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SWOT analysis of Google

By Ovidijus Jurevicius | 16.02.2013

This is Google Inc. SWOT analysis for 2013. For more information on how to do SWOT analysis please refer to our article.

Company Background

Name Google Inc.
Logo Google Inc. logo
Industries served Internet
Geographic areas served Worldwide
Headquarters U.S.
Current CEO Eric Schmidt
Revenue $ 50.17 billion (2012)
Profit $ 10.7 billion (2012)
Employees 53,861 (2012)
Main Competitors Apple Inc., Facebook Inc., Microsoft Corporation, Samsung Electronics Co., Ltd., International Business Machines Corporation and many others.

Google Inc. is a multinational corporation that provides Internet-related products and services, including internet search, cloud computing, software and advertising technologies. Advertising revenues from Ad Words generate almost all of the company's profits.
You can find more information about the business in its official website or Wikipedia’s article.

SWOT

Google SWOT analysis 2013

Strengths

Weaknesses

  1. Open source products and services
  2. Quality and customer experience are the primary objects
  3. Financial situation
  4. Access to the widest group of internet users worldwide
  5. Strong patents portfolio
  6. Product integration
  7. Culture of innovation

Weaknesses

  1. Relies on one source of income
  2. Unprofitable products
  3. Patent litigations

Opportunities

Threats

  1. Growing number of mobile internet users
  2. Obtaining patents through acquisitions
  3. Driverless electronic cars
  4. Growing into electronics industry
  5. Google fiber cables

Threats

  1. Growing number of mobile internet users
  2. Unprofitable products
  3. EU antitrust laws
  4. Competition from Microsoft

Strengths

  1. Open source products and services. As the company states:” Google’s mission is to organize the world’s information and make it universally accessible and useful.” The same is with almost any of Google products. Let it be Google maps, calendars, drive, OS or the advices how to rank better in a search index. Google’s products can also be used with any OS or mobile device without a charge. Google openness is the key why Google is the number one in many products and services.
  2. Quality and customer experience are the primary objects. Everything that Google offers is of premium quality. The products are aimed at solving customer needs and problems by providing excellent customer experience.
  3. Financial situation. Google is one of the most profitable companies in the world with earnings nearly $50 billion and $11 billion profits (22%). The company also holds $48 billion in cash and just $7 billion of debt. Few other companies are so strong financially to compete with Google.
  4. Access to the largest group of internet users worldwide. Google has an access to 79% of the world desktop search market users and 89% of the world mobile search market users. Combined, these internet users represent an extremely large market that Google can use to promote and sell its products and services.
  5. Strong patents portfolio. In 2012, Google added 1,151 patents and was the 21st business worldwide in terms of number of patents. Intellectual property is the key in competing against competitors and Google with Motorola’s acquisition gained a strong advantage over its competitors.
  6. Product integration. Nearly all Google products are integrated with each other forming an ecosystem that enriches customers experience and encourages using more of company’s products and services. Besides, Google products can be used on any OS or any device without a trouble or can be integrated with other companies’ applications. No other major tech organization offers the same level of integration.
  7. Culture of innovation. Many unique products are offered by Google every year, with so many in development stages. According to Boston Consulting Group (BCG) Google is the 2nd most innovative business in the world. The company was also the second patent creator in the worle in 2012. Google emphasizes its innovative work culture as one of its main competitive advantages.

Weaknesses

  1. Relies on one source of income. More than 90% of Google’s revenue comes from online advertising. Online advertising is expected to grow in double digits in 2013 and will grow Google’s income in the short term. But in the long run, Google may experience slow income growth or even the decline due to a few reasons. First, the market for personal computers is growing slowly and the Google experiences the overall decline in its desktop search engine market. If Google won’t push the competition back it will lose not only the market share but the main source of its income as well. Second, Google as many other firms, find it hard to monetize mobile device users, who will represent the highest growing group in online advertising. Third, online advertising growth is driven by emerging economies where an average price for an advertisement is considerably lower than in the developed economies, so the growth of online advertising will only grow the income of companies insignificantly.
  2. Unprofitable products. Google has many products and services that add little value for the business and make only losses, thus decreasing firm’s profits.
  3. Patent litigations. Google is often involved in litigations over the breached patents and other intellectual property. These litigations are costly and time consuming and distract the company from innovating rather than litigating.

Opportunities

  1. Growing number of mobile internet users. Google has an opportunity to create a platform that could be used to better display ads for mobile device users and increase firm’s income.
  2. Obtaining patents through acquisitions. For Google to grow and to compete successfully, it has to obtain more new patents. One way of doing that is to acquire companies that have strong patents portfolio. Google has acquired Motorola in 2012, obtaining more than 17,000 patents from the business.
  3. Driverless electronic cars. Google has introduced and successfully tested driverless cars in Nevada, U.S. The technology of these cars could easily be installed in any future model and would be a huge technological step. Although, Google has no intentions of manufacturing such cars itself, the company could sell licenses for car manufactures for using their technology and IP.
  4. Growing into electronics industry. Google has already launched a few new models of notebooks, tablets and smartphones into the market but these were only introduction models. Google could strengthen its entry into electronic devices industry by introducing more products for more customer groups and cut out its market share. This would result in tighter integration of its software products and diversified income.
  5. Google fiber cables. Google is currently testing their new fiber cables that can deliver internet content at astonishing 100 times as fast as current providers. It is wise for Google to invest in such infrastructure that virtually would have no competition and would integrate the company vertically.

Threats

  1. Growing number of mobile internet users. Google finds it hard to monetize mobile internet users as there is less space to place ads on a mobile device and the ads costs less than usual. The growing number of mobile users means fewer searches made on the personal computers and lower income growth or even decline for Google.
  2. Unprofitable products. Google has introduced many products and services but few of them earn profits for the business. Most of the services are the burden for Google and only makes losses. If Google continues to introduce new products that add little value and only make losses, the company’s profits will fall.
  3. EU antitrust laws. Google is currently accused by EU of using its dominating position in internet search engine market to display its own services higher than competitors’ in search results. If proved guilty, Google would have to pay fines that would significantly lower firm’s profits.
  4. Competition from Microsoft. Microsoft is gaining a market share in internet searches and is playing an important role against Google. The company has also introduced Windows 8, the OS aimed for mobile devices, to carve out its market share in mobile OS market. In both fronts, internet search and mobile OS, Microsoft is challenging Google and is taking away the potential revenues.