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December 21, 2009

Name: Google

Google’s advertising networks are what allow many online media creators to make some money from their content. Its ownership of YouTube gives the company a huge presence in online video, and its Android operating system may represent the only serious competition to the iPhone’s play for dominance in the smart-phone market.

Stock Symbol: GOOG
Mountain View, CA
(650) 253 0000
Year Founded:
Number of Employees:

Executive Leadership:

CEO: Eric Schmidt

Bio: Bachelors in electrical engineering from Princeton University, a masters and Ph.D. from the University of California Berkeley. Prior to Google, Schmidt was the Chairman and CEO of Novell, a network technology company, and CTO of Sun Microsystems.

CTO: Sergey Brin

Bio: Bachelors in mathematics and computer science from the University of Maryland at College Park. Masters degree in computer science from Stanford University. Founded Google with Larry Page out of work done at Stanford.

Board Members and Advisors:

Sergey Brin

John Doerr, Kleiner Perkins Caufield & Byers

John Hennessy, Stanford University

Ann Mather

Paul Otellini, Intel

Larry Page

Eric Schmidt

Ram Shriram, Sherpalo

Shirley M. Tilghman, Princeton University


Total R&D Spending: $2.8 billion

R&D as a percentage of revenues: 12.8 percent

Percentage of employees engaged in R&D: 35.9 percent


Google’s core technology is based on the PageRank system, a technology for ranking the relevance of web pages to search queries, initially developed in 1998 at Stanford University. Since then, Google has gotten hundreds of patents for their various products with no signs of slowing down. Of course, their next big innovation was in the area of online advertising, creating the first system that can track user behavior and customize advertising content to each consumer based on their preferences. Most recently, Google has focused attention on open source technologies, in their Google “Code” playground. Out of this has come the Google Android product, an open source platform for mobile devices used to create the new Motorola Droid (the first significant challenger to the iPhone’s increasing dominance of the smartphone market) , and Google Wave, an invite-only communication and collaboration platform with open APIs. Finally, Google Chrome, the open source lightweight operating system is currently being developed, which could move computation from personal computers to cloud computing systems.


The search engine giant is constantly creating new products, spending a remarkable 12.8% of revenues on research and development. More products means more markets in which to compete, and more competitors. Google currently competes in four main markets - search engine, online advertising, email provider, and small business software solutions. Yet, with the addition of new products such as Google Earth, Google Analytics, YouTube, Google Health, the company has expanded to compete in more than ten different new markets, many of them already saturated by leading Fortune 500 companies. What’s more, Google is offering these products for free, posing a serious threat to many incumbents.

A prime example is the Google Health suite, a tool for managing one’s online health records online. Companies such as e-MD, Siemens, Athena Health, and others have been trying to develop this market for almost a decade now, charging anywhere from ten to a few hundred dollars per patient for the service. Yet, none of them seemed to make much headway. That is, until Google entered and offered the same service for free. Currently, more than 100 million people in the US use Google Health.


Google’s strategy is to continue to develop new products while maintaining a large market share in their existing markets. Google rapidly expanded outside of its initial niche in search, and has stated its goal is to organize the world’s information, across all mediums. The question is can they do that while still maintaining the quality and creativity that have become synchronous with the Google brand name? It is not a stretch to say that Google is trying to take over the world, at least the digital world, with plays in online media, advertising, and online content, and now phones, digital books, email, and browsers. But has Google gotten too large and too unfocused, and too fast?

Challenges and Next Steps:

Google will continue to face challenges from incumbents as they enter new markets and they need to be prepared for a swell of lawsuits and price challenges from competitors such as Microsoft, Amazon, and Apple. The most recent of these is the lawsuit over Google’s digital book initiative - an attempt to digitize and catalog millions of copyrighted books. The lawsuit was filed by the Open Book Alliance, a group that includes Yahoo and Amazon, among others. It is expected that a settlement will be reached in early 2010, likely giving Google rights to complete its goal but within strict guidelines and an independent party to oversee the financial interests of the books’ copyright owners and to prevent price rigging.

Compiled by Jen Novak

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