Google Inc. Case

Case 6: Google Inc.

1. The competition in the search industry consists of two main rivals including Yahoo and Microsoft. According to Exhibit 10, U.S. Search Engine Market Share Rankings, Google is high above its competitors in market share standings. In the most recent year given; 2010, Goggle held 63.7% of searches while Yahoo and Microsoft only held 18.3% and 12.1% respectively. According to the case "in 2010 Google was the world's most visited Internet site, with nearly 147 million unique Internet users going to Google each moth to search for information." Although Google was on top of the competition in 2010, its two large competitors have the ability and are trying to catch up within the search industry. The strongest of the competitive forces seems to be the bargaining power of the buyer. In this market the cost of switching to a competing product in non-existent and for the most part what the competitors offer is pretty standardized. In comparison to the "sellers" the number of consumers is astronomical. Buyers can easily decide which service to use and switch with great ease at their discretion. The weakest competitive force seems to be potential of new entrants. With three powerhouse search engine companies, it doesn't make sense for other smaller companies to try to push in and compete. Building a network and securing a significant place in the internet market would be difficult for new entrants because of the status that Google, Yahoo, and Microsoft have already established and there is a very strong network effect in customer demand. Buyers are more attracted to products when there are many users of the product, this including the already existing popular search engines. Exhibit 10 also shows small search engine companies in the industry; their percentage of searches is very small compared to the big three, Ask.com held 3.3% and AOL held 2.3% in 2010 in comparison to the next closest which was Microsoft at 12.1%. As of 2010 Google was dominating the market and market attractiveness was extremely low. Companies trying to enter would have little to no chance of catching up with already established Yahoo brands and applications being offered.

2. As of 2010 there were two factors that would define the success of the search engine industry, these being cloud computing and semantic search processes. Cloud computing is not only becoming popular in the corporate world but also for personal use. Being able to access documents from anywhere at any time is what consumers are looking for. The company that can give consumers the best accessibility is the company that is going to come out on top. As far as semantic search processes, they will also better benefit the consumer by giving them more accurate search results at a much faster rate. The forces that are most likely going to bring about change in the next three to five years will be speed, accuracy, and accessibility and that is what these competing companies need to focus on.

3. The key factors that define the success in the industry are revenue production and relevancy. Revenue production is a task that Google has mastered all while keeping their services relevant to consumer wants and needs. The search engine part is not what is making these companies money it is the advertising and acquisitions that are creating the funds. For example Google acquired YouTube in 2006 which allowed it to receive advertising revenues for ads shown during internet videos, it acquired DoubleClick in 2008 which allowed them to generate revenues through banner ads,