1. GOOGLE INC.
2012 KSIM ‘IT STRATEGY’
Google’s mission is to organize the world’s information
and make it universally accessible and useful.
- Google’s mission statement

2. INTRODUCE TEAM MEMBER
KSIM
Kim Min Woo
.
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3. GOOGLE INC.
The recent take-over of Motorola and fee-charging of the Google Map reflects some of the changes
in Google’s strategic approach. Henceforth, as a result of some situational changes for Google, it is
an appropriate time to observe if Google is yet to experience relevant strategic changes as well. The
following report regards Google’s current and future strategies based on the analysis of changes and
conditions surrounding Google Inc.
 WHAT’S GOOGLE’S CORE BUSINESS?
[Source: Google 2010AnnualReport] [Source; Net Market Share (2011. 10)]
2010 2009 2008 2007
Google Web 194(24%) 157(9%) 144(36%) 106(68%)
Sites
Google Network 87(23%) 72(7%) 67(16%) 58(39%)
Web Sites
Licensing & 11(42%) 7.6(14%) 6.7(268%) 1.8(61%)
Other Revenues
Total Revenue 293(24%) 236(9%) 218(31%) 166(56%)
* Note: % within brackets is the growth rate over the previous year , Google Annual Report 2010
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4. FEATURES OF
GOOGLE CORE COMPETENCE
GOOGLE’S
 Business Structure INDUSTRY
STRUCTURE
According to annual reports, Google’s business islargely categorized into3
types. First is the Google website which refers to the site operatedby Create and expand
Google itself. Google mainly makesprofitsoff ’AdWords’ sales aimed to
show searching results. In late 2011, Google website sales recorded $194 its revenue models
billion, which counts for 60% of total sales. Google is competing against MS by strengthening
and Yahoo in the searching advertising market. As it is shown in the figures
above, Google has maintained and sustainedits overwhelming Google’s
competitiveness for a long time. Second isthe Google Network Web Sites.
platformleadership
Web site owners and Blogger operators produce profits using advertising
solution called ‘AdSense’. Google also shares Ad revenue with its site base on its core
operators. Revenue earnings from Google website have reached $ 88
competences
billion. This amount accounts for 30% of total Google sales. Licensing &
Other Revenue accounts for 4% of total Google sales.
 Business Features
First, dependency onthe Google website whichis mainly known for
itssearch engine is considerably high (66% of total sales). On-line
advertising revenues withNetwork Web Sites ad sales added captures 96%
of total sales. But Google faces a problem due to its poor portfolio. High
reliance on on-line advertising business led to the result of Google’s
revenue growth being vulnerable to economy fluctuations.
Second, online advertising revenueswhich account for 96% of total sales
are dependent on existing PCs.The table above suggests that advertising
revenues in 2007, 2008, and 2009 are almost zero. The current Android
device may have spread across the world, but its advertising revenues
seem quite insignificant. Data traffic flow from desktop to mobile may distort
the current business structure and, inevitably, impacts desktop-based
advertising revenues negatively
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5.  Better Portfolio
In terms of Google’s business structure, challenges faced by Google is in
need of effective responses from SNS, such as Facebook, and also must CORE
consider new revenue models, according to various portfolios focused on a
CAPABILITY
new business model.
Ability to provide
AdSense for content products/service
AdSense for customers
AdSense for mobile
content
AdMob for mobile
applications
 WHAT IS GOOGLE’S CORE
CAPABILITY?
Google Search. The goal of AdWords, our primary auction-based
advertising program, is to deliver ads thatare quite useful and relevant
to search queries or web contents are a form of information in their own
rights.WithAdWords, advertisers create simple text-based ads that then
appear beside related search results or web contents on its websites
and thousands of partner websites on Google Network, which is the
network of thirdparties that useGoogle’s advertising programs to deliver
relevant ads with their search results and contents. Most of
our‘AdWords’ customers pay Google on a cost-per-click basis, which
means that an advertiser pays only when a userclicks on one of its ads.
We also offer AdWords on a cost-per-impression basis that
enablesadvertisers to pay usbased on the number of times their ads
appear on our websites and our Google Network Members’ websites
asspecified by the advertiser.
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6. Our AdSense program enables websites that are part of the
Google Network to deliver ads from our AdWordsadvertisers that
are relevant to the search results or contents on their websites. CORE
We share the majority of therevenues generated from these ads
CAPABILITY
with the Google Network Members that display the ads. The
AdSense programenables advertisers to extend the reach of their Ability to provide
ad campaigns, improve our partners’ abilities to generate products/service
revenuefrom their contents, and deliver relevant ads for their
users. for customers
Google Display. Display advertising is comprised of videos, text,
images, and other interactive ads that runacross the web on
computers and mobile devices, including smart phones and
handheld computers such asnetbooks and tablets. The Google
Display Network provides advertisers services related to the
delivery of displayadvertising across publishers participating in our
AdSense program, publishers participating in the DoubleClick
AdExchange, and Google-owned sites such as YouTube and
Google Finance.
Through our DoubleClick advertising technology, we provide to
publishers, agencies, and advertisers the adserving technology,
which is the infrastructure that enables billions of ads to be served
each day across theweb. Our DoubleClick Ad Exchange creates a
real-time auction marketplace for the trading of display ad space.
Weaim to simplify display advertising so it is easier for advertisers
[source: google annual report 2012]
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7.  HOW DOES GOOGLE’S BUSINESS MODEL
CANVAS LOOK LIKE?
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8.  HOW GOOGLE GENERATE CORE REVENUE?
• USERS: the best and widest range of searches for free
• ADVERTISERS : a more measurable advertising
model‘AdWords’,linking directly to search phrases and triggering
payments contingent on user actions (clicks)
• WEB CONTENT OWNERS : opportunities to monetize from traffic
routed by Google, through AdSense revenue sharing model
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9. <REFERENCE: ANNUAL REPORT 2011>
SOURCE 1 GOOGLE 2011 ANNUAL REPORT
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10.  IN PARTICULAR, WHAT IS GOOGLE’S
REVENUE MODEL?
Now let us have a look at Google’s revenue model regarding itsbroker
business. Usually, there are compensations for every products and
services, but it may not necessarily bein payment form.
In Google’s case, the non-monetary compensation for their search
offering is the key to
Google’s fortune.
In Fig. you can see that
Google’s search business
basically provides a
search service to search
customers and a PPC
(Pay per click) advertising
service to its advertising
customers.
The compensation for
the PPC advertising
service is payment per
click on an advertisement.
The non-monetary
compensation for the
search service is the data
about the user who is
searching.
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11. Synergy from Google´s Revenue Model
This business model has two striking advantages:
 The information about the search customers is provided to Google
for free and Google sells advertising space, perfectly matched with
the customer information, to advertisers via an automatic online
auction.
 So Google leverages a revenue synergy between the search and
advertising business.
 The revenue model allows the revenue generated in the broker
business to be used to carry the sunk cost and operations cost of
offerings like Gmail and others.
GOOGLE
BROKER
MAIN BUSINESS MODEL
(HYBRID)
MAIN SOURCE OF
ADVERTISING
REVENUE
NON-MONETARY YES
REVENUE STREAM (BROKER)
REVENUE SYNERGIES ADVERTISING AND ALL
BETWEEN E.G.. OTHER BUSINESS
IMPACT OF EXISTING CUSTOMER AND
ECOSYSTEM PARTNER ECOSYSTEM
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12.  WHAT DOES GOOGLE HAVE TO DO SUSTAIN?
GOOGLE, HISTORICALLY AHEAD IN MANY DIGITAL
SERVICES, IS BEHIND IN SOCIAL TECHNOLOGY
While they have tried in the past with services like Wave and Buzz,
they have failed to capture mass attention and usage.
ACROSS THE GLOBE,USERS CHOOSE TO SPEND
THEIR DIGITAL TIME IN SOCIAL
In December 2010, Europeans spent more time on Facebook.com
than on Google sites
– comScore, dec. 2010
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13. GOOGLE+ WILL BECOME THE CORE OF GOOGLE’S
SERVICES
“The assumption is that everything will move over to using
the Plus infrastructure over time”
– Eric Schmidt, Google’s chairman
IT’S TIME TO SHIFT PARADIGMS.PROVIDE BETTER ADS.
BETTER ADS MEANS MORE REVENUE.
FIGURE 1. CURRENT PORTFOLIO
Google+ brings more social factors into other services,such as YouTube and Chrome, and
will activate social data across other Google products that millions are already using.
FIGURE 2. FUTURE PORTFOLIO
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14. GOOGLE SHOULD ALSO BE FOCUSING ON ADS MORE THAN MOBILE
PAYMENT BUSINESSES BASED ON PAYMENT FEE.
Google has the opportunity to spread the NFC that occurs in off-line payment transactions
and personal information has accumulated based on the BM-based advertising business.Its
value base must be expanded into the real economy.
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