Google Inc.
Company Profile
Publication Date: 9 Jul 2010
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Google Inc.
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Google Inc.
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Google Inc.
TABLE OF CONTENTS
TABLE OF CONTENTS
Company Overview..............................................................................................4
Key Facts...............................................................................................................4
SWOT Analysis.....................................................................................................5
Google Inc.
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Google Inc.
Company Overview
COMPANY OVERVIEW
Google is one of the leading internet technology and advertising companies in the world.The company
specializes in internet search engines and related advertising services. It maintains a large index of
web sites and other online content, which are freely available through its search engine. The company
generates revenue primarily by delivering relevant, online advertising.The company primarily operates
in the US. It is headquartered in Mountain View, California and employs 19,835 people.
The company recorded revenues of $23,650.6 million during the financial year ended December
2009 (FY2009), an increase of 8.5% over FY2008. The operating profit of the company was $8,312.2
million in FY2009, an increase of 25.3% over FY2008. Its net profit was $6,520.4 million in FY2009,
an increase of 54.3% over FY2008.
KEY FACTS
Head Office
Google Inc.
1600 Amphitheatre Parkway
Mountain View
California 94043
USA
Phone
1 650 253 0000
Fax
1 650 253 0001
Web Address
http://www.google.com
Revenue / turnover 23,650.6
(USD Mn)
Financial Year End
December
Employees
19,835
NASDAQ Ticker
GOOG
Google Inc.
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Google Inc.
SWOT Analysis
SWOT ANALYSIS
Google is one of the leading internet technology and advertising companies in the world.The company
specializes in internet search engines and related advertising services. It maintains a large index of
web sites and other online content, which are freely available through its search engine. The company
generates revenue primarily by delivering relevant, online advertising. Google is one of the premier
internet brands in the world and also holds strong market position in global search market. Its
significant brand image coupled with strong market position provides a competitive advantage to
the company over its peers. However, intense competition from online services may affect its revenue
growth and market position in the coming years.
Strengths
Weaknesses
Significant brand image
Strong infrastructure base
Robust financials
Lack of product integration
Opportunities
Threats
New products and services
Strategic acquisitions
Growing mobile advertising market
Positive outlook for Android smart phones
Intense competition
Exchange rate fluctuations
Hacking and related security issues
Strengths
Significant brand image
Google is one of the premier internet brands in the world. The company is ranked among the top
brands worldwide. Google was ranked for the fourth consecutive time as the world's most valuable
global brands for 2010, overtaking Microsoft and some other well-established brands like General
Electric, Coca-Cola, Wal-Mart Stores and IBM. Google's brand was valued at $100 billion, making
it the world's first $114,260 million brand. Additionally, Interbrand, a brand consultancy, also ranked
Google in seventh position in 2009 up from the 10th position in 2008, in their Top 100 Global Brands
ranking. Interbrand valued Google brand at $31,980 in 2009, an increase of 255 over previous year.
In addition, the company holds strong market position. According to comScore, Google had 66.8%
of the global search market, followed by Yahoo and Chinese search engine Baidu. Further, the
company's YouTube online video services is a leading online media platform. It also has robust
market share in social networking segment with orkut, and webmail through Gmail.
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Google Inc.
SWOT Analysis
Significant brand image coupled with strong market position provides a competitive advantage to
the company over its peers.
Strong infrastructure base
The company has a strong infrastructure base comprising online, software and hardware resources.
The company's infrastructure includes a strong portfolio of own websites which generate advertising
revenues contributing to a significant portion of its total revenues. Advertising revenues from Google
websites accounted for 67% of its total revenues in FY2009, compared to 66% and 64%, respectively
in 2008 and 2007. This represents a revenue contribution of $15,722.5 million, $14,413.8 million,
and $10,624.7 million, respectively, in FY2009, FY2008 and FY2007. Moreover, Google web sites
accounted for 69%, 68% and 65% of the company's advertising revenues in FY2009, FY2008 and
FY2007, respectively.
Google's products and services are backed by homegrown software and hardware infrastructure,
which provides substantial computing resources at low cost. It uses a combination of off-the-shelf
and custom software running on clusters of commodity computers.The company made considerable
investment in developing this infrastructure, which simplifies the storage and processing of large
amounts of data, eases the deployment and operation of large-scale global products and services,
and automates much of the administration of large-scale clusters of computers. Although most of
Google's infrastructure is not directly visible to users, it is the base for providing innovative products
and services. At the end of FY2009, Google had IT assets base of $3,868.3 million in FY2009,
compared to $3,573.5 million in FY2008.
The company's strong infrastructure base allows it to introduce innovative products and services to
gain competitive advantage.
Robust financials
The company reported robust financials in recent years. Its revenues have increased from $16,594
million in FY2007 to $23,650.6 million in FY2009, representing a compound annual growth rate
(CAGR) of 19% for the period 2007–09. Google’s profitability has also increased in recent years.
The company’s operating profit increased at a CAGR of 28% for the period 2007–09 from $5,084.4
million in FY2007 to $8,312.2 million in FY2009. Similarly, the net profit also increased at a CAGR
(2007–09) of 25% from $4,203.7 million in FY2007 to $6,520.4 million in FY2009. As a result, the
company’s operating net profit margins have increased from 30.6% and 25.3%, respectively, in
FY2007 to 35.1% and 27.6%, respectively, in FY2009.
In addition, the company’s strong operating performance translated into healthy balance sheet with
strong cash and cash equivalents and strong equity position. At the end of FY2009, its cash and
cash equivalents stood at $10,197.6 million, compared to $6,081.6 million in FY2007. Its stockholders’
equity increased from $22,689.7 million in FY2007 to $36,004.2 million in FY2009.
Robust financials enhance the investors’ confidence as well as allows the company to invest in
potential growth avenues like new products.
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Google Inc.
SWOT Analysis
Weaknesses
Lack of product integration
Google's products lack integration with its other products. The company has focused more on
launching new products in recent years and less on integrating products into a whole for delivering
a holistic experience to the user. As a result, Google now has a large number of new products, some
of them innovative, but which seemingly having little in common with each other. Product integration
allows internet companies to steer visitors from one service to another and retain them on their site
for a longer time. Product integration also enables internet companies to gain acceptance for new
products quickly.
Furthermore, there have been numerous instances where users have been unaware of its new
products because they are embedded so deeply within Google's sites. The fact that some users
have had to use the Google search engine to find new products highlights the lack of integration
between its new products. In contrast, Yahoo has built better linkages between its various products
by allowing users to choose from most of its product available on the homepage. Lack of product
integration puts Google at a competitive disadvantage against more integrated rivals such as Yahoo.
Opportunities
New products and services
The company has launched many new products and services in recent times. In May 2010, it
introduced Android 2.2. Codenamed Froyo, an update to the first open and comprehensive platform
for mobile devices. In the same month, the company launched Google TV, an open platform that
integrates multichannel television with web media content.
Google released its upgraded ad serving platform for publishers, DoubleClick for Publishers (DFP),
in February 2010. Also, in the same month, the company released a new website and tools for sport
fans around the world. The tools include a new website, available in 40 languages and combining
up-to-date information and visuals from Street View imagery of the competition venues to medal
counts and news. In January 2010, Google launched a new web store, which enables the customers
in purchasing Android mobile phones and began offering first phone through this model, Nexus One.
The company released the newest version of Google Web Toolkit with features, including performance
profiling with speed tracer, incremental downloading with code splitting, and declarative UI with
UiBinder, in December 2009.
New products and services coupled with timely up gradation of existing services will enable the
company to increase its customer base.
Strategic acquisitions
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Google Inc.
SWOT Analysis
The company has made certain strategic acquisitions in recent periods. In May 2010, the company
completed the acquisition of AdMob, a mobile display ad technology provider. The acquisition will
strengthen Google's existing expertise and technology in mobile advertising. The company also
completed its acquisition of On2 Technologies, a developer of video compression technology, for
approximately $124.6 million in February 2010. The acquisition further strengthens the company’s
ability to offer enhanced video experience for users on the web.
In addition, in May 2010, Google and Global IP Solutions (GIPS) Holding signed a transaction
agreement under which Google Acquisition Holdings, a wholly owned subsidiary of Google, will
make a recommended voluntary public cash offer to acquire all the issued and to be issued shares
of GIPS for approximately $68.2 million. GIPS provides voice and video processing technology for
IP networks.
Such strategic acquisitions will expand and strengthen the company’s portfolio thereby enabling it
to better serve its customers.
Growing mobile advertising market
The mobile advertising market is forecast to record strong growth in coming years. The growth of
mobile advertising is being driven by increasing mobile penetration rates and development in
technological capabilities of mobile devices to support higher bandwidths. For instance, according
to the industry sources, mobile advertising in North America is predicted to quadruple from $415
million in 2009 to $1.5 billion in 2014.
Google offers mobile advertising through a portfolio of mobile solutions. Google Mobile provides
mobile-specific features, including voice input and location-based technology, to mobile phone users.
The company’s mobile-specific search technologies include: search by voice, search by sight, and
search by location. The company also offers mobile ads, including smartphone targeting, which
enables advertisers to target their advertising campaigns at mobile phones like Android devices and
the iPhone; and AdSense for Mobile Apps, which enable mobile developers and publishers to
integrate targeted advertising directly into their Android or iPhone applications.
Growing mobile advertising market will contribute to the company's top line growth in coming years.
Positive outlook for Android smart phones
Google’s Android-powered smartphones are expected to record positive growth in the coming years.
According to the industry sources, the Google Android mobile operating system is expected to run
on approximately 14% of the global smartphone market in 2012, compared to less than 2% percent
of the world’s smartphones in 2009. By 2012, the Google Android mobile operating platform is
forecast to be ahead of Apple’s iPhone, Windows Mobile and RIM’s BlackBerry platforms.
In January 2010, Google launched a new web store, which enables the customers in purchasing
Android mobile phones and began offering first phone through this model, Nexus One, which combines
the latest in hardware from HTC with the newest Android software. As of FY2009, the company’s
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Google Inc.
SWOT Analysis
Open Handset Alliance has over 65 partners and the open-source Android system with over 20,000
applications has over 60 carriers in 49 countries and 19 languages. In addition, according to the
company, Google’s partners are shipping about 65,000 Android handsets per day. Further, according
to the industry sources, in the first quarter of 2010, Android-powered smartphones accounted for
28% of US consumer sales compared with 21% for the iPhone.
Growth of Android smart phones will enhance the company’s revenues in the coming years.
Threats
Intense competition
Google operates in a highly competitive business environment. The company faces competition
from companies that seek to connect people with information on the web and provide them with
relevant advertising. It competes with traditional search engines, such as Yahoo! and Microsoft’s
Bing. Google also competes with vertical search engines and e-commerce sites, including WebMD
(for health queries), Kayak (travel queries), Monster.com (job queries), and Amazon.com and eBay
(commerce).The company also faces increasing competition from social networks, such as Facebook,
Yelp, and Twitter. It competes against traditional forms of advertising, including television, radio,
newspapers, magazines, billboards, and yellow pages, for ad dollars.
In addition, Google faces competition from companies offering mobile applications and providers of
online products and services. The company also provides a number of online products and services,
including Gmail, YouTube, and Google Docs, which compete directly with new and established
companies that offer communication, information, and entertainment services integrated into their
products or media properties.
Intense competition from online services may affect its revenue growth and market position in the
coming years.
Exchange rate fluctuations
The company is exposed to foreign exchange risk as it derives a major portion of its revenues from
international operations. Its international revenues accounted for 52.7% of the total revenues in
FY2009, compared to 51.2% and 47.6% in FY2008 and FY2007, respectively. The proportion of
revenues derived from international markets increases the company's exposure to fluctuations in
foreign currency to the US dollar exchange rates. For example, in FY2009, the general strengthening
of the US dollar relative to foreign currencies (primarily the Euro and the British pound) had an
unfavorable impact on the company’s revenues.
The company’s attempts to reduce the effect of exchange rate fluctuations through a variety of
hedging activities may not be sufficient or successful, resulting in an adverse impact on its results
in the coming years.
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Google Inc.
SWOT Analysis
Hacking and related security issues
Google is subject to hacking and related security issues. The company’s products and services
involve the storage and transmission of users’ and customers’ proprietary information, and security
breaches will expose it to a risk of loss of this information, litigation, and potential liability. Its security
measures may be breached due to the actions of outside parties, employee error, malfeasance, or
otherwise, and as a result, any unauthorized party may obtain access to Google’s data or its users’
or customers’ data. Additionally, outside parties may attempt to fraudulently induce employees,
users, or customers to disclose sensitive information in order to gain access to the company’s data
or its users’ or customers’ data.
In case of any breach or unauthorized access, it will result in significant legal and financial exposure
and damage to Google’s reputation. The company has reported that its computers were attacked
by hackers based in China in January 2010. Further, if the company’s security measures were
breached by hacking and other ways, the customers may lose confidence in its products and services
thereby adversely affecting its business operations.
Google Inc.
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