Professional Documents
Culture Documents
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1 Network or portal which offers only its own content or services to users
December 2008 • Everything you always wanted to know about Google… • 3
1 Why won’t Google be affected by the crisis ?
2 Why is Google trying to change the mobile world ?
3 Why isn’t YouTube a content portal ?
4 Why does Microsoft fear Google ?
5 How Google wants to compete with Facebook ?
6 Why is Google buying satellites ?
7 How does Google buy traffic ?
8 Why did Google acquire DoubleClick ?
9 Why doesn’t Google monetize all its services ?
10 How does Google capitalize on Open Source developers work ?
11 How did Google capture the offline advertising market ?
12 Why is Google stealing our voices ?
13 Is PageRank a really competitive advantage ?
14 How does Google turn advertising into information and performance ?
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Estimates 2008 :
Revenues = 200 M $
1
Google is in a situation in which it can resist the economic crisis and find
new revenue sources, both advertising and non-advertising
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1: faberNovel
estimates December 2008 • Everything you always wanted to know about Google… • 5
2
Operating
Terminal Portal Operator Web Contents
System
Examples:
Entry barriers stop Google from applying its models to the mobile industry:
• Terminals assigned to a unique operator • Operator portals favored over other portals
• Difficulty of interconnecting networks • Services offered by terminal manufacturers
favored over other services
• Closed operating systems
The mobile industry is not suited for the Google development model
based on openness, interoperability and network effects.
..…….
Google breaks open the mobile industry value chain to create an environment
that will be fit to the distribution of its products and monetization model.
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1 Operating System 2 Federal Communications Commission 3 Acquisitions
December 2008 • Everything you always wanted to know about Google… • 7
3
Monetise contents
Give access to
Organise information through various
information
sources of audience
•A new information silo: video • YouTube bandwidth • Broadcasting of contents
search spending estimated to reach through Google websites as
1M$/day1 well as other sites
•Next : Speech to text
technology : information • Revenue sharing logic
searches within video
contents
• Acquisition of SketchUp, a 3D
modeling software with a free
version made available
Network Network
effects effects
Network effects
Google wants to become the « social data search engine » and to monetize
this data, leveraging network effects.
Wifi
Gratuit
Satellite Wimax
• 60 M$ Investment • Partnership
• Internet access in • A mobile high-speed
developing countries internet access
technology
• A 100 M users
Baloon market by the end of
Backbone1
Wifi 2008
Google has three objectives when investing in the upstream part of its value
chain:
Prioritize Internet access for • Future web users are Google services’ next
unconnected countries or populations users
Google has the financial power to buy traffic from partners, accessing to
massive audiences. ..…….
Number of advertisers
services?
Some Google services are free of charge and monetized through advertising :
Blogger: blog creating tool
Google Health: service for managing and storing personal medical information
GoogleNews: personalized mash-up of news articles and summary
Picasa: photo sharing service
Google SketchUp: 3D model creating tool
Goog-411: phone information service
…
Monetization of blogs created on Google 411 created to better the Picasa devised as a loss leader
Blogger through AdSense or video indexing on YouTube towards other Google products
FeedBurner
3% 7% 8%
Billboards Radio Most offline media (television,
44% 17% Internet Daily Press radio, press,…) begin to be IP-
News Press Television ready with online versions
21%
Google’s entry on this market anticipates new uses and broadens its offer.
Not specifically successful for now…
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1 TNS Media Intelligence, US advertising market
December 2008 • Everything you always wanted to know about Google… • 18
12
Creation of a Development
Indexing of Indexing of all
of « speech to
phoneme text »
YouTube audio/voice
database audio tracks sources
technologies
2
Bla bla
bla
Based on the correlation between the amount of links towards a page and their
relevance
It accounts for the notoriety of the sites that link to the page in question
(A page’s (u) PR is the sum of all PRs of pages linking to u (v), divided by the respective number of
outbound links contained in pages v)
Google1 claims that PageRank is one of its search engine’s main competitive
advantage :
1 http://www.google.fr/why_use.html
..…….
Relevance guaranteed
Scalable architecture Quick/simple queries
by 200 other criteria
Undefined
Strong intrusion Weak relevance
performance
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Most relevant ad
Qualityscore measures the relevance of the ad and
is determined by the click throug rate on the ad. It
impacts the display rank and Cost per Click:
$ Gmail
$ Apps
Server
Products
$
Apps $ $
$
Search $
Customer engine
Business
products Products $
$ $
$ $
$ Partners
Entertain Youtube
ment
$
The global value of the company relies The global value of the company relies
on independent lines of on traffic between network parts
products/business units (proprietary or partners)
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The platform must subsidize the groupe that is most price-sensitive and charge the
group that is most sensitive to the other group’s size.
1 Provided the sum of price A + price B is a fixed figure, a platform financing a group automatically charges the other group
and vice versa ..…….
Revenues 0,2
1%
CAGR Revenues 02-07 : 107%
Net CAGR Net margin 02-07 : 112% Licences and other 5,8 34%
margin revenus
Partner websites
(AdSense) 10,6
4203
3077 Google web sites
1465 65%
100 106 399
CA 2007
2002 2003 2004 2005 2006 2007
16,4
10,5 30,1% 599 1229 2120
34,9% 6,1
31,5% 9,0% 11,0% 12,0%
+ 26%
1,9 2,4
2005 2006
To faberNovel contributors :
• Amaury de Buchet, VP Consulting
• Cyril Vart, VP Strategy & Development
• Alexis Arquié, Junior Project Analyst
• Mounir Fassouane, Junior Project Analyst
To the bloggers :
• Olivier Ertzscheid from affordance.typepad.com/
• Google Operating System : googlesystem.blogspot.com/
• Richard MacManus from readwriteweb.com/
• Techcrunch.com & Mobilecrunch.com/
• Frédéric Cavazza from fredcavazza.net/
..…….
Cyril Vart
VP Strategy & Development
cyril.vart@fabernovel.com
Pierre Fremaux
Project Analyst
pierre.fremaux@fabernovel.com
Matthieu Lecomte
Junior Project Analyst
matthieu.lecomte@fabernovel.com
Tél. : +33142722004
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