2. Agenda - History and Background - Key Success Factors
- The Future of the Search Business
- Competitors
- Google’s Next Move
- SWOT Analysis
- Board of Directors
- Corporate Governance, Culture & Processes
- Current Situation
- Major Competitive Moves
- Current Financial Ratios
- Q&A

3. Background - March 1995 Meeting of Sergey Brin & Larry Page
- BackRub
- PageRank algorithm 1998
– 10,000 queries a day
– 60,000,000 queries a day

4. Background (cont.) - 37% of all U.S. searches in Q3 2005
- 68% of all search traffic outside U.S. as of Q3 2005
- Google's mission is to organize the world's information and make it universally accessible and useful.

5. Key Success Factors
- PageRank-the better algorithm vs. directory based searches
- Reliable delivery of more relevant searches
- Google adopts Overture’s cost-per-click
- 55% of Internet search volume for Google’s paid-listing advertisers
- Constant innovation – Google launches contextual paid-listing

6. The Search Business - Google Most relevant searches 67% market share
- Yahoo!
Acquired Inktomi & Overture in 2003
20% market share
- Microsoft
Replaced Inktomi in 2005 with in-house search engine
7% market share

7. Google’s competitors - Yahoo - MSN - Others

8. Yahoo!
- Yahoo is the leading internet portal with revenue of 5.3billion & 345 million monthly visitors.
- Yahoo’s competitive advantage over Google is being a full-fledged portal which has the third party content and related transactional services and the channel to different sections such as:
- Autos - Finance - Game - Health
- Kids - Movies - Hot Jobs - Personals
If Google wants to diversify the business Full fledged portal would be one of the options

9. Microsoft’s MSN - Microsoft is the dominant player in OS
- They are trying to compete with Google in the Search Business
- Google is trying to compete with MS through open office

10. eBay - eBay has 15 million current U.S. listing as of 2005
-The number of listing fell because:
Google offered Base which got 10 million listing in just 6 month
Through Base, customers who used to go to eBay to find a qualified seller, could find the vendor through Google
Previous full-frontal assaults on eBay was expensive
failures and negative experience for the users
Higher transaction costs on eBay compared to Google paid listings for small businesses
- eBay could keep its market share because of the online payment service (Pay Pal)
- Google tried to come up with Google’s Electronic Wallet

11. Next Move? - Building a full-fledged portal like Yahoo!’s
- Targeting Microsoft’s desktop software hegemony
- Becoming an e-commerce intermediary like eBay
If Google wants to diversify the business Full fledged portal would be one of the options

12. SWOT STRENGHTS WEAKNESSES OPPORTUNITIES THREATS
Experience in Developing & Improving the Best Search Engine
High Quality Services & Products
Knowledgeable and Motivated Workforce
Creativity & Innovation
Rapid Product Delivery to the Market
Decision Making Concentrated in Management Trio
Narrow Spectrum of Products
OPPORTUNITIES
THREATS
Diversify Products & Services
Expand into New Search Areas
Internet Portal
Financial Intermediary
Software development
New Entrants
New Technology & Algorithms

13. AOL: Google or MS
In renewing its deal with AOL, could Google afford to pay more than 100% of the revenue generated from AOL searches? How did Microsoft maximum affordable bid for AOL’s search traffic compared to Google’s?
- Google: 5% stake in AOL, 85-90% Revenue split, 300m ad Credit
Google blocks the move by Microsoft (Strategic move)
AOL provides communications channel to Google
AOL had 17.7 million subscribers nationwide in 2005.
MS lower search volume than Google, cannot necessarily pay the same share of ad revenue

14. Board of Directors Dr. Eric Schmidt Chairman of the Board and CEO
(10% voting control )
Larry Page Co-Founder & President, Products
(30% voting control )
Sergey Brin Co-Founder & President, Technology

15. Corporate Governance, Culture & Processes
- Anything but shareholder friendly
- Two-tiered stock system
- Shares held by insiders are 83 percent of the voting power &
Board of directors largely packed with insiders
- Viewed by Wall Street as risky corporate governance in long run
- Groupthink
- Compressed business lifecycle vs. “innovative” managers

16. Corporate Governance, Culture & Processes
- Technology and strategy at Google are inseparable
- Google is in a fast changing & unpredictable environment; must limit its strategic planning to a few principles & guidelines; the rest must emerge as circumstances unfold
- Innovation as a source of competitive advantage
- Organizational climate encouraging innovation
- Clear sense of direction (Vision and Mission)

17. Current situation - Google's core business:
- Engine services and advertising
- Web portal services
Webmail (Gmail)
Blogging (Blogger)
Photo sharing (Picasa)
- Image library (Google Images)
- General news stories (Google News)
- Financial news (Google Finance)
- Interactive maps (Google Maps)
- Comparison shopping services (Google Product Search)
Google interface is available in some 115 languages

18. Major Competitive Moves
- Purchase of YouTube for more than $1.6 billion (Google Video) (2006)
- Purchase of dMarc Broadcasting (audio ads) (2006)
- Acquired security company Postini for $625 million (2007)
- Bought mobile social network firm Zingku (2007)
- Bought Adscape Media (placing advertising within videogames) (2007)
- Bought Jaiku (mobile and Web-based instant messaging) (2007)
- Acquired digital ad firm Doubleclick for $3.2 billion (2008)

19. Current Financials & Ratios
Dec 07
Dec 06
Dec 05
Revenue
16,594.0 m
10,604.9 m
6,138.6 m
Gross Profit Margin
59.9%
60.2%
58.0%
Net Profit Margin
25.3%
29.0%
23.9%
Return on Investment
22.41
20.83
21.42
2007 Sales 2007 US
52 % UK
15 %
Other
33 %
Advertising 2007
$ mil.
% of total
Google sites
10,625 64
Google networks
5,788 35
Licensing & other
181 1
Total
16,594
100

20. Any Questions??