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Web search, in comparison to its short life span, has an enormous presence in the lives of people who spend time online. Initial web search engines -
Alta Vista, Excite, Inktomi, LookSmart, Lycos, Alltheweb - are now largely unkown. A few engines were consolidated and then eventually acquired by
larger companies (Yahoo, for example, purchased Overture who had earlier purchased Alltheweb). Search Engine History provides a detailed overview of
initial search companies - predating the Web itself.
A key downfall for many search engines arose as they sought to move beyond search into more general information provision such as shopping
services. The result: portals. Portals resulted in a dilution of the quality of search and often provided confusing and complex interfaces. The intent of a
service like Yahoo, for example, was to keep individuals on site as long as possible. In contrast, Google kept the search interface clean and emphasized
"pushing people" to resources they might find to be of value.
Evolution of Google
1997
Larry and Sergey continued working to perfect their technology through the first half of 1997. Following a path that would become a key tenet of the
Google way, they bought a terabyte of disks at bargain prices and built their own computer housings in Larry's dorm room, which became Google's first
data center. . Meanwhile Sergey set up a business office, and the two began calling on potential partners who might want to license a search technology
better than any then available.
Among those they called on was friend and Yahoo! founder David Filo. Filo agreed that their technology was solid, but encouraged Larry and Sergey to
grow the service themselves by starting a search engine company. "When it's fully developed and scalable," he told them, "let's talk again." Others were less
interested in Google, as it was now known. One portal CEO told them, "As long as we're 80 percent as good as our competitors, that's good enough. Our
users don't really care about search."
Touched by an angel
Unable to interest the major portal players of the day, Larry and Sergey decided to make a go of it on their own. All they needed was a little cash to move
out of the dorm — and to pay off the credit cards they had maxed out buying a terabyte of memory. So they wrote up a business plan. Andy Bechtolsheim,
one of the founders of Sun Microsystems, was used to taking the long view. One look at their demo and he knew Google had potential — a lot of potential.
It was made out to Google Inc. and was for $100,000."
Already Google.com, still in beta, was answering 10,000 search queries each day. The press began to take notice of the upstart website with the relevant
search results, and articles extolling Google appeared in USA TODAY and Le Monde. That December, PC Magazine named Google one of its Top 100 Web
Sites and Search Engines for 1998. Google was moving up in the world.
In February of 2002, AdWords, our self-service advertising system, received a major overhaul, including a cost-per-click (CPC) pricing model that makes
search advertising as cost-effective for small businesses as for large ones. Our approach to advertising has always followed the same principle that works so
well for search: Focus on the user and all else will follow. For ads, this means using keywords to target ad delivery and ranking ads for relevance to the
user's query. As a result, ads only reach the people who actually want to see them - an approach that benefits users as well as advertisers.
Google News launched in beta in September of 2002, offering access to 4,500 leading news sources from around the world. Headlines and photos are
automatically selected and arranged by a computer program which updates the page continuously. The free service lets users scan, search, and browse, with
links from each headline to the original story.
And speaking of the world at large, our Keyhole acquisition last fall led us to create Google Earth, which was unveiled in late June. This technology enables
users to fly through space, zooming into specific locations they choose, and seeing the real world in sharp focus. It turns out that when we talk about "the
world's information," we mean geography too.
Although August is traditionally a time to slow down, we didn't seem to. We released two significant products during the month: Google Talk, a free way to
actually speak to people anytime, anywhere via your computer, featuring crystal-clear voice technology, plus an instant message service; and the next
generation of Google Desktop, now offering at-a-glance access to your files, email, news, photos, weather, RSS feeds, stocks and other personalized web
content.
Google Chat connected people through Gmail and Talk, becoming the first service to integrate email and instant messaging within a web browser. An
updated version of Google Desktop made it easier for people to find and share information on their own computers. 2006
In March, Google Finance debuted to improve upon the information that many investors, stock-watchers, and businesses rely on daily. Developed in our
Bangalore R&D Center as a 20%-time project, Google Finance puts stock movements into better context with related news and blog posts. 2006
Google Philosophy:
Never settle for the best
"The perfect search engine," says Google co-founder Larry Page, "would understand exactly what you mean and give back exactly what you want." Given
the state of search technology today, that's a far-reaching vision requiring research, development and innovation to realize. Google is committed to blazing
that trail. Though acknowledged as the world's leading search technology company, Google's goal is to provide a much higher level of service to all those
who seek information, whether they're at a desk in Boston, driving through Bonn, or strolling in Bangkok.
To that end, Google has persistently pursued innovation and pushed the limits of existing technology to provide a fast, accurate and easy-to-use search
service that can be accessed from anywhere. To fully understand Google, it's helpful to understand all the ways in which the company has helped to redefine
how individuals, businesses and technologists view the Internet.
From its inception, Google has focused on providing the best user experience possible. While many companies claim to put their customers first, few are
able to resist the temptation to make small sacrifices to increase shareholder value. Google has steadfastly refused to make any change that does not offer a
benefit to the users who come to the site:
By always placing the interests of the user first, Google has built the most loyal audience on the web. And that growth has come not through TV ad
campaigns, but through word of mouth from one satisfied user to another.
Google does search. With one of the world's largest research groups focused exclusively on solving search problems, we know what we do well, and how
we could do it better. Through continued iteration on difficult problems, we've been able to solve complex issues and provide continuous improvements to a
service already considered the best on the web at making finding information a fast and seamless experience for millions of users. Our dedication to
improving search has also allowed us to apply what we've learned to new products, including Gmail, Google Desktop, and Google Maps. As we continue to
build new products* while making search better, our hope is to bring the power of search to previously unexplored areas, and to help users access and use
even more of the ever-expanding information in their lives.
Google believes in instant gratification. You want answers and you want them right now. Who are we to argue? Google may be the only company in the
world whose stated goal is to have users leave its website as quickly as possible. By fanatically obsessing on shaving every excess bit and byte from our
pages and increasing the efficiency of our serving environment, Google has broken its own speed records time and again. Others assumed large servers were
the fastest way to handle massive amounts of data. Google found networked PCs to be faster. Where others accepted apparent speed limits imposed by
search algorithms, Google wrote new algorithms that proved there were no limits. And Google continues to work on making it all go even faster.
Google works because it relies on the millions of individuals posting websites to determine which other sites offer content of value. Instead of relying on a
group of editors or solely on the frequency with which certain terms appear, Google ranks every web page using a breakthrough technique called
PageRank™. PageRank evaluates all of the sites linking to a web page and assigns them a value, based in part on the sites linking to them. By analyzing the
full structure of the web, Google is able to determine which sites have been "voted" the best sources of information by those most interested in the
information they offer. This technique actually improves as the web gets bigger, as each new site is another point of information and another vote to be
counted.
The world is increasingly mobile and unwilling to be constrained to a fixed location. Whether it's through their PDAs, their wireless phones or even their
automobiles, people want information to come to them. Google's innovations in this area include Google Number Search, which reduces the number of
keypad strokes required to find data from a web-enabled cellular phone and an on-the-fly translation system that converts pages written in HTML to a
format that can be read by phone browsers. This system opens up billions of pages for viewing from devices that would otherwise not be able to display
them, including Palm PDAs and Japanese i-mode, J-Sky, and EZWeb devices. Wherever search is likely to help users obtain the information they seek,
Google is pioneering new technologies and offering new solutions.
Google is a business. The revenue the company generates is derived from offering its search technology to companies and from the sale of advertising
displayed on Google and on other sites across the web. However, you may have never seen an ad on Google. That's because Google does not allow ads to be
displayed on our results pages unless they're relevant to the results page on which they're shown. So, only certain searches produce sponsored links above or
to the right of the results. Google firmly believes that ads can provide useful information if, and only if, they are relevant to what you wish to find.
Google has also proven that advertising can be effective without being flashy. Google does not accept pop-up advertising, which interferes with your ability
to see the content you've requested. We've found that text ads (AdWords) that are relevant to the person reading them draw much higher clickthrough rates
than ads appearing randomly. Google's maximization group works with advertisers to improve clickthrough rates over the life of a campaign, because high
clickthrough rates are an indication that ads are relevant to a user's interests. Any advertiser, no matter how small or how large, can take advantage of this
highly targeted medium, whether through our self-service advertising program that puts ads online within minutes, or with the assistance of a Google
advertising representative.
Advertising on Google is always clearly identified as a "Sponsored Link." It is a core value for Google that there be no compromising of the integrity of our
results. We never manipulate rankings to put our partners higher in our search results. No one can buy better PageRank. Our users trust Google's objectivity
and no short-term gain could ever justify breaching that trust.
Thousands of advertisers use our Google AdWords program to promote their products; we believe AdWords is the largest program of its kind. In addition,
thousands of web site managers take advantage of our Google AdSense program to deliver ads relevant to the content on their sites, improving their ability
to generate revenue and enhancing the experience for their users.
Once Google had indexed more of the HTML pages on the Internet than any other search service, our engineers turned their attention to information that
was not as readily accessible. Sometimes it was just a matter of integrating new databases, such as adding a phone number and address lookup and a
business directory. Other efforts required a bit more creativity, like adding the ability to search billions of images and a way to view pages that were
originally created as PDF files. The popularity of PDF results led us to expand the list of file types searched to include documents produced in a dozen
formats such as Microsoft Word, Excel and PowerPoint. For wireless users, Google developed a unique way to translate HTML formatted files into a format
that could be read by mobile devices. The list is not likely to end there as Google's researchers continue looking into ways to bring all the world's
information to users seeking answers.
Though Google is headquartered in California, our mission is to facilitate access to information for the entire world, so we have offices around the globe. To
that end we maintain dozens of Internet domains and serve more than half of our results to users living outside the United States. Google search results can
be restricted to pages written in more than 35 languages according to a user's preference. We also offer a translation feature to make content available to
users regardless of their native tongue and for those who prefer not to search in English, Google's interface can be customized into more than 100
languages. To accelerate the addition of new languages, Google offers volunteers the opportunity to help in the translation through an automated tool
available on the Google.com website. This process has greatly improved both the variety and quality of service we're able to offer users in even the most far
flung corners of the globe.
Google's founders have often stated that the company is not serious about anything but search. They built a company around the idea that work should be
challenging and the challenge should be fun. To that end, Google's culture is unlike any in corporate America, and it's not because of the ubiquitous lava
lamps and large rubber balls, or the fact that the company's chef used to cook for the Grateful Dead. In the same way Google puts users first when it comes
to our online service, Google Inc. puts employees first when it comes to daily life in our Googleplex headquarters. There is an emphasis on team
achievements and pride in individual accomplishments that contribute to the company's overall success. Ideas are traded, tested and put into practice with an
alacrity that can be dizzying. Meetings that would take hours elsewhere are frequently little more than a conversation in line for lunch and few walls
separate those who write the code from those who write the checks. This highly communicative environment fosters a productivity and camaraderie fueled
by the realization that millions of people rely on Google results. Give the proper tools to a group of people who like to make a difference, and they will.
The life span of a Google query normally lasts less than half a second, yet involves a number of different steps that must be completed before results can be
delivered to a person seeking information.
Business
Date Company Good/Bad
Area
GOOD
Google
September 20, 2001 Deja's Usenet archive (still being used and
Groups
out of beta)
GOOD
Online (info retrieval is key
September 20, 2001 Outride, Inc.
retrieval tech to the search
business)
MIXED
(nothing has been
done with blogger
February, 2003 Pyra Labs Blogger since the purchase,
but money is made
off of all the MFA
sites)
MIXED
(good if you count
automated support
CRM
April, 2003 Neotonic Software a positive thing;
technology
bad if you are trying
to actually resolve
an issue)
GOOD
(adwords and
Applied Semantics ($102 Adwords /
April, 2003 adsense made
million) Adsense
Google the money
printer that it is)
GOOD
Search (acquiring patents
September 30, 2003 Kaltix engine for the core
technology business is almost
always good)
May 10, 2004 Ignite Logic Template BAD
maker (aside from use in
Blogger, where else
does Google need
templates?)
MIXED
(bad in that they
Photo haven’t done
July 13, 2004 Picasa management anything with it yet,
software good in that they
still could do a lot
with it)
GOOD
(a popular product
October 27, 2004 Keyhole, Inc. Google Earth
with income
potential)
GOOD
Sept.-Dec., 2004 Where2 Google Maps(a nice compliment
to Google Earth)
GOOD
Google Ride (if it ever gets out of
Sept.-Dec., 2004 ZipDash
Finder beta it has
potential)
GOOD
(part of
2005 2Web Technologies Spreadsheets
Google’s office
suite)
GOOD
(Google gets more
Urchin Software user
March 28, 2005 Web stats
Corporation data.information is
power; a recurring
theme)
BAD
Social
May 12, 2005 Dodgeball (nothing was done
networking
with this)
July, 2005 Reqwireless Web browser MIXED
and wireless (good for near term,
e-mail but long-term the
only difference
between a office
computer and a
phone is the
browser agent is
slightly tweaked)
GOOD
(this is really good.
Current Communications Broadband Control upstream
July 7, 2005
Group ($100million) Internet data [more power]
and bypass greedier
cable companies)
BAD
(doubtful that PDA
PDA specific software
August 17, 2005 Android
software will matter for too
much longer - see
Reqwireless)
GOOD
Graphics
November, 2005 Skia (part of Google's
software
office suite)
Latin GOOD
Akwan Information American (more upstream
November 17, 2005
Technologies Internet data; tap into a
operations growing market)
GOOD
(I think this might
Radio be one of their best
January 17, 2006 dMarc Broadcasting
Advertising purchases for
expanding the ad
network)
GOOD
(more data, more
power…and it can
February 14, 2006 Measure Map Blog analysis
be useful in
determining real
blogs versus splogs)
GOOD
Word (part of
March 9, 2006 Upstartle
processing Google’s office
suite)
March 14, 2006 @Last Software 3-D GOOD
modeling (possible part of
Google’s office
suite)
GOOD
April 9, 2006 Orion Search (again…core
product is search)
GOOD
(good if it truly is
Photo
August 15, 2006 Neven Vision used with Picasa to
aggregator
do something
useful)
MIXED
(similar to Pyra
purchase, in terms
of controlling the
October 31, 2006 JotSpot Wiki creator
means for people to
get started online
– good if
executed)
GOOD
(this is a big ad
November, 2006 Youtube Online video
revenue stream
about to pop)
GOOD
Mapping (technologies will
December, 2006 Endoxon
solutions compliment Earth
and Maps)
GOOD
(control the
user’s e-mail,
Network,
January, 2007 Xunlei virtual hard disk
file-sharing
space…the entire
dataset of being
online)
GOOD
Video game
February, 2007 Adscape (another channel to
advertising
push ads)
March, 2007 Trendalyzer Analysis GOOD
(understanding the
data better, even at
a fractional
percentage, will
result in higher
revenue)
GOOD
Presentation (another product for
April, 2007 Tonic Systems
software Google’s office
suite)
GOOD
(continue to control
the medium for
Video
April, 2007 Marratech pushing
conferencing
ads…might be a
good fit with
dMarc)
GOOD
Desktop (securing data and
May 11, 2007 GreenBorder Technologies enterprise the user experience
security allows for further
scaling)
About YouTube:
Founded in February 2005, YouTube is a consumer media company for people to watch and share original videos worldwide through a Web experience.
YouTube allows people to easily upload and share video clips on www.YouTube.com and across the Internet through websites, blogs, and e-mail. YouTube
currently delivers more than 100 million video views every day with 65,000 new videos uploaded daily and it has quickly become the leading destination
on the Internet for video entertainment.
October 9, 2006 : $1.65 billion in a stock-for-stock transaction. Following the acquisition, YouTube will operate independently to preserve its successful
brand and passionate community.
The acquisition combines one of the largest and fastest growing online video entertainment communities with Google's expertise in organizing information
and creating new models for advertising on the Internet. The combined companies will focus on providing a better, more comprehensive experience for
users interested in uploading, watching and sharing videos, and will offer new opportunities for professional content owners to distribute their work to
reach a vast new audience.
"The YouTube team has built an exciting and powerful media platform that complements Google's mission to organize the world's information and make it
universally accessible and useful," said Eric Schmidt, Chief Executive Officer of Google. "Our companies share similar values; we both always put our
users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service
to users, content owners and advertisers."
"Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google, we can
benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new
opportunities for our partners," said Chad Hurley, CEO and Co-Founder of YouTube. "I'm confident that with this partnership we'll have the flexibility and
resources needed to pursue our goal of building the next-generation platform for serving media worldwide."
When the acquisition is complete, YouTube will retain its distinct brand identity, strengthening and complementing Google's own fast-growing video
business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company. With Google's technology,
advertiser relationships and global reach, YouTube will continue to build on its success as one of the world's most popular services for video entertainment.
The number of Google shares to be issued in the transaction will be determined based on the 30-day average closing price two trading days prior to the
completion of the acquisition. Both companies have approved the transaction, which is subject to customary closing conditions and is expected to close in
the fourth quarter of 2006.
Combination Will Significantly Expand Opportunities for Advertisers, Agencies and Publishers and Improve Users' Online Experience
MOUNTAIN VIEW, Calif., April 13, 2007 - Google Inc. (NASDAQ: GOOG) announced today a definitive agreement to acquire DoubleClick Inc., a global
leader in digital marketing technology and services, for $3.1 billion in cash from San Francisco-based private equity firm Hellman & Friedman along with
JMI Equity and management. The acquisition will combine DoubleClick’s expertise in ad management technology for media buyers and sellers with
Google’s leading advertising platform and publisher monetization services.
The combination of Google and DoubleClick will offer superior tools for targeting, serving and analyzing online ads of all types, significantly benefiting
customers and consumers:
For users, the combined company will deliver an improved experience on the web, by increasing the relevancy and the quality of the ads they
see.
For online publishers, the combination provides access to new advertisers, which creates a powerful opportunity to monetize their inventory more
efficiently.
For agencies and advertisers, Google and DoubleClick will provide an easy and efficient way to manage both search and display ads in one place.
They will be able to optimize their ad spending across different online media using a common set of metrics.
“It has been our vision to make Internet advertising better – less intrusive, more effective, and more useful. Together with DoubleClick, Google will make
the Internet more efficient for end users, advertisers, and publishers,” said Sergey Brin, Google’s Co-Founder and President, Technology.
“DoubleClick’s technology is widely adopted by leading advertisers, publishers and agencies, and the combination of the two companies will accelerate the
adoption of Google’s innovative advances in display advertising,” said Eric Schmidt, Chief Executive Officer of Google.
“This transaction will strengthen our advertising network by expanding our access to publisher inventory and enabling us to serve the needs of a broader set
of advertisers and ad agencies,” said Tim Armstrong, Google’s President, Advertising and Commerce, North America.
“Google is the absolute perfect partner for us,” said David Rosenblatt, Chief Executive Officer of DoubleClick. “Combining DoubleClick's cutting edge
digital solutions for both media buyers and sellers with Google’s scale and innovative resources will bring tremendous value to both our employees and
clients.”
“When we acquired DoubleClick in July 2005, we saw an opportunity to partner with a great management team to further enhance the company’s
capabilities and growth trajectory,” said Philip Hammarskjold, Managing Director of Hellman & Friedman. “This transaction affirms the successful
transformation of DoubleClick, positions the firm for the future, and greatly benefits our investors.”
Both companies have approved the transaction, which is subject to customary closing conditions, and is expected to close by the end of the year.
Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanford Ph.D.
students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. Google's targeted advertising program provides
businesses of all sizes with measurable results, while enhancing the overall web experience for users. Google is headquartered in Silicon Valley with offices
throughout the Americas, Europe and Asia. For more information, visit www.google.com.
DoubleClick is a provider of digital marketing technology and services. The world's top marketers, publishers and agencies utilize DoubleClick's
expertise in ad serving, rich media, video, search and affiliate marketing to help them make the most of the digital medium. From its position at the
nerve center of digital marketing, DoubleClick provides superior insights and insider knowledge to its customers. Headquartered in New York, and with
17 offices and development hubs and 15 data centers worldwide, the company employs more than 1200 people and delivers billions of digital
communications every day. Learn more at www.doubleclick.com
Fourth Quarter 2007 Highlights
• Revenue growth of 51% Y/Y and 14% Q/Q
– Google properties revenue growth of 58% Y/Y and 14% Q/Q, driven by strength in
the holiday retail season
– Network revenues increased 37% Y/Y and 12% Q/Q
– Strong international performance, with $2.3 billion in Q4 international revenue
• Executing on Search.Ads.Apps Strategy
– Infrastructure investments in search leading to improved quality
worldwide
– Giving advertisers more control and improving ROIg
– Improving Apps performance and ensuring data portability
– Significant strides in mobile with the launch of Android
• Ongoing focus on growth and profitability
2
Quarterly Revenue
4,827
Q4’07 Y/Y Growth = 51%
1,352
$3,000 1,345
2,690
2,456
1,198
$2,500 2,254
1,037
1 919
$2,000
997
1,578
928
1,384 3,122
$1,500 1,257 799 2,735
675
2,282 2,486
$1,000 584630 1,977
1,626
1,432
1,098 1,297
$500 885
657 737
$0
Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07
3
Google.com Network
Licensing and Other
$ in millions
U S vs International Revenue
4,827
$4,500 4,231
3,872
$4,000
3,664
$0
Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07
US
4
Intern ational
$ in millions
Traffic Acquisition Costs
1,440 40%
$1,400
37.2% 36.1%
$1,300 1,221
34.0%
1,125 1,148 35%
$1,200 33.2%32.5%32.3%
$1,100
976
$1,000
$300
15%
$200
$100
$0 10%
Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07
5
$ i nmillions
Costs and Expenses
GAAP
$Millions Q4'06 Q3'07 Q4'07
Non-GAAP
$Millions Q4'06 Q3'07 Q4'07
Cost of Revenues $1,272 $1,659 $1,950
Percent of revenues 40% 39% 40%
6
Table 1 for reconciliations of non-GAAP costs and
Note: Please refer to supporting expenses to GAAP costs and expenses
Profitability
GAAP
$Millions Q4'06 Q3'07 Q4'07
Income from Operations $1,061 $1,318 $1,441
Operating Margin 33% 31% 30%
Non-GAAP
$Millions Q4'06 Q3'07 Q4'07
Income from Operations $1,195 $1,516 $1,686
Operating Margin 37% 36% 35%
Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations
measures to the nearest comparable GAAP measures
7
Free Cash Flow
8
Table 1 Reconciliations of nonGAAP costs and expenses
to GAAP costs and expenses
As a % of As a % of As a % of
$Millions Q4'06 Revenues (1) Q3'07 Revenues (1) Q4'07 Revenues (1)
Cost of Revenues (GAAP) $ 1 283 40% $ 39% $ 1 956 41%
Less: Stockbased compensation (11) $ 1 663 (6)
(4)
Research and development (GAAP) $ 387 12% $ 549 13% $ 631 13%
Less: Stockbased compensation (82) (131) (161)
Research and development (non GAAP) $ 305 10% $ 10% $ 470 10%
$ 418
Sales and marketing (GAAP) $ 255 8% $ 381 9% $ 422 9%
Less: Stockbased compensation (14) (30) (38)
Sales and marketing (non-GAAP) $ 241 7% $ 351 8% $ 384 8%
Total costs and expenses (GAAP) $ 2,145 67% $ 2,914 69% $ 3,386 71%
Less: Stockbased compensation (134) (198) (245)
9
(1) Percentages based on GAAP revenues of $3,205 million in Q4 '06, $4,231 million in Q3 '07 and $4,827 million in Q4 '07
Table 2 Reconciliations of nonGAAP results of operations
measures to the nearest comparable GAAP measures
Income from operations (GAAP) $ 1,061 33% $ 1,318 31% $ 1,441 30%
Add: Stockbased compensation 134 198 245
Income from operations (non GAAP) $ 1 195 37% $ 1 516 36% $ 1 686 35%
10
(1) Percentages based on GAAP revenues of $3,205 million in Q4 '06, $4,231 million in Q3 '07 and $4,827 million in Q4 '07
COMPETITORS
Before starting with the competitors let us see the various Search Engines available.
1) www.google.com
2) www.yahoo.com
3) www.msn.com
4) www.ask.com
5) www.GO.com
6) www.altavista.com
7) www.askjeeves.com
8) www.goto.com
9) www.rediff.com
10) www.webcrawler.com
Even the company with the 2nd highest ad revenues for 2007 falls a long way behind the
search engine giant. News Corp only managed to pull in gains of $915 million.
While Google has traditionally allowed users to search for information and products by
directing them to other sites, now Google allows users to search within sites including
Washingtonpost.com and bestbuy.com, while staying on its own webpage. Google profits
33
from that extra time on its site, and it says makes searches for information and products
easier.
2) Refined Search
For searches within certain topics, you'll notice links at the top of the search
results page that help you quickly narrow your search.
3) Format Supported
Google has expanded the number of non-HTML file types searched to 12 file
formats. In addition to PDF documents, Google now searches Microsoft Office,
PostScript, Corel WordPerfect, Lotus 1-2-3, and others. The new file types will simply
appear in Google search results whenever they are relevant to the user query.
Market Share
Others
Ask
MSN
Google
Yahoo
Yahoo MSN
Ask
Google Others
34
Microsoft and Yahoo officials strain to put on a happy face whenever they are confronted
with Google's dominance. Both companies are fond of saying that search engine
technology is still in its infancy and that consequently an opportunity exists to unseat
Google as leader.
Still, when month after month trackers of search engine usage come out with their latest
studies and Google remains firmly perched at the top, these predictions inevitably sound
like wishful thinking and forced optimism.
USAGE
THE USAGE
35
Google, of course, is growing much faster than others online because it has built a better
business around direct response ads online. It's obviously outpacing traditional media
because those are mature businesses.
But what Google has yet to capture are the billions of dollars marketers spend on branded
advertising on television, radio, and outdoors. Its 5.7 percent of the overall ad market
shows that there's still much more milkshake to drink.
Internal STRENGTHS:
Proclaimed by many as ‘the most efficient’ search engine on the Internet
Lured Earthlink, the number three Internet Service Provider in the United States, to use
Google as its default search engine.
Largest search engine in the world
Internal WEAKNESSES
Made their IPO a complicated auction process, which angered a number of investors
Produces less relevant hits than subject-specific subscription databases
External OPPORTUNITIES
Computer literacy is on the rise, especially in underdeveloped countries.
There is a trend in the United States towards telecommuting and at-home-businesses.
As the cost of technology continues to fall and the demand for information grows, the
variety of services will increase in response to market niches.
There is a lot of potential for the International Market, especially in China, which plans to
privatize many state-owned facilities.
External THREATS
There will be legal challenges from private citizens to the storage of information about
private citizens.
Database companies (Gale, Lexis-Nexis, ProQuest) are designing products and internet
search engines at rates that are more affordable to individual customers; these products
provide superior research aids; they are also teaming with newspaper companies.
There are a number of companies in competition with Google.
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World best R&D companies
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• IBM, General electric, Dupont share the top tier because of the outright volume of
research performed, their consistent performance in this area and their long-
lasting, continued and growing global R&D presence.
• The middle tier was dominated by 3M, Toyota, Google and apple due to their
dramatic growth over past several years based primarily on the value contributed
by their R&D operations.
• The bottom tier dominated by Microsoft, Genetech and Dow chemical consist of
large, well respected R&D players with entrenched global development programs
that will continue to grow their companies.
• But over the last five years Google has most improved company in R&D. The
growth in Research and development is 15 %. Compare to other companies it is
much higher than expected. The growth in R&D due to their dramatic growth
over past several years based primarily on the value contributed by their R&D
operations.
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Industrial Growth
While recently writing about Google and Microsoft, Google is no pushover and cited its
impressive results as an indication of how stronger Google is getting to be. Google is
pulling in more and more searches on its own site, which are the most profitable kind of
searches there are. Some figures are quite insightful:
• Average revenue per search: 12 cents. It was around a dime in late 04.
• Avg. revenue per searcher: $7
• Avg. revenue per sponsored click: 62 cents.
• Estimated profits for Google in 08: Roughly $4 billion (Bear Stearns) (which
is about the same as their forecasted annual revenues this year, FWIW)
• Revenue growth of Google year to year: 56%
• Revenue growth of Yahoo: 42%
• Estimated revenue growth for next year for Google (Bear): 61%
• For the average of eBay, Yahoo, and Amazon: 29%
• Amount spent on capex, 07(estimate): $800 million
• Google nabbed 58.4 percent of search queries, followed by Yahoo in a very
distant second place with 22.9 percent and Microsoft's MSN with 9.8 percent.
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• The search segment is the largest of the fast-growing U.S. online ad market,
accounting for 41 percent of revenue, or about $5.1 billion. Online advertising
spending grew 30 percent in 2007 to $12.5 billion and google took the lion’s
share from it.
• The year-over-year growth of revenue (in 2008) on Google.com (U.S.)--
approximately $2 billion--was more than twice as much the growth of ad
revenue in all of the offline media companies in this sample combined. This is
such an amazing fact that it bears repeating: A single media property,
Google.com (US), grew by $2 billion. All the offline media properties owned
by the 13 offline media companies above, meanwhile all of them grew by
about $1 billion.
• Google's advertising revenue in the United States last year totaled about $8.7
billion, up 44 percent from 2008 revenue. That's remarkable considering that
U.S. Internet advertising was only expected to grow by 13.4 percent last year
over 2006, according to estimates from TNS Media Intelligence.
• To put it into perspective, Google's take of the total U.S. advertising market
was about 5.7 percent of $153.7 billion last year, according to TNS Media
projections of annual spending. TNS estimated that in 2008, Internet
advertising would make up about 7.2 percent of total ad spending--not that
much more than Google's share.
• Google's continued stranglehold on the search market is significant
considering that in recent years both Yahoo and Microsoft have invested
heavily on developing and improving their search engine technology and
accompanying search ad networks.
• Google's continued stranglehold on the search market is significant
considering that in recent years both Yahoo and Microsoft have invested
heavily on developing and improving their search engine technology and
accompanying search ad networks.
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CORPORATE AFFAIRS AND CULTURE:
Google is known for its relaxed corporate culture. of which its playful variations on its
own corporate , logo are an indicator. In 2007 and 2008 , Fortune Magazine placed
Google at the top of its of the hundred best places to work .Google’s Corporate
philosophy embodies casual principles as “you can make money without doing evil “ , “
you can be serious without a suit “, Work should be challenging and challenge should be
fun.”
Google has been criticized for having salaries below industry standards so google
implemented other employee incentives in 2005 , such as the Google Founders Award , in
addition to offering higher salaries to new employees. Google’s workplace amenities ,
culture , global popularity , and strong brand recognition have also attracted potential
applicants.
GOOGLEPLEX :
Google’s headquarters in Mountain View , California , is referred to as “ the
GOOGLEPLEX “ in a play of words : a googolplex being 1 followed by a googol of
zeros , and the HQ being a complex buildings. The lobby is decorated with a piano , lava
lamps , old server clusters, and a projection of search queries on the wall. The hallways
are full of exercise balls and bicycles. Each employee has access to the corporate
recreation center. Recreation amenities are scattered throughout the campus and include a
workout room with weights and rowing machines , locker rooms , washers and dryers , a
massage room, assorted video games , there are snacks rooms stocked with various foods
and drinks.
The size of goggle’s search system is presently undisclosed . The best estimates place the
total number of the company’s servers at 450,000, spread over twenty five locations
throughout the world including major operations centers.
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About the Googleplex :
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representing real time searches rising from the surface of the globe toward space, color
coded by language. Toggle and you can see traffic patterns for the entire Internet. Worth a
trip to the second floor.
• Nearest 24 hour doughnut shop - Krispy Kreme, Mountain View, CA
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Google has offices around the globe and Google engineering centers are recruiting local
talent in locations from Zurich to Bangalore Dozens of languages are spoken by Google
staffers, from Turkish to Telugu. When not at work, Googles pursue interests from cross-
country cycling to wine tasting, from flying to Frisbee. As Google expands its
development team it continues to look for those who share an obsessive commitment to
creating search perfection and having a great time doing it.
Last spring google announced that we would be carbon neutral for 2007 and beyond, and
they’re on track to meet this goal. Google have taken concrete steps to reduce our carbon
footprint and accelerate improvements in green technology. For example, through design
improvements and the adoption of power-saving technologies, such as evaporative
cooling, we have made great strides to bolster the efficiency of our data centers – the
facilities that store the computers that enable Google to deliver accurate search results at
lightning speed. We’ve also reduced the carbon footprint of our building and office
operations - for example, by replacing incandescent bulbs with higher-efficiency lighting,
and maximizing the use of natural light. And earlier this year we flipped the switch at our
Mountain View headquarters on one of the largest corporate solar panel installations in
the United States.
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Powering a clean energy revolution
We’re busy assembling our own internal research and development group and tasked with
building 1 gigawatt of renewable energy capacity that is cheaper than coal. (That’s
enough electricity to power a city the size of San Francisco.) Google’s R&D effort will
begin with a significant effort on solar thermal technology, and will also investigate
enhanced geothermal systems and other areas.
Google.org is already working with two innovative corporations who are building
potentially breakthrough technologies, and we look forward to collaborating with other
members of the renewable energy field, including companies, R&D laboratories, and
universities.
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solar specializes in solar thermal power. Solar thermal
technology replaces the fuel in a traditional power
plant with heat produced from solar energy, and has
great potential to produce utility-scale power that is
cheaper than coal.
Last spring we announced that we would be carbon neutral for 2007 and beyond, and
we’re on track to meet this goal. We’ve taken concrete steps to reduce our carbon
footprint and accelerate improvements in green technology. For example, through design
improvements and the adoption of power-saving technologies, such as evaporative
cooling, we have made great strides to bolster the efficiency of our data centers – the
facilities that store the computers that enable Google to deliver accurate search results at
lightning speed. We’ve also reduced the carbon footprint of our building and office
operations - for example, by replacing incandescent bulbs with higher-efficiency lighting,
and maximizing the use of natural light. And earlier this year we flipped the switch at our
Mountain View headquarters on one of the largest corporate solar panel installations in
the United States.
In addition to “greening” our own business, we’re also cooperating with members of the
tech community to improve efficiency on a broader scale. In 2007, we teamed with Intel
and other industry partners to form the climate savers computing initiative, a group which
advocates the design and adoption of less wasteful computing infrastructure. (In
November 2007, CSCI achieved a new milestone when we signed on our very first public
sector partners, the state governments of Minnesota and Kansas.)
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Our business powers the platforms that drive the Internet. With hundreds of millions of
Google users, it takes extensive computer infrastructure to keep our tools and services
running. And that takes a lot of electricity. Generating that electricity requires energy, and
as our business grows, we want to make sure we minimize our impact on the Earth's
climate. So we’re taking every step we can to produce electricity using renewable energy
resources that don't add to the production of greenhouse gas emissions.
As part of that responsibility, Google has committed to being carbon-neutral for 2007 and
beyond. To honor our pledge, we’re taking a three-step approach. First, we’re increasing
the energy efficiency of our own operations. Second, we’re actively pursuing the use and
creation of clean and renewable sources of electricity. Third, for the emissions we can’t
reduce directly at this time, we’re investing in projects that help offset carbon generated.
Improving Efficiency
Efficiency and innovation are central Google values. From our very first servers to our
latest-generation data centers, extracting maximum performance per watt of delivered
power has allowed the scale and scope of our services to grow exponentially. It’s good for
the environment and good for business, too.
Our data centers use half as much energy as a typical industry data center to power the
same amount of computing. We have achieved this improvement over industry standards
through the use of increasingly efficient power supplies and evaporative cooling
technology. We’ve also started to share some of what we’ve learned about efficient
computing with others by forming the, joining other industry leaders to spread the word
about reducing the amount of electricity wasted by computers and servers.
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Utilizing Renewable Power
Renewable energy is a critical component of a clean energy future and Google has set a
goal of creating 50 megawatts of new renewable energy-generating capacity by 2012.
(That’s enough electricity to power 50,000 homes.) And with the November 2007
announcement of our new renewable energy R&D group, Google’s co-founder Larry
Page upped the ante, saying, "Our goal is to build 1 gigawatt of renewable energy
capacity that is cheaper than coal, and we are optimistic that this can be done within
years, not decades."
We’re eager to use more on-site renewable power both at home and around the world. In
Mountain View, CA, for example, we currently have a 1.6 megawatt (MW)solar panel
installation that generates 30% of the peak power necessary to fuel the buildings on
which they are located. In addition to reducing our carbon footprint, the solar panels
make good business sense; they’ll pay for themselves in 7 ½ years. And at our Google
office in Hyderabad, India, we're planning to install solar modules that heat all the water
for the building.
Pricing carbon is an important tool to reducing the financial risk that our energy
investments face. Moreover, when evaluating power options, using a shadow price for
carbon puts renewable energy on a more level playing field.
The offset projects in which we invest go beyond “business as usual.” That means we
look for project activity that would not be viable without carbon financing. Through this
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requirement, we ensure that our investment makes a real difference in reducing
greenhouse gas emissions.
On their own, carbon offsets are not capable of creating the kinds of fundamental changes
to global energy infrastructure that will be necessary to stabilize greenhouse gas
emissions over the long-term. But the projects to which we contribute do offer real and
measurable emissions reductions that allow Google to take full responsibility for our
footprint today.
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international level will help ensure that clean energy technologies are developed and
deployed as quickly as possible. These include:
Efficiency Standards: Efficiency makes the energy we use more productive, allowing us
to do more with less. (It’s also the cheapest way to reduce greenhouse gas emissions.)
Investments in efficiency are often win-win, sometimes paying for themselves in just
months. Energy efficiency standards set minimum efficiency levels for energy use in
equipment, appliances and vehicles. They help overcome obstacles to the widespread
deployment of energy-efficient technologies, including market distortions, information
gaps, and jurisdictional issues. Adopting these standards, as well as establishing
incentives, will help move more efficient technologies to market.
Renewable Portfolio Standard: A national RPS would require that US utilitiles produce a
specific percentage of electricity from renewable energy and build on similar measures
already adopted at the state level. Expanding the market for renewable energy through an
RPS – along with incentives such as tax credits - would help renewable energy
technologies realize the economies of scale that will, over time, drive down their cost and
make them competitive with coal-fired generation.
Public Funding for Research & Development: Increased public funding of clean energy
R&D focused on renewable energy, energy efficiency and advanced transportation
technologies will help spur the innovation necessary to meet today's critical
environmental, economic and security challenges.
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