Experimenting with Google Docs - the Rise of a Digital Conglomerate

I have started using Google docs as a tool for collaborative work between my students. It is early days yet but my aim is to set a discussion question once a week for each group to contribute to, I will credit students for the input they have having reflected on the edit history for the document. Here is our first attempt.

The expansion of Google and the economics behind their growth strategy offers interesting avenues for study as part of your A2 micro course. This document asks a simple question “Which industry is Google in?” The answer(s) will reveal much about the nature and ambition of Google as a business and the economics of contestable markets and monopolistic markets. The full document can be downloaded below as a pdf file.

Which industry is Google in?

1. Web search (this is the core service) - Wired magazine reported in October 2010 that Google remains a web search engine that has grown to command 6.4% of all web traffic (approximately 34000 searches per second). Google commands 97% of searches through Apple’s iPhone. It has recently been improving its service by introducing Google instant where it tries to predict what is being keyed in to speed up search times by 2-5 seconds per query.

2. Advertising agency - Google is now the world’s largest advertising agency e.g. through AdSense and Adwords. This strand of the business produces the lions share of revenue (98% of total revenue) and consequently the balance sheet was knocked by the global fall in marketing spending during the 2008 recession. Nevertheless, in 2009, Google’s advertising revenue amounted to US$23 billion from AdWords, its main advertising product.

3. Cloud computing services (apps) such as e-mail, address books, storage, collaboration tools (including Google docs) and business applications. Although Google’s apps account for less than 10% of global document/presentation creation and work flow (81% of people still use Microsoft Office) in terms of online viewing and sharing, Google has cornered the cloud computing market, although this may change after the release of Microsoft’s own online office application in May 2010.

4. Printing business: New integration between Google docs and Chrome will allow Google apps users to print off a document on any internet enabled printer around the world

5. Google finance, in competition with Bloomberg, Reuters and Yahoo finance. Like most non-professional trading platforms the data is delayed by 15 minutes

6. You Tube - video service provider (a challenger brand to TV and film industries). YouTube has famously failed to make a profit thoughout its existence, mainly because the high cost of bandwidth offsets any revenues that might be gained from advertising. Through a large number of lucrative deals with major news and film providers such as Sony and CBS, Google is hoping that 2010 will be the year that advertising revenues exceed bandwidth and licensing fees.

7. Google TV - trying to encourage people to access the web through their TV screens http://www.youtube.com/watch?v=U4Qiz-q0DxM - some background here

8. Google Me - a film starring Jim Killeen. After typing his name into Google, Jim Killeen tries to arrange to meet and interview people from all over the world who share the same name.

9. Web browsers - with Google Chrome (third most widely used Internet browser in Oct 2010) which competes with the likes of Mozilla Firefox and Internet Explorer in the Web browsing industry.

10. Operating system developer - Android, is a direct challenge to in-house operating systems developed by handset manufacturers. It has been prevalent recently on phones by HTC, who hope that the new technology might help to increase competitiveness in the mobile phone market where Apple and RIM are becoming so dominant.

11. Google is also one of the world’s biggest manufacturers of hardware (servers), though in fact the servers are produced by Dell

12. An energy company - Google will be investing around $200 million dollars in the Atlantic Wind Connection as Google looks to expand capacity in wind farms to provide the energy for it’s servers.

13. A Library - Google books has embarked on a project to scan many works of literature into a central database, though this movement has created opposition from authors who are wary about digital rights management

14. Web mapping - Google provides the non-commercialised service Google Map to users through satellite imagery. Google Maps incorporates Google ride finder and Google transit. The site also includes Google Ditu, Google Moon, Google Mars, Google Sky, Google Street View, Google Aerial View, Google Latitude and Google Flu Shot Finder.

15. Satellite Imagery - through a joint venture with NASA, Google Earth was launched in 2005. Google Earth displays a virtual globe, containing real-life images of every corner of the world which can be viewed at all angles, ranging from a bird’s eye view to a view parallel to the ground (in some places). Currently comes in two main versions: Google Earth, a free version with limited functionality, and Google Earth Pro, intended for commercial use at $399 a year (a good example here of the Freemium business-model!)

16. Translator - introduced in 2007, Google Translate is a statistically-based translation service. With the ability to translate between 35 different languages, this basic service is provided free. They have recently upgraded the service to make translating quicker by installing software which works out the language you want by the words you type in so that users do not have to spend time scrolling through and selecting the different languages. The service also enables users to give feedback on the translation so they can say whether its wrong and can give a better translation; this is used by Google to built a better product and brand.

17. News Agency - launched in 2002, Google News offers a news service that is compiled solely by computer algorithms without human intervention. Instead of employing editors, Google News provide links to news, articles, and photographs from other news organisations all around the world. In 2007, Google News had between 5 to 10 times as much traffic as NY Times, MSNBC, the Guardian and Digg combined.

18. Shopping - Google has a shopping option on it’s home page which uses the innovative ‘google checkout’ technology As google has the unique advantage of having product on the web in it’s database Google Checkout allows quick and easy buying from stores across the web allowing one to track all their orders and delivery information in one place. It also has spam control and fraud protection technology enabling the user to use one login everywhere.

19. Scholar - Google Scholar is a freely accessible web search engine that indexes the full text of scholarly literature across an array of publishing formats and disciplines. Released in beta in November 2004, the Google Scholar index includes most peer-reviewed online journals of Europe and America’s largest scholarly publishers.

20. Social Networking - With Gmail already a popular choice of email amongst many consumers Google has been looking at entering the social networking space with Buzz

21. Dictionary - Google dictionary was created to compete with dictionary.com and has done rather well since its release in 2009.

22. Another Google Failure - Knol was Google’s attempt to provide competition to Wikipedia’s dominance over the ‘online encyclopedia industry,’ however it ultimately led to failure and it has not really threatened Wikipedia at all. http://knol.google.com/k

23. Photography - Google introduced Picasa which can be used for photo organisation and editing software. It has become widely used by people who find it a useful way of organizing their photographs in different folders as well as using it to edit them. It is also a photo-sharing website

24. Telecommunications - Google phone is a relatively new product which enables users to call others, either for free, or at extremely reasonable prices. With a model which is very similar to that or Skype, google phone users can call other users for free, and can call and landlines or mobiles for less than 1p per minute. Another product, witch’s industry itself is hard to define that google has created is called ‘google chat’. The instant messaging services that also comes with a google mail account allows any users to communicate with others who are online at the same time.

Full Google Docs Document (in pdf format)
Google-WhichIndustryIsItIn.pdf