All about Google

Everything you always wanted to know about Google…But were afraid to askParis, December 2008This work is licensed under the Creative Commons to allow for further contributions by other specialists and web users in the coming months. To view a copy of this Attribution-NonCommercial-ShareAlike3.0 Unported license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/ or send a letter to Creative Commons, 1712nd Street, Suite300, San Francisco, California, 94105, USA...…….December 2008 • Everything you always wanted to know about Google… • 2Google key success factors : Web specific ?ScalabilityNetwork effectsData mining• Ability to easily grow at • The utility of a good or a • The web offers the marginal costs service varies with the opportunity to exploit and • Applied to infrastructures : number of users analyze a very large ability to adapt its size to • The reach of a critical amount of datahigh load & volumesmass of users constitutes • Users’ behavior can be • Applied to business a significant barrier to the analyzed to create models : ability to entrymonetizing valuemonetize millions of usersOpennessCocreationBusiness model•••The traditional walled Non-traditional actors Advertising is not a market garden1 media strategy become part of the value but a business model becomes irrelevantchain• Any market that attract ••Content and services must Users, content creators advertising is a target for be open and interoperable and external developers Googleto favor audience are given the tools to circulationcreate new markets and enrich services..…….1 Network or portal which offers only its own content or services to usersDecember 2008 • Everything you always wanted to know about Google… • 31Why won’t Google be affected by the crisis ?2Why is Google trying to change the mobile world ?3Why isn’t YouTube a content portal ?4Why does Microsoft fear Google ?5How Google wants to compete with Facebook ?6Why is Google buying satellites ?7How does Google buy traffic ? 8Why did Google acquire DoubleClick ?9Why doesn’t Google monetize all its services ?10How does Google capitalize on Open Source developers work ?11How did Google capture the offline advertising market ?12Why is Google stealing our voices ?13Is PageRank a really competitive advantage ?14How does Google turn advertising into information and performance ?Annex: Network effect, two-sided market, glossary, financial , contact ..…….December 2008 • Everything you always wanted to know about Google… • 41Why won’t Google be affected by the crisis ?4 levers will allow Google to increase its revenues amidst the economic crisisPerformance Bn$ 35 1advertisingLicenses and During a crisis, other performance revenuesadvertising gains market sharesInternet Explosion of the + 3% 2007-2008 1Mobilenon advertising revenuesOn line Monetisation of +450% 2007-2008 the Internet videoMobile audienceYouTube Bn$ 201monetization 260 millions mobile increasessubscribers worlwide oct 2008 1Estimates 2008 : Revenues = 200 M $1Revenues 2008Revenues 2012Google is in a situation in which it can resist the economic crisis and find new revenue sources, both advertising and non-advertising..…….1 : faberNovel estimatesDecember 2008 • Everything you always wanted to know about Google… • 52Why is Google trying to change the mobile world ? (1/2)Mobile industry is based on a “ traditional” locked values chain.Operating TerminalPortalOperatorWeb ContentsSystemExamples: Entry barriers stop Google from applying its models to the mobile industry:Access restricted to services/contents Limited Network Accessand to their improvement•Terminals assigned to a unique operator•Operator portals favored over other portals•Difficulty of interconnecting networks•Services offered by terminal manufacturers favored over other services•Closed operating systemsThe mobile industry is not suited for the Google development model based on openness, interoperability and network effects...…….December 2008 • Everything you always wanted to know about Google… • 62Why is Google trying to change the mobile world ? (1/2)In order to duplicate its open model, Google designed a three fold strategy :Android : Open Source LobbyingTelco partnershipsO.S.1• Android Developer Challenge:• Google candidacy for mobile• Pressure from Google to forceContest for developers to createlicense attribution aims to force theoperators to offer its applicationsnew applications for AndroidFCC2 to impose an opennessas default optionsclause to the winner• OpenHandsetAlliance:Common initiative of 34 mobile• Sharingofadvertisingphoneindustryplayers• A success : clause partiallyrevenues between Google and(manufacturers,suppliersandimposed on the winning bidder,operatorsdistributors) aiming at spreadingVerizon.AndroidIn addition, Google developed and acquired mobile devices applications :Location-based Social Collaborative GamesservicesNetworksToolsShareYour Cab4me FreeFamilywatchGolfplayJOYitJaiku 3WertagoGrand central 3BoardGoogle breaks open the mobile industry value chain to create an environment that will be fit to the distribution of its products and monetization model...…….1 Operating System2 Federal Communications Commission3 AcquisitionsDecember 2008 • Everything you always wanted to know about Google… • 73Why isn’t YouTube a content portal ? (1/2)YouTube acquisition is part of a strategy to monitor key content and audience hubs.Monetise contents Give access to Organise informationthrough various informationsources of audience•A new information silo: video • YouTube bandwidth • Broadcasting of contents searchspending estimated to reach through Google websites as 1M$/day1well as other sites•Next : Speech to text technology : information • Revenue sharing logicsearches within video contentsYouTube has already won the audience battle …75%…60%May 200816%9%4%8%2% 3% 1% 1%May 2007Market shares of 5 leading video websites, United States (may 2008 vs.may 2007) [%]21 NewYork Times..…….2 Hitwise 2008December 2008 • Everything you always wanted to know about Google… • 83Why isn’t YouTube a content portal ? (2/2)Unlike its competition, YouTube follows an open logic and focuses primarily on developing content distribution tools :Encourage content Attract as many viewers as Monetize through relevant providers to use the servicepossibleadvertising tools•YouTube Program Partner : •Broadcasting videos on •Traditional advertising: Payed providers of semi-YouTube website and other AdSense and bannersprofessional contentGoogle sites (ex : Google.com, GoogleNews)•In-video advertising :Pre-roll, post-roll, overlay2••Broadcasting contracts Exporting videos (blogs, with major content providers soci al ne t w orks) and •Brand advertising: developing API1 for broadcasting video ads advanced broadcasting on within an environment third party websitescoherent with the brand’s image•Broadcasting on all video devices : television, mobiles, •E-Commerce: Affiliation of multimedia players, video partner websites (Amazon, consolesItunes, video games)YouTube acts as the platform of a two sided3 market composed of content providers and video seeking users. 1 Application Programming Interface. Standardized programming protocol allowing applications to communicate..…….2 Clickable text advertising displayed on a video3 See AnnexDecember 2008 • Everything you always wanted to know about Google… • 94Why does Microsoft fear Google ?Google’s ambition isn’t limited to “in browser” Web services, but extends to any online or offline application market. Google sets out to enter the online application market, MSFT’s cash cow :Disruption of offline application Consolidation of the online market segmentsenvironment• Launching of the Office Google • Launching of Google Gears: software pack: a word-processor, Open Source project allowing an a spreadsheet program, a offline use of online applicationspresentation tool and a calendar• Free alternative to Microsoft Office pack• Claimed ambition of becoming a standard and encouraging online languages as opposed to offline programming languages• Acquisition of SketchUp, a 3D modeling software with a free version made availableGoogle partly « destroys » Microsoft’s market when shifting valuefrom offline to online..…….December 2008 • Everything you always wanted to know about Google… • 10