Google SWOT analysis 2016

| May 17, 2016

Company Background

Name Google Inc.
Logo
Industries served Internet (Google Search, Google AdWords, Gmail)
Computer software (Chrome OS, Picasa, Google Earth)
Consumer electronics (Chromebook, Nexus, Google TV)
Geographic areas served Worldwide (more than 50 countries)
Headquarters Mountain View, California, U.S.
Current CEO Sundar Pichai
Revenue US$74.541 billion (2015) 13.5% increase over US$65.674 billion (2014)
Profit US$16.348 billion (2015) 15.6% increase over US$14.136 billion (2014)
Employees 61,814 (2016)
Parent Alphabet Inc.
Main Competitors Apple Inc., Facebook Inc., Microsoft Corporation, Samsung Electronics Co., Ltd., International Business Machines Corporation and many other Internet, computer software and consumer electronics companies.

Business description

Google business overview from the company’s financial report:

“Our founders started Google because they share a profound sense of optimism about the potential for technology to create a positive impact in the world. As Larry and Sergey explained in their first letter to shareholders, our goal is to: “... develop services that significantly improve the lives of as many people as possible.”

In many ways, Google itself began with a series of questions: What if we could download and index the entire web? What if we could organize all the world’s information? And then we went out and searched for the answers.

We know we’ve found the right answers when they pass what we call the "toothbrush test," whether this product will be used by hundreds of millions of people everyday, hopefully twice a day.

We are proud of everything we have managed to do. Our innovations in search and advertising have made our website widely used and our brand one of the most recognized in the world. We generate revenues primarily by delivering online advertising that consumers find relevant and that advertisers find cost-effective.

We provide our products and services in more than 100 languages and in more than 50 countries, regions, and territories.”[1]

Google SWOT 2016 Factors

Strengths

1. Dominance in web search, video content sharing, online advertising, mobile OS, browser usage and many other markets. Google is an Internet company that primarily competes in the web search and online advertising markets. However, the company’s product portfolio is very diverse and includes both related and unrelated hardware and software products and services. Google dominates most of the markets it operates within, including:

  • Online advertising. Google’s main source of revenue is its advertising business. In 2015, advertising generated US$67.4 billion or 90.4% of the company’s total revenue. According to eMarketer,[2] Google earns more than 30% of the world’s digital advertising revenue, 4 times as much as the next largest earner, Facebook. The company dominates the digital advertising market through many different channels, including its own AdWords advertising program, AdSense, YouTube and the Android OS. By dominating the online advertising market Google can better understand current advertising trends, collect an enormous amount of information about online users’ shopping habits, and enhance their related services by improving targeted advertisements.

    Figure 1. Net digital advertising revenue share worldwide in 2014

    Pie chart showing a worldwide share of digital advertising by company. Google earns 31%, Facebook 7.8%, Microsoft 2.5%, Yahoo 2.5%, IAC 1% and other companies 55.2% of total earnings from digital advertising.

    Source: eMarketer[2]

  • Web search. Google Search is the company’s search engine that people use to find information online. It’s the most widely used search engine in the world with a 67.86% desktop market share and more than 90% share of the mobile segment.[3] Google’s search engine domination is especially prominent in Europe with the company having more than 90% market share in both the desktop and mobile market segments.
  • Android mobile operating system. Google’s recent increase in its advertising and other revenue sources has been fueled by the rising adoption of its Android mobile OS. Android OS is the number one mobile OS in the world, being used by some of the largest smartphone vendors such as Samsung, Lenovo, LG, Huawei, HTC, Motorola. In Q2 2015, Google’s Android had 82.8% of the worldwide smartphone OS market share.

    Figure 2. Worldwide smartphone OS market share (in percentages)

    Period Android iOS Windows Phone BlackBerry OS Others
    Q2 2015 82.8 13.9 2.6 0.3 0.4
    Q2 2014 84.8 11.6 2.5 0.5 0.7
    Q2 2013 79.8 12.9 3.4 2.8 1.2
    Q2 2012 69.3 16.6 3.1 4.9 6.1

    Source: International Data Corporation (IDC)[4]

    Android’s rising market share has led to the increased popularity of other Google products, such as Google Play, Google Play Music, the Chrome browser and Google Search, further strengthening company’s position in these markets.

How does Google’s leadership position in these markets help the company to gain competitive advantage?

  • Massive amount of information. Google receives an enormous amount of information about its users and their habits through Google Search, Google Analytics, YouTube, Android OS, Chrome and its other products and services. This information provides Google with a key competitive advantage. Google can target advertisements or adapt its products to its users’ needs better than any competitor, because it has both smarter algorithms and much more information about its users.[5]
  • Growing brand awareness. Market leadership provides Google with a lot of publicity, attention, and more users via strong brand recognition.
  • Power over customers, competitors and suppliers. To some extent, Google can use its dominant market share as a source of power over its customers, competitors and suppliers.