The Top Internet Information Providers, Research Paper Example

Abstract

In this paper we are going to take a look at the top internet information providers in online industry. One of goals is to identify the criteria for strategic comparison by means of conducting five-force analysis, strategic group map and SWOT analysis. On the basis of the achieved results, we are going to evaluate the position of a chosen company, Google, in regards to other top-rated internet information providers with the purpose of making a number of recommendations to the top-management in the fields that need strategic improvement.

Introduction

Internet accompanies us almost everywhere nowadays. Whether we are looking up the latest news or checking the e-mail, sending instant message or using Skype to talk to our relatives or friends, we are a part of a huge online industry, which brings millions of people together. “Internet fever has gripped the commercial world. Everyday comes news of businesses going online, companies offering free access to the Internet and new advertising possibilities” (Davis, 2000). In a search for relevant and needed information, users are exposed to hundreds of pages of references and websites on various possible topics and themes.

With a view of potential financial profit, new businesses have made their way in the online industry. Some of the most popular ones are internet information providers. These are the companies, which help you to find the exact information you need in a couple of seconds by means of simply typing the key words in the search engine and pressing the “search” button. When asked of the favorite search engines, most of the people would bring up such names as Google, Yahoo, MSN and AOL. In this paper, we are going to take a look at one of the most popular providers – Google and compare it with the rest of the competitors. With a help of certain business comparison analysis, we are going to estimate Google’s ultimate position in the online industry market as well as propose certain changes that can be made in order to ensure the prosperous future of the company. By evaluating the advantages and disadvantages of Google, compared to other players in the market, we are going to clear out the top priorities for the company’s management to take care of and specific steps that can be taken in regards to financial status and revenue increase.

Nowadays, one can point out a number of players in the online industry market, among which Google, Yahoo, and Microsoft stand out as the most popular and highly competitive. According to 2009 Scott Morrison “Google Inc. (GOOG) increased its share by half a percentage point in April to 64.2% of the U.S. market, reaching its highest level ever; Yahoo is the No. 2 U.S. search engine, with 20.4% market share in April, according to market research group comScore, while Microsoft continued to lag far behind with about 8% of the market”. All three companies are in the constant rivalry with each other by means of offering new services and options. So, with that in mind, consumers are the ones receiving the highest benefits as they are exposed to a huge number of useful and informative alternatives. As far as I can judge, the mission of each of the three companies is to provide quick and comfortable access to the world’s information. What differ from company to company are the special features and ways, in which all the information is being presented. Everything, from web page design to allocation of tools, from customized emblems to search engines, is being developed with the purpose of creating a specific image in the users’ minds that will automatically make them choose one particular company over the others. To achieve such results, competitors in the online industry are trying to propose something new and different from already existing alternatives, to make it easier and less frustrating for the users to search through thousands pages of information as well as to provide some sort of entertainment along with it. It as evident for all the three companies that if the above-mentioned objectives are achieved, the company will be able to capture a wider market segment, which, in this case, will be accompanied with increasing profit and higher stock market shares.

All the three companies, Google, Yahoo, and Microsoft, open a wide range of options to the users. Whether it is a customized homepage or e-mail box, an access to the latest world news or online gaming, each company tries to impose a specific image which can be associated with that particular company. Take, for example, the companies’ web pages. Everybody knows that Google’s is plainly white with the search engine and only the word “Google” in the center as the ultimate header, which changes its design for special occasions, and all the tools on the top of the page. Yahoo’s usually reddish with the e-mail box on the right side and shortcuts for the latest news in the middle, where as MSN webpage is blue with a 4-colored butterfly near the search engine. But, to my mind, the most competitive and aggressive arena in the online industry market are search engines themselves. They may have changing coloring or personalized options, but what makes them stand out before the user is the quality and arrangement of the search process. Because once you make a choice in someone’s favor, you will probably never want to switch to another. That is why in the online industry every one is fighting for this first impression as it is what enables companies to win the favorability and loyalty of the users.

One way to consider competitive pressure that Google faces is by doing a Porter’s five-force analysis. The first segment to look at is threat of new entrants. One can fairly say that the threat is low because there are already existing giants among internet information providers, which have already earned their users and reputation. It will be hard for the new provider to win the market segment because Google, as well as Yahoo and Microsoft, have already provided users with a numerous amount of searching tools and options, leaving almost no space for altering. When talking about the bargaining power of suppliers, one can assume that it is low because the only supplies Google can be dependent on is human resources as well as equipment and hardware supplies for offices. “As a business, Google generates revenue by providing advertisers with the opportunity to deliver measurable, cost-effective online advertising that is relevant to the information displayed on any given page” (Company Overview, 2009). That is why the bargaining power of buyers can be considered strong. The more people wanted to use Google as a place to post their advertisement, the higher the revenues would be and vice verse. Considering threat of substitute products, it is evident that it is high. Most of the internet information providers have the search engine options combined with e-mail services, news alerts, weather forecasts and so on. At any time can the user decide to try a new provider and for some reason like it better then the previous, consequently switching them. Currently, this is the issue with Microsoft’s Bing – a new alternative search engine. “Microsoft announced Bing as the name of its new search engine. The company describes Bing as delivering more answers to your search queries directly on the search-results page, so you don’t have to keep hunting around for what you want to find. Microsoft is hoping that people now will be “binging” instead of “googling” for information” (Mossberg , 2009). “Experts say that functionality Bing will likely appeal to big advertisers, from car-makers to consumer goods manufacturers, because it makes it easier for consumers to find their products. However, it won’t grab significant market share from Google overnight, though Internet marketing executives think it will likely win over some big brand name advertisers, helping it push the scales on search” (Hodgson, 2009). Finally, looking at the last segment, one can definitely state that Google’s rivalry is intense with over 45 companies worldwide providing internet information services. All in all, the competitive pressures that Google faces are mostly related to the so-called “buyers” in the market, substitute products and ability to withstand rivalry. In majority of cases, buyers, apart from shareholders, are people advertising some goods or services with Google’s help. The strong bargaining power of buyers means that a certain part of the company’s revenue depend on the decisions of those people, placing advertisements. That is why Google should be careful and considerable for that segment of the market, providing satisfactory terms and options. Dealing with intense rivalry is a long-term process in this particular case. Since the foundation of the company in 1998, Google was faced with harsh competition. And over the years, with the further advancement of informational technology, it is necessary for Google to stay updated and alert with all the new options competitors are offering to the market. This helps to evaluate the market’s preferences as well as to open up new spheres and abilities of the already existing tools and options. At this point, with Microsoft’s Bing gaining its publicity, it is vital, to my mind, for Google to stay alert and think a couple of steps ahead already, because according to Hodgson (2009) ““There’s an opportunity for any search company to help consumers find media. Microsoft’s search engine does go a step beyond Google in integrating different types of search and media,” Tim Hanlon, a digital advertising specialist at Denuo, a unit of Publicis Group, (PUBGY) said”. Furthermore, the rivalry is closely connected with the image of the company from the users’ perspective. That image is built up from the users’ experience and, consequently, can be altered or modified by the company itself by means of offering users more comfortable and advanced services. This is important to keep in mind, because, it takes quiet a long time to disserve users’ preference and only a couple of minutes for the users themselves to gain a negative impression of the company only on the bases of one company’s failure or even worse, heard rumors or gossips.

Another method to evaluate Google’s as well as the other competitors’ position in the online industry is by means of strategic group map. As far as I can judge, the best competitive characteristics to be chosen for the axes of the map are popularity ranking and stock market revenues. These two characteristics represent different fields of public interest and describe the competitors from two different angles, which, on the one hand, show the positions of the companies as businesses, which earn money for their owners and shareholders, and, on the other, the preferences they managed to earn among the users. In the beginning of the paper I have pointed out the three most popular internet information providers Google, Yahoo and Microsoft, so these will be the competitors, which will be compared in the map. As you can see in Figure 1, Google takes the leading positions in the popularity ranking with over 60% of users choosing it as their main search engine.

However, Microsoft is the highest on the stock market shares, showing a rapid revenue growth every year with $51,122 million in 2007 and $60, 420 million in 2008 (Microsoft Corporation (MSFT) Revenue & Earnings Per Share (EPS), 2009), where as Google has its stock market revenues at $16,593 million in 2007 and $21,725 million in 2008 (Google Inc. (GOOG) Revenue & Earnings Per Share (EPS), 2009). Yahoo, on the other hand, received $6,969 million in 2007 and $7,208 million in 2008, also showing increasing revenues (Yahoo! Inc. (YHOO) Revenue & Earnings Per Share (EPS), 2009). When we assess the current situation, with the financial crisis making its way through the financial world, it is notable that Microsoft’s 1^st fiscal quarter stock market revenues dropped compared to the last year from $14,454 million to $13,648 million (Microsoft Corporation (MSFT) Revenue & Earnings Per Share (EPS), 2009), Google’s showed a slight increase from $5,186 million to $5,508 million (Google Inc. (GOOG) Revenue & Earnings Per Share (EPS), 2009) and Yahoo’s declined from $1, 817 million to $1,580 million (Yahoo! Inc. (YHOO) Revenue & Earnings Per Share (EPS), 2009). In the stock market revenue comparison, it is worth mentioning that the high Microsoft revenues are determined by the fact that it is not being viewed only as an internet information provider, but also as a software and hardware producer, where as most of the Google’s and Yahoo’s revenues are contributed to the online industry only. Analyzing the strategic group map, one can say that Google owns its own favorable position, being the most popular search engine, winning almost 3/5 of the online industry market and being safely ahead of the closest competitor, Yahoo, by almost 40%. From the stock market revenues point of view, it is hard to compare Google and Microsoft, but in comparison with the equal internet information provider as Yahoo, it is evident that Google is being beneficial not only for internet users, but also for the owners and shareholders, earning money with every share.

When considering doing a SWOT analysis for Google, it is useful to keep in mind that this kind of analysis is a simple technique, which can be used at a fairly superficial level to determine the company’s strengths, weaknesses, opportunities, and threats in regard to the industry and competitors. SWOT analysis can be summarized in a cruciform chart, which makes it easy to perceive information and make any judgments (Coyle, 2000). When we look at the Google’s position in the online industry, the following chart can be analyzed:

All in all, after the development of the SWOT analysis, it is clear that Google occupies a favorable position in the online industry market. The company has earned its name and has a couple of advantages over the competitors which help to ensure further development and growth. What I personally find necessary for the company is to continue making an emphasis on the simplicity and clearness of the search process as well as to provide customers with tools and options like “local search”, “trip planning” and “everyday essentials”. It is also vital to track all the competitors’ developments and new releases in order to coordinate the company’s flow in the industry as well as to stay competitive among other providers. It would be quite beneficial to technologically improve the whole process of data analysis and evaluation with the purpose of tracking down and eliminating as much irrelevant and spam information as possible. If the above suggestions are put into perspectives, Google will definitely remain its #1 image in the online industry.

When we take a look at the whole online industry, it is evident that to stay competitive and earn public approval, companies need to have certain objectives and goals determined in advance. It is attainable by means of evaluating and deciding on the success factors that will assure company’s growth and prosperity. To my mind, in the online industry the key success factors are accuracy and reliability, time consumption and simplicity. The whole purpose of the information providers is to supply users with all the necessary information in split seconds. At the same time, the information should be relevant, topical and suitable for each of the search items as well as to allow users not to get lost or confused in all the pop-ups, spam or fake web-sites. In my opinion, simplicity of the search process should not be underestimated as well, because it is one of the determinants that make the user choose in favor of one or another provider.

Taking specifically about Google, one can point out that after a number of analyses being conducted in the above sections of the paper, a clear picture of the company’s position  in the online industry market is presented. All in all, a conclusion can be made that Google has a competitive advantage among competitors because the company’s advantageous positions way outweigh the disadvantageous. First of all, Google is already the #1 search engines being used by more than 60% of the users. Secondly, Google keeps innovating in providing customers with numerous options for increasing search accuracy as well as narrowing down specifics. Thirdly, as a business, Google is financially attractive because of the increasing revenues and stock market shares, which open a wide range of investing possibilities. Finally, as an advertisement service provider, Google opens numerous opportunities for businesses all over the world to advertise their products on the pages of the most popular search engine, which definitely adds up to the significance and turn-over of advertised information.

However, there are still a couple of problems or concerns that should be closely looked at by the company’s top managers. One of such issues, which can be fairly considered a top priority, is the on-going technological competition from close rivals like Yahoo and especially Microsoft. With Microsoft’s Bing making it way to the public, Google’s top managers and analysts should be keeping a close look at all the publicity and attention Bing is getting. From my point of you, it is important to carefully analyze the public opinion and track any changes in the users’ preference shifts. For now it is evident that Bing is not going to overweigh Google’s dominance in the search engine field, but any slight changes in the users’ attitudes should not be taken for granted. This does not mean that Google will have to change something to suit Bing. The priority here is to stick to the already existing trademark with its already recognized patterns and options. What should be done is constant improvement, which becomes the second important priority for the top managers. The improvements need to be made in the area of data processing, with more accurate and highly-technological filters tracking down false websites, spam and irrelevant information, providing users with up-to-date, topical data suiting all their requests. At this moment, it is vital to keep in mind, that those improvements should not touch the interface or content of the already known attributes of Google. The image should not be changed or altered in any way, just the content and the operating process. Furthermore, there are also some issues that can be attributed to low priorities. Among those are one can suggest enlarging the partnership business, as, for example, in case of signing partnership contracts with radio or other media for the cooperation and enlargement of the areas of influence. To my mind, what will add up to the competitiveness and long-term financial success of the company are possible acquisitions of different online businesses like blogs, chat rooms or even such public favorites as MySpace or YouTube. On the one hand, it would be an expensive investment, but on the other, taking in consideration increased number of users and net income, the suggestion would be worth a try.

Summary

From my personal point of view, Google nowadays is a highly competitive, mature brand. According to Nilson (1998) “A competitive brand is a successful brand. If the brand is stronger than the competition, it will succeed. If the brand is more trusted and relied upon than the others, the customers will choose it ahead of the others”. As far as I can judge, this statement fully describes Google’s current position in the online industry. Google confidently leads the market, leaving the closest competitors far behind. Such groundbreaking success of the company can be attributed to the number of factors, among which simplicity and accuracy, customer care and branding are the key determinants that made Google #1 choice in the minds of 3/5 of the internet users. But, “a successful brand is not enough. The skills in building a competitive brand have to be matched by an ability to run a profitable business” (Nilson, 1998) and Google proves this by its own example. Providing work places for over 100,000 people, Google manages to increase its net income and stock market shares with every year. This means that apart from having earned a highly attractive reputation and having accomplished new-online-search objectives stated by Larry Page and Sergey Brin, the founders of the company, Google was capable of becoming a profitable business, attractive for both investors and shareholders.

With the view of rapid informational technology development it is highly important for Google to keep its leading position in the industry. Such an objective can be accomplished by means of keeping up with certain “unwritten” requirements: protecting the company’s already existing image, improving technological and processing activities as well as developing new schemes of business alliances or partnership with the view of establishing future financial growth. Already occupying a huge market segment, Google does not have to prove its advantages over other competitors, though it is highly important to keep an eye on their activities to stay updated and alert of the new comings. The best tactic,however, is to emphasis what the company is doing in regard to users’ convenience and satisfaction. Such a technique, to my mind, will only add up to the company’s image because of the fairness and openness of the intentions. Some companies may be trying to get on top by means of underlining the disadvantages of others, but for such giant as Google, the most successful and wise approach is improving itself without waiting for competitors to slip or make a mistake.

References

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