Google's success story is woven around two simple tenets – question established ways and have a healthy disregard for the impossible. Here is an insight into how Google has consistently challenged convention and succeeded in each of the markets it has entered.

By Subha Rama, Unified Communication & Collaboration Group

When Google began as a student project at Stanford, it was founded on the firm belief that whoever harnessed search would ultimately dominate the Internet. Just two years later, the Internet was already morphing into a phenomenon, growing from a few hundred pages into tens of thousands of web sites and millions of pages, creating the need for search engines that are fast, intuitive and accurate. Existing search engines were more portal-like in character, with search being just one of their features, leaving users disillusioned with their search results. Google, originally called BackRub, reinvented search by using an algorithm that ranked pages by quality (named PageRank after one of its founders, Larry Page), which makes searches highly relevant. The algorithm derives a probability match of a page to a user query by correlating the number of links towards a page and their relevance.

As Google grandly outlined in its first SEC filing, its mission was "to organize the world's information …. and make it universally accessible and useful". Google believed that the most effective, and ultimately the most profitable, way to accomplish this mission was to put the needs of their users first. This has become more or less the governing principle behind almost all its product innovations.

Search was one of the first fronts to be conquered, but it was definitely not the last, though it still remains the core of Google's business. In search itself, Google is aiming towards achieving higher levels of 'intelligence', making the engine more intuitive with the ability to 'understand' what the user is looking for. Beyond search, Google has consistently displayed an admirable acumen for anticipating the ways in which the Internet will evolve, and how users will access it.

Google recognizes that search has transcended web pages to include an array of other things such as images, maps, books, video and multimedia content. Consequently, it is constantly expanding its search capabilities to include all that information people own, organize, share and search. In 2009, it launched real-time search and music search, which quickly became popular. Google's other products - Gmail, Google Template, Google Groups, Google Maps, Blogger, Chrome (the open-source browser) or Google Apps - have also gained popularity and high usage. When Google launched its Gmail, it again raised the bar for the competition by offering 1GB storage, which has now grown to 7GB. Its junk mail filter is still one of the best in the industry.

Google offers many of its products free as it believes that "it is better to be free than cheap". The company monetizes some of its free services via advertising and in some other cases, it builds adjacent revenue streams. For example, though enterprise-grade Gmail is offered free with its domain hosting service, it generates revenues by charging for Postini, a bundled product consisting of email and web security and archiving features. Google Apps combines calendars, spreadsheets, e-mail, blogs and a whole lot more for just $50 per user a year. Though Google Apps accounts for only a fraction of its $23.65 billion in revenues for 2009, the product is expected to have derive opportunities via other businesses such as its proposed operating system, Chrome OS, mobile computing driven by Android and its Chrome web browser. See Figure 1 for Google's expanding portfolio of businesses.

Figure 1: Google's Reach

                                          Source: Frost & Sullivan

The company is also making non-core investments to ensure that its products are consumed in new markets. While Google's presence has rapidly expanded in developed nations, in the developing world it has faced challenges in tapping new markets due to lack of infrastructure and high-speed broadband connectivity. To overcome these, the company is investing heavily in satellites, and high-speed networking technologies such as WiMAX and last-mile connectivity options such as Wi-Fi. Google has a huge data center infrastructure (though the number and location of its data centers are closely guarded secrets), which is indispensable for its cloud-based delivery model.

Over the last several years, the Google brand has gained in stature. It has near cult-like following among the developer community. The company has re-written the rules in almost every one of the markets it has entered. Google displays some vastly different traits from those of its competitors, which have probably defined its very fabric of work.

"Crazy Definitely Triumphs Comfy at Google"

Google takes pride in saying that it hires only the best talent out there, people who are academically exceptional and are capable of thinking out of the box. Its employees come from diverse backgrounds, right from neurosurgeons and rocket scientists to nerdy computer engineers. At work, it follows a typical Stanford culture, allowing employees to dedicate 20 percent of their time (one work-day a week) to work on their pet ideas. This has helped sustain innovation, and has helped roll out popular products such as Google News, Orkut and Google Images. Employees are constantly challenged to think in new directions and come out with defining ideas. While allowing its people to experiment with novel (sometimes crazy) ideas, Google has also learnt to balance this by ensuring productivity and enforcing deadlines so that it is not drowned in chaos, which can be so typical of highly creative environments.

Many of the innovations are released internally first to see how they are being used among the engineers at Google. For example, engineers use blogs and wikis as core tools for reporting on the progress of their work. Google Docs was actively used internally before it was added to Gmail. Google is not averse to opening up the products to developers and users before they are completely ready. Many of the products in Google Labs actually evolve into their commercial version depending on how popular they become among these communities. Also, Google never hesitated to discontinue products that may be functionally unstable and not popular among users.

The Long Tail Model

Google strongly believes in the Long Tail model, that as the costs of online production and distribution fall, niche products and services can become as economic as mainstream ones. This theory in fact forms the core of a cloud-based service delivery model, which while accommodating a wide variety of applications is not subject to the lowest-common-denominator principle that we apply in a physical environment. Giving customers greater choice in terms of the number and range of applications, the business model focuses on a large number of products, each targeted at a relatively small audience, thus addressing niche segments, and building customer communities in the process. The Google business model is in fact based on openness, interoperability, decentralization and accessibility, the pivots around which cloud-based services are built. This probably explains why Google's markets are very diverse and range from search, operating system and content to mobile services and social networking.

"Don't be Evil"

Google's code of conduct, though it sounds simplistic, reflects the culture of a company that firmly believes that it should adopt the highest ethical standards in conducting its business. In their IPO letter, the founders emphasized a Google quality, user focus, which has endeared it to millions of consumers around the world. In the letter, the founders vowed never to "compromise our user focus for short-term economic gain." Hence, Google's search results and ranking inclusion are decided by the algorithm, without human intervention (It was forced to reiterate this on a few occasions in the past when user queries pulled out offensive content). Google accepts no pop-up ads and does not display advertisements unless they are relevant to the search.

Towards Egalitarianism

The Google world is totally egalitarian and the company believes that the Internet is fast bringing down barriers. Google search, in fact, brings down social barriers by creating a single, uniform information access mechanism. Google demonstrated a similar approach when it went public for the first time in 2004. It rejected the Wall Street model of hiring bankers to set the offer price and allocate stocks to their valued clients. Instead, it opened up an eBay-type auction, encouraging potential investors to evaluate the company on their own and place bids on the stocks, a model that was similar to the bidding process for AdWords.

Acquisitions Add Strength

Google has taken the acquisition route in the past in order to enhance its technology and market capabilities. Looking at its long list of acquisitions, it is easy to spot its preference for smaller companies that have harnessed unique ideas, be it Where2 and Keyhole (Google Maps and Google Earth), Upstartle (Google Docs), Dodgeball (social networking) or AppJet (a collaborative real-time editor). Some of its bigger acquisitions include YouTube, DoubleClick and Postini. The Android acquisition is an effort to create a mobile platform for all of its Internet-focused services and applications.

By constantly challenging the established ways and rewriting the rules of the game, Google has not only brought in the "wow" factor into its products, but also a bunch of angry competitors. The company has had a long-standing face-off with the Chinese government and its censorship of the Internet, which abruptly culminated in its decision to quit the Chinese market earlier this month. Its online advertising business model violently clashed with the advertising business of conventional media companies. The company's attempt to scan books and make them available online brought in a legal battle with Authors Guild and the Association of American Publishers that ended with Google agreeing to share 67 percent of the revenues generated by the project with authors and publishers. In 2007, Viacom, the parent company of Paramount Pictures, filed a $1 billion lawsuit against Google and YouTube for posting 160,000 of their clips without authorization. Google and AT&T are at loggerheads over net neutrality and MediaCorp is upset about Google serving its content for free over the Internet.

The competition for Google is also diverse, given that it competes across a number of markets. Microsoft is acutely aware of Google's enterprise play (See Figure 2) and the emerging threat to its business. Microsoft's search engine, Bing, has found some initial success and is forging ahead, powered by strong marketing and a cash-back program (under which Microsoft pays consumers to shop using Bing). In late 2009, Microsoft drastically reduced the prices for BPOS (Business Productivity Online Suite) in order to counter growing competition from Google Apps. Facebook has allegedly invested in a search company started by ex-Googlers.

Figure 2: Google Apps for the Enterprise

                                               Source: Google, Frost & Sullivan

Will the Google Juggernaut Roll On?

While stock market pundits have been predicting that it is impossible to sustain such high growth forever, Google has been outperforming predictions consistently over the last few years. However, 2009 was a rollercoaster year for the company – a 3 percent decline in revenues in the first quarter followed by a flat second quarter. Google has pulled off a strong fourth quarter performance by posting a 17 percent year-on-year growth and an overall increase of 9 percent for the full year to record revenues of $23.65 billion. The growth is especially impressive as the global economy was contracting and businesses were challenged on all fronts.

One of the things that Google did right was to hunker down and focus on core businesses, narrowing down its ambitious plans. As part of this strategy, it discontinued and reprioritized some of its initiatives, including the much-debated audio advertisements. The 2010 focus areas will be search, social media (not just limited to social networking but to make all of Google's products social), greater personalized mobile web services through Android and cloud-based applications delivery, as Google strongly believes that companies are migrating to the cloud not because of the cost factor but because they can be more efficient. More importantly, it plans to focus on the one thing that has made Google what it is today – innovation.