SWOT analysis of Google
This is a Google Inc. SWOT analysis for 2013. For more information on
how to do SWOT
analysis
please refer to our article.
Company background
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 company in its
official
website or
Wikipedia’s article
.
SWOT analysis of Google
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
1. Relies on one source of income
2. Unprofitable products
3. Patent litigations
Opportunities
Threats
Name
Google Inc.
Industries served
Internet
Geographic areas served
Worldwide
Headquarters
U.S.
Current CEO
Eric Schmidt and Larry Page
Revenue
$ 50.17billion(2012)
Profit
$ 10.7billion(2012)
Employees
53,861 (2012)
Main Competitors
Apple Inc., Facebook Inc., Microsoft
Corporation, Samsung Electronics Co., Ltd.,
International Business Machines Corporation
and many others.
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
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 and89% 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 andwas the 21
st
company
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 company 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 2
nd
most innovative company in the world. The company was also the second company to add
the most patents 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 company 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 company.
3.
Driverless electronic cars
. Goggle 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
. Goggle 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 company. 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.
Sources:
1.
NetMarketShare (2013). Market Share Trend Highlights. Available at:
http://www.netmarketshare.com/
2.
Google (2013). Investor Relations. Available at:
http://investor.google.com/
3.
Finley, K. (2013). Google, Apple, South Koreans Challenge IBM for Patent Crown. Available at:
http://www.wired.com/wiredenterprise/2013/01/patents/
4.
Garside, J. (2013). Google set for Brussels showdown. Available at:
http://www.guardian.co.uk/technology/2013/jan/10/google-brussels-europe-regulatory-showdown
5.
McCue, T. J. (2012). Apple #1, Google #2 - 50 Innovative Companies Ranked By 1,500 Execs.
Available at:
http://www.forbes.com/sites/tjmccue/2013/01/10/apple-1-google-2/
6.
Wikipedia (2013). Google. Available at:
http://en.wikipedia.org/wiki/Google
