DAFC59810577858&filetosendalias=GoogleB%5FGA100908A%2Edoc

In summary key strategic items are....

Strengths

• Strong Market Position
• Proprietary technology and technological
  infrastructure
• AdWords and AdSense programs

Weaknesses

• Reliance on Google Network members
• Weak presence in social networking domain
• Lack of product integration

More detail of the above can be found at the above link

Google & the Big Brother effect

Gentlemen
another angle: http://www.abc.net.au/news/stories/2008/09/09/2360246.htm

Overview and History of Google Inc.

Gentlemen
I will publish this as a word doc on our uni site and I will email it to you directly as well:

• 
  Google began in 1996 as a collaboration of two Stanford doctoral students: Sergey Brin and Larry Page on a search engine known as ‘BackRub’. That engine, uniquely, analysed back links (the information that points to a website).
  
• The space demands of the search engine outgrew the student’s ability to satisfy the need. Sergey Brin began looking for business partners who, by licensing the use of the search tool would allow the students to afford the equipment they needed.- demonstrated the engine to Andy Bechtolsheim (Sun Systems) who provided them with the seed capital for their company.
  
• By 1999 Google was answering >500,000 calls daily and had begun signing up major organisations that needed a webpresence and searching tool (Netscape, AOL).
  
• From 2000 Google began diversifying from being strictly a web page search tool. Functionality it has created or bought and badge reengineered include:
  AdWords: a keyword targeted advertising program
  Google Toolbar: an add in for a persons web browser using google;
  Google Zeitgeist[1] – now Google HotTrends: identifies most popular trends
  Image Search: search tool for images based on meta data
  Googlebot: an automated software tool that continually crawls the web updating
  pages links etc
  GoogleCompute: similar to SETI allows people to donate unused computer cycles to
  unis that need computational power
  Froogle: online food shopping
  Google Labs: have the general public beta test potential products
  GoogleNews: latest news from 1>400 newspapers & media outlets
  Blogger: web logs
  GoogleCalendar: online calendar that people can share
  GoogleAdSense: places highly targeted ads next to search content
  Gmail: an email address for people
  GoogleSMS have information from searches sent directly to mobile devices
  GoogleEarth images of the planet from satellites
  GoogleSitemaps prioritise the pages crawled on a site
  GoogleTalk early form of Skype
  GoogleBlogSearch search tool for trawling blogs
  GoogleBase a structured tool for uploading information
  GoogleAnalytics a tool that analyses the effectiveness of pages and content
  GooglePrint a public domain book search tool can now download PDF copies of the
  book
  GoogleChat integration of email and texting from mobile devices
  GoogleCheckout secure, fast convenient shopping service
  GoogleGroups the updated version of Usenet
  Knol: the Google version of Wikipedia
  Google.org Google’s philanthropic company
  
• To date Google “own” 88% of the search market in Australia alone and have > 100 domains!
  
• Google have acquired companies that have them provided them with service that are offered free to the online community – such as PryaLabs for blogs, and Keyhole Corporation for digital and satellite images (GoogleEarth, GoogleMaps), YouTube.
  
• Like NEC Google has been very selective and yet audacious in its partnership arrangements. For example it has partnerships with eBay (advertising), with Fox Integrated Media (thus linking to MySpace), most of the mobile phone companies (Motorola, Vodaphone, Telefonica KDDI).
  
• Google has strategic alliances with Intuit, Dell Computers, Sky Broadcasting
  
• Google has recently acquired Adscape – an innovative in-game advertiser, Trendanalyser – whose software generates dynamic graphics and special effects, and Zenter – presentation tools.
  
• Google have begun looking at the use of IT in the Healthcare industry and have recently released a beta version of their own browser “Chrome”.
  
  
• Google conforms to the Seven People Management Practices developed by Pfeffer and Veiga. These being:-
  1. Employment Security;
  2. Selective Hiring;
  3. Self Managed Teams and Decentralised as basic elements of Organisation Design (e.g. AdSense is operated and developed in Hyderabad in India)
  4. Comparatively high compensation contingent on organisational performance;
  5. Extensive training;
  6. Reduction of status differences
  7. Share information
  
  
• Google has created and developed new markets for its advertisement income stream– such as paying bloggers to place ads on their pages and increasing the revenue it obtains in the process
  
  
  [1] Zeitgeist (German) = Spirit of the times