Google’s Business Model By Morgane Botella What is google? Google is a company that started six years ago when its founders Larry Page and Sergey Brin developed a new way to do online searching in a Stanford University dorm room. This new idea then spread quickly to many people around the globe seeking information. Googles’ technologies have been able to sort through a large amount of growing information on the web and deliver it to its users for free, a service which returns accurate information in a very short amount of time. They rely on the millions of people who post websites to figure out which other sites have good content.

Google uses a technique called PageRank to rank every page. It figures out all of the sites linking to a web page and gives them a value, based in part on the sites which are linked to them. Then Google is able to determine the sites with the most votes meaning they have the best amount of information to those most interested in the information offered. PageRank keeps on improving as the web becomes bigger, since each new website is another set of information which leans to another vote. It is the top search engine in the world, representing eighty percent of all European search page views and forty one percent of all US search page views.Its net income has been increasing, $6,985,000 in 2001, $99,656,000 in 2002, $105,648,000 in 2003, and $399,199,000 in 2004.

This company must have done a great job in order to be so successful. When it was first started their web index contained about thirty million documents, and now they index more than eight billion web pages which translates to two hundred and fifty times as much information. However Google isn’t just a popular search engine it also does many other things that come in hand to many people around the world.Some of Googles’ services include Alerts where you receive news and search results by e mail, Blog Search which finds blogs on people’s favorite topics, Book Search to find text of any books, Images where you can find images on the web, Maps where you find maps and directions, and News where you can find many news stories. Some of Google’s tools include Blogger where you can express yourself online, Earth where you can explore the world from your PC, Translate where you can view web pages in other languages, and Talk where you can IM and call friends from your PC.

Google is global, besides its main Google. com it includes one hundred and two other international domains such as Google. de, Googdle. fr, and Google.

co. uk. One hundred different languages are available. Sources 1, 2, 3 So why is Google so popular? A good way to get many users interested in the search engine is making it really easy to use. Google believes they should hide the complexity of their powerful search engine from their users so that they will be left with a simple, understandable way to get the information they need.So not only is the interface clear and simple, but the pages load instantly, the way the search results are placed is not sold to anybody, and the advertising it relevant content which does not get in the user’s way. Google really does provide the best user experience possible, it refuses to make any changes that would not benefit the users that go to their site. “The perfect search engine,” says Google co-founder Larry Page, “would understand exactly what you mean and give back exactly what you want.

” Google likes to be fair meaning they refuse to make money through search result ranking or inclusion.All of the advertising has to be on the right of the page, none in the actual search results. Also Google only lets ads be displayed if they have something to do with the results page.

Meaning certain searches might not include ads on the right. Google believes that these sponsored ads can help the user find what they want, which is why they have to be relevant to the search results. They want neutrality, there is no reason for one link to be before another one just because its owners paid more money. Unlike some of its competitors, Google provides inclusion and frequent updating in their sites for free.Meaning anybody’s website could be in the search results if their website is related to what the user typed in the search box.

And this is great because it makes the search results completely accurate. Not only is Google easy to use and fair to the public but it is also very fast. It only takes a fraction of a second to get the information that you need. Google has worked very hard on getting rid of excess bit and byte from their pages to make it go as fast as it possibly can, it has been breaking its own speed records.While other companies thought large servers would be the quickest way to deal with huge amounts of data Google realized that networked PCs were faster. While other search engines stuck with the speed limits for the search algorithms Google developed new algorithms which proved there was no limit as to how fast you could go. Google still is trying to make it faster. So basically the key to Google’s popularity has been and probably always will be the fact that they know how to make money without being evil.

Everyone is happy, while Google is making millions from the advertising links they put up, the owners of those links know that people are going to their websites, and the users get to enjoy a free powerful search engine which gives them the information that they want in a short amount of time and in an accurate way. Sources 1, 4 How does Google make money? Google is a business. Besides trying its best to satisfy its users it has to find ways of generating the most revenue.

Google does this in a few different ways. The first one is the advertising which happens on the right side of the page when you search on Google, a program called AdWords.The second is offering its search technology to others, they do this with a program called AdSense which anybody on the web can start using. The third way in which they make money is through its Google Search Appliance which they sell to their customers. This appliance delivers accurate search results throughout a number of documents. Meaning your company would have its own search engine and it would work just as well as google.

com. Businesses using Adwords can accomplish greater cost effectiveness with their marketing budgets for two reasons.Adwords only shows ads to people who are interested in the kind of information the advertisers are selling. There is no pop up advertising because that gets in the way of what the user is doing, they can’t see the content of what they have requested.

So the simple ads on the right of the page are perfect. Secondly, advertisers get to choose how much they should pay Google when a user clicks on their ad, however there is a minimum fee. Since the ads are simply formatted the advertisers do not need to worry about production costs which also leads small advertisers to AdWords because it is so cost-effective.Also advertisers are able to create many different ads which will make it more likely for a user to see the ad most suited for its search.

Since the users find advertisements which are relevant to their needs, the advertisers will benefit because the users will find what they want at their site. Both benefit in this situation and so does Google. Adwords is serving ads to the thousands of third-party web sites who are part of the Google Network, this means advertisers using Adwords can target people on Google’s sites and on search and content sites throughout the web.AdSense program gives you advertising revenue from each page of your website while you need a very small amount of time to do this and no additional resources, and it is free of charge. AdSense brings text and image ads which are relevant to the contents of your website. When a Google search box is added to your site, Adsense will deliver text ads which will go with the search results of the visitors of the site. It is the quick and easy way for website publishers of any size to show relevant Google ads on their pages.

The ads are related to what the visitors are looking for on the site or correspond to the personalities of the visitors the content of your site attracts. For web sites that have more than twenty million page views per month, Google supplies customization services. There are features included in the AdSense program. Competitive ad filters where web sites are able to block competitive ads or ads they don’t want to have show up by simply giving Google their URL’s. There are sensitive content filters because at times certain ads might be inappropriate.Default ads which the web sites choose themselves are available in case Google is not able to serve targeted ads on the page. And you can have image ads, web sites are able to show graphical ads related to the contents of their web page.

So AdSense enables the website owners to make money whenever someone clicks on the ads and of course every time this happens Google also makes money. This is pure genius because again, everyone is satisfied because all parties make money and none are negatively affected. The Google Search Appliance is a hardware and software product that enables you to have your own search engine.The Google search products will give your employees, partners, and customers the same quality of search which Google does. From your corporate intranet to your public web site or even your own desktop, Google will give you powerful search easy to use. “It’s a corporate search solution as simple and powerful as Google itself. ” The Google Search Appliance will make the huge amount of lost data on your web servers, file systems, and relational databases available instantly with one click.

You only need to point it to your content and add a search box to the web site.After that is done your users will be able to search through two hundred different file formats in any language and fifteen million documents will be indexed. There are different product models but the products start at $30,000 to search up to 500,000 documents. Google makes money selling those products. Sources 1,4,5,6,7 Is Yahoo competition? Yahoo and Google are battling over the same Web visitors and advertising dollars. There currently is an $8 billion global search advertising business, which is expected to rise to $22 billion in five years, according to Piper Jaffray.Worldwide online brand advertising is expected to increase twenty one percent this year from $11. 3 billion to $18.

2 billion, according to Goldman Sachs. These two companies are using very different approaches while going after the same advertising dollars. Yahoo uses human editors or “surfers” to organize web sites into categories. However humans cannot index everything so they are partnered up with a third party search engine to provide answers when its human – powered listing do not suffice. Google is about its search engine, done only with PageRank.

There is no human indexing involved.Yahoo has been using a program called the “Idea factory” to promote inventive thinking in their company, staffers are supposed to improve everything from the company’s products to its campus. On the other hand, Google assumes inventive thinking.

For example, the engineers of Google are required to spend a day a week on a personal project. This is how they come up with services such as Google News, which is now attracting quite a few number of people. “One company is building tools that reflect how people are expressing themselves.

The other is building tools that will help find needles in haystacks.One is facilitating community development. The other is facilitating data retrieval,” said Matt McAlister. Yahoo owns the world’s most popular website and believes in a multidimensional approach as it tries its best to be all things for all people. First it will identify what the people want and from there figure out which products to build or buy in order to have the visitors stay on their site as long as possible. Google on the other hand owns the world’s leading online search engine, its mission is to transform the way today’s world is storing and finding information.They are taking a laissez faire approach toward innovation, before they start trying to figure out how everything will fit into a business plan they work on their new products and ideas first.

While Yahoo’s sales team is now focusing on traditional partnerships, handholding with ad agencies, and has an internal telemarketing group whose responsibility is to call small agencies and companies to work with Yahoo. Google believes in classifying advertising that is based on technology rather than relationships. Both companies are currently prospering but Yahoo’s market capitalization is $51 billion while Google’s is $76 billion.Financial analysts and industry watchers believe both companies can be part of the Internet economy however they worry that Google, just like Yahoo, will someday go through awkward years. Sources 8,9,10,11 Is Microsoft competition? Microsoft is also competing with Google because Google is now a major threat to their dominance. While Google was launching all of its products for free, Microsoft was trying to catch up in search doing a project which they spent $150 million on but Google and Yahoo keep on getting ahead with new innovations such as complete maps and satellite photos.Bill Gates wishes he could have combined software innovation with a brand new Internet business model like Google did.

Gates is worried about how much Google will hurt Microsoft’s core of franchise, control of what users will do when they first turn on their computers. Microsoft was always very powerful because it had control of the Windows operating system, they would decide which products and services consumers saw first. And so Microsoft did not have to make better products than its competitors, just about equal. It won because it went after competitors’ business models, not their technology.Now Microsoft’s strong points seem useless against Google. The people at Microsoft are worried that a “Google Office” will come out. And now that Google has come up with a desktop search there is no need for the start button in Windows.

“Google is interesting not just because of web search, but because they’re going to try to take that and use it to get into other parts of software,” says Gates. You no longer need a PC to be on Google, you can use a cellphone, television, etc… Microsoft cannot cost less than Google because Google is free. There is no easy way to make Google’s online advertisers use another service. Microsoft can play its old game to compete with Linux and Apple. It has to play Google’s game to compete with Google,” says a former Microsoft executive. So Microsoft is thinking of now offering online services on top of their existing software lineup to compete with Google but some analysts are worried that this will cause Microsoft’s business model to go down the drain. Sources 12, 13 What’s in Google’s future? Google is only becoming more powerful. It has a desktop search utility on the way, a shopping engine, news aggegrator, and webmail services.

Google is also hoping to offer a new browser (GBrowser).It would include all the Google properties such as Gmail, Froogle, Google News, Picasa, and Blogger. This means that the user could get all of his or her business done without ever having to leave the Google environment.

This new browser would be another way to destination Google, meaning more revenue because more ads would be looked at by more users. It would also help Google control both data and applications, surpassing Microsoft. Google might also launch its own PC which would not need any Microsoft software. Of course to make this all happen Google needs more talented employees.They have created a hiring machine which hires about ten employees a day. There are three hundred recruiters, and to find new talent Google has organized software-code writing contests and has many billboards with math problems.

Google has paid to have “aptitute tests” included in tech magazines so that engineers will submit their answers to the questions and send their resumes. They have been offering free food to the engineering students so that they will pay attention to them and not their competition. Google will have to keep on prospering with the help of its talented engineers and its great ideas for future products.It will be able to beat competition by using its technologies and everyone around the world will be glad to use what it has to offer. Sources 14,15,16 Works Cited: 1. www. sec. gov archives/edgar/ data 2.

www. google. com corporate/index 3. Has the Google juggernaut got a roadmap? By Tim Weber, BBC news, 10/21/05 4. www. google corporate/tenthings 5.

https://adwords. google. com/select/ 6. https://www. google. com/adsense/ 7.

www. google. com enterprise/gsa/index 8. Google vs. Yahoo: Clash of cultures By Stefanie Olsen, CNET, 06/20/2005 9. The difference between Yahoo! and Google By Matt McAlister, 10/07/2005 10.Differences between Yahoo and Google (no author cited), Rank for Sales, 12/21/04 11. Yahoo Renews With Google, Changes Results By Danny Sullivan, SearchEngineWatch, 09/09/02 12.

Google chase could trip up Microsoft By Ina Fried and Mike Ricciuti, CNET, 09/1/05 13. Gates vs. google, Search and Destroy By Fred Vogelstein, Fortune, 05/02/05 14. Is there a browser in Google’s future? By Eric Bangeman, 9/20/04 15. Google’s Future? GBrowser, GooglePC, GoogleNetPC and Google ISP (no author cited), 05/08/05 16. Tam, PuiWing Tam and Delaney, Kevin J.

“Google turns into hiring engine. ” The Times Friday Nov. 2005: 1,4.