Google: SWOT analysis
Alphabet is a collection of businesses – the largest of which, of course, is Google. It also includes businesses that are generally pretty far afield of our main Internet products such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo, and X. Google’s core products such as Search, Android, Maps, Chrome, YouTube, Google Play, and Gmail each have over one billion monthly active users.
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Google’s SWOT analysis shows the firm’s internal capabilities and the external factors that influence how these capabilities are used.
Google holds the largest market share in the search engine market. Its name has become synonymous with online search. According to industry reports, Google holds more than 70% of the global search engine market. For years, it has continued to focus on making its search engine as user-friendly as possible. A large part of its revenue comes from online advertising.
Google has adopted the Android and mobile technologies and it becomes the direct competitor of Apple by introducing the new devices and their operating systems. About 80% smartphone users use Android service. It enables users to use some open source applications like Google Maps, Google Drive, Gmail and many others. When users use these applications, Google places targeted ads across its network. This is one of the major ways to advertise products and services. By this way, Google earns a profit.
Alphabet employs more than 27,100 people in research and development (R&D). The company invested USD 13,95 billion, USD 12,28 billion and USD 9,83 billion on R&D for 2016, 2015 and 2014 respectively. Massive investments in R&D have enabled the company to introduce new products for new markets in a consistent manner, thus adopting first mover advantage as a competitive advantage of the business. Specifically, the range of innovative products and services introduced by Google include, but not limited to self-driving car equipped with video cameras, radar sensors and a laser range, Google TV, a platform that integrates television and internet, Google Replay, a source for achieve of tweets, Priority Inbox feature in e-mails and others.
Despite a highly diversified portfolio of Alphabet Inc. products and services, 88% of total revenues in 2016 were generated from advertising only. Google’s major strength – its leadership in online advertising can be its major weakness as well, in a way that the company mainly relies on only one source of revenue. Sustainability of this revenue source is not ensured as advertisers can terminate the contract at any time due to a wide range of reasons. Additionally, an introduction to fundamentally innovative forms of advertising by competition can result in highly negative implications for Google in short-term and long-term perspectives.
Google’s ‘Google Plus’ is a lot behind Facebook or Twitter. According to industry sources while the number of visitors on Facebook, Twitter, Pinterest and YouTube is growing, on Google Plus it is shrinking. Google plus is not as successful as the other brands in terms of the number of visitors and followers. Twitter or Facebook have superior features compared to Google Plus. It is why Google Plus failed to engage visitors like the other social media sites.
The company’s opportunities are mainly based on technological changes. Google is expanding its business to the driverless car. This innovation will be introduced within several years. This new technology will enhance the lifestyle of people though it will take several years to bring in the market. It will be safe for people to travel one place to another. The company will come in a new form in the market. There will not be any competitor. This will be the biggest opportunity for the company to capture the market.
Looking further ahead, Google has plenty of opportunities for long-term growth, including driverless cars, smart home efforts, robotics projects, artificial intelligence, medical equipment, and even medicine. Although many of these efforts are “moonshots” that might never generate meaningful revenue, the success of just one could diversify Google’s top line away from advertising.
The company will introduce Google Fiber and enhancement of cloud service. Google Fiber will bring ultrahigh speed to increase easy access on the web. The experts think that Google Fiber will increase the profitability of the company. Though the company has cloud service, it is very little to serve the customers. They are trying to increase cloud service. It will be leveraging its massive computing infrastructure to compete with other competitors like Amazon, Microsoft, and Oracle.
The company faces tough competition. Competing firms include large ones like Yahoo and Apple, as well as start-ups and regional/national firms offering products similar to Google’s. Other firms can also imitate the company’s products, such as its Nexus consumer electronics.
Apple, Microsoft, and Facebook are its primary competitors. Its share in mobile ads is increasingly under threat by Facebook. Facebook’s ad revenue from mobile advertisements has seen significant increase recently. At several points, Facebook’s performance in mobile ads has been better than Google. Apple is also trying to reduce the presence of Google in its ecosystem. Amazon’s product searches could also prove a threat for Google’s shopping ads. Google has generally managed the threat of competition well by acquiring a very large market share in search engines.
Facebook is the highest level threat to Google with the plethora of information and data it has in its database. The Graph search feature initiated by Facebook will pose a great threat to Google since both are equally powerful in terms of money, performance as well as business capabilities. Google has to set a strategy to overcome this stiff situation
Overall, while Google has emerged as a powerful brand in the web world, it cannot ignore the threat from competition. While Google does face a potentially difficult road ahead, they still remain a dominant force in the technology industry and one of the most profitable companies in the world. In the realm of search engines, Google is a household name and that name has become a synonym for internet search, eg. “Google it.” Their continued growth through acquisition and innovation keeps them steps ahead of their competitors and their large cash holdings keep the company liquid enough to remain able to do these things. Google faces too many disruptive challenges to be considered a safe long-term investment. Its core search and ad revenues are strong, but its inability to expand into social networking or shopping is worrisome. Unless Google can shore up its defenses against Facebook, Amazon, and Apple, the value of Google’s ads could continue sliding.
- Alphabet Inc. Annual Report (2016) [https://abc.xyz/investor/pdf/2016_google_annual_report.pdf]
- Alphabet Inc. Wikipedia [https://en.wikipedia.org/wiki/Alphabet_Inc.]
- SWOT Analysis of Google Inc. [https://www.fool.com/investing/general/2015/07/03/swot-analysis-of-google-inc.aspx]
- Larry Page explains why he chose the name ‘Alphabet’ for his new big company [http://www.businessinsider.com/why-googles-new-name-is-alphabet-2015-8]