GOING AFTER THE NEXT BIG THING
Google has still too much to worry about. With growth CAGR of +100% it needs to keep improving every day and penetrating additional markets every second.
To obtain such an audacious goal, Google has several strategy, two of the main strategies are: (a) Penetrating China, and (b) Expanding its service to the
Developing Economies Strategy -
For Google the developing markets are very different from what they are used to in the
For example in
Chinese government have put in place since the inception of the industry era in
The government provided a blacklist of banned IP addresses and URLs featuring information and news about politically or culturally sensitive topics and required operators to block access to them. Users who attempted to access blocked sites would receive a non-specific error message, such as “the page cannot be displayed.” [i]
Google services has been affected by this firewall that impede its systems to run smoothly. On the contrary it services seems erratic and poorly managed, given space for local competitors.
Google’s own research showed that the company was perceived in China as an international brand and technology leader, but “a little distant to average Chinese users.” More than half of Internet users who knew about Google could not spell the name correctly, and more than half thought the company should have a Chinese name. By contrast, Baidu was perceived as being a Chinese brand with good technology, “friendly,” “closer to average Chinese people’s life,” and as having entertainment products. [ii]
Given that Google do not work closely with the Chinese government on terms of internet censorship, Badu –Google’s top competitor and local player in
Baidu works with the government more closely than other search companies. Baidu launched a more aggressive system to censor their key words. They started to censor their search service earlier and more extensively than others. That’s why the government likes Baidu.xi
In this case Google has two possibilities. (a) Follow Baidu game book and work with the Chinese government to censor its services from the beginning, and (b) Improve its search services inside
An analogy to the problem that Google faces in the developing economies where the paid online advertising market is still immature is what happened in the mobile phone industries more than a decade ago. When penetrating new markets mobile phone service providers changed the way they provide services. In the
An step towards changing the name of the game was the partnership that Google signed with
The Western Union Co. announced a program that allows Google AdSense(TM) Website publishers to receive payment in cash in nine countries via the Western Union Quick Cash®service. The Google AdSense advertising program enables Website publishers to serve Google AdWords(TM) text, image and video ads that are precisely targeted to their Website's content. When visitors to the site click on the ad, the AdSense publisher earns revenue. Before the launch of this program, Website publishers using Google's AdSense program received payment through paper check or electronic funds transfer (EFT) into a bank account.
Developed Economies -
Google strategy in developed countries should focus on expanding its technology to new channels. One particular channel that I believe would be the future is the mobile space. I’m not talking only about cell phones but anything that would be describe as mobile (i.e. PDAs, portable game consoles, smartphones, etc).
Few analysts believe that the mobile focus would bring big advertising dollar for Google. The street believes that the big ad dollar would come from Google’s penetration to traditional media (TV, Printed and Radio). On the contrary I believe that the advertising market would continue to shift away from traditional media towards new media.
Forrester’s 2005 Benchmark Study, although consumers spend 32% of their time on the Internet, advertisers currently only spend 7% of all ad dollars on online advertising. Google believe that over time, this gap should shrink, with more dollars continuing to move online where consumers are. The parallel increase in the number of Internet users with broadband connections will also help stimulate growth and demand for online advertising. Much of the growth in the coming years is expected to come from the emerging markets regions as the online advertising market is relatively more mature in the
Google has recently focus on acquiring or developing a mobile platform that allows them to capture this new nascent market. In recent weeks, Google announced the world that it is going to release its own mobile platform in 2008 and it is already seeking partnership with wireless operators. The Google mobile platform (Android) would make Google applications and services as easily accessible on mobile phones as PCs, allowing Google to capture more ad business from the more than three billion users of cell phones and other wireless devices. On top of that other companies (e.g. Artificial Life Inc) have announced plans to develop games and applications for Android.
Interesting enough this new platform would be less costly than others (i.e. iPhone), attracting new opportunities for low cost providers and new solutions for developing countries. Google anticipates that this emerging platform will soon attract handset manufacturers because of the lower costs for the operating system and expects Android to be successful especially in
Google is also exploring other alternatives to improve its mobile platform:
v Google has also developed plans to acquire mobile phone spectrums in both the
v Acquired (Oct 2007) Jaiku that operates as a conversational microblogging community that enables users to post thoughts from Web and mobile applications, and comment on the posts of friends and family.
v Acquired (Sep 2007) Zingku that provides mobile text and picture messaging services.
v Acquired (July 2007) GrandCentral Communications that provides a Web-based voice communications platform to manage phones and phone numbers.
v Developing (Nov 2007) a technology that will find the location of people using its mobile mapping service, even if the phone making the connection isn't equipped with a GPS receiver.
Google needs to constantly innovate and growth to be able to manage its investors expectations. The new goal in the future would be its expansion to the mobile and traditional media platforms, and its path to penetrate new markets (
It seems that Google is accomplishing in each step of the way the relevant milestone to fulfill this audacious goal of organizing the information of the world. Only time will tell.
 Capital IQ News Run
 Google Inc. HBS Case 9-806-105 by Thomas R. Eisenmann and Kerry Herman (Nov 9, 2006)