Search industry has undergone tremendous changes in the recent past to adopt a new face in the modern world. Google Inc. is such an organization that has been subjected to drastic changes in the recent past as a result of advancements in technology. Since its inception as BackRub by two computer science students from Stanford University, Google search engine has maneuvered through a highly competitive market to become the best search engine in the world (Gamble, 2008). At the outset, Larry Page and Sergey Brin developed the aforementioned search engine in 1996 which later gained dominance and captured the world market. In 1997 for instance, BackRub gained the loyalty of many Silicon Valley internet users due to its accuracy (Gamble, 2008). BackRub later transformed to Google Inc. in 1998 following its acquisition by an investor who paid up $100000 for the search engine. Since then, Google has undergone comprehensive changes to gain its reputation that is currently witnessed in the market. Google has since adopted various strategies to increase its revenue base and the market share in an attempt to out-compete its rivals and survive in the industry. These strategies included approaches such as acquisition of various ventures since 2004 IPO including Keyhole in 2005 and You Tube in following year as well as its focus on research and development (Gamble, 2008). These strategies enhanced Google’s dominance in the internet advertisements. Generally, the aforementioned changes in the search industry have been necessitated by a variety of factors including environmental, social, and political as well as advances in technology. For instance, environmental factors comprise of competition within the search industry which has shaped up the industry. It has changed a variety of industry facets including quality as well as the prices of goods and services produced by the search companies.
Competition in the search industry
Search industry is characterized by stiff competition given the complexities in the taste and preference of the consumers as well as changes in technological advancements in the industry. To begin with, Google Inc. has ever since enjoyed the loyalty of many internet users in the market by controlling huge market share. Google became the largest company offering mobile and internet advertisements in 2008 by controlling over sixty three percent of the market share (Gamble, 2008). This is attributed to the great faith in the company displayed by the customers in the Google Company. Such preference in the company by customers increased the company revenues to about $16.5 billion in 2007 thereby stabilizing the company further against market forces. Google had a steady growth since its inception and could not be dislodged from the first position in the internet advertisements within the industry by its closest rivals including Yahoo and Microsoft Live. It out-competed all the business rivals in the internet industry including AOL, Ask, Yahoo, and Microsoft among other firms in the industry by controlling more than forty percent of the market share (Gamble, 2008).
Besides, the company embarked on a strategy to acquire various business ventures in an attempt to increase its revenues, earnings as well as net cash since the 2004 IPO. Such initiatives ensured that the company gained economic ground within the information technology industry thereby enhancing its competitive ability. Moreover, the initiation of cloud computing applications would ensure that the company grows to $95 billion by 2013 as estimated by information technologists (Gamble, 2008).
Google Inc. faced stiff competition from a variety of sectors due to its diverse operations strategy. To begin with, the production of Android operating system not only had benefits but faced stiff competition from other firms such as Apple iPhone as well as potential competitors including LG and Nokia which had planned to launch such similar products one year after the Google’s launch of the product (Gamble, 2008). The launch of Android in 2008 could ensure that the wireless providers including Nokia as well as LG were able to produce internet enabled phone that had features similar to that of Apple iPhone. Google therefore captured the market after production of the aforementioned operating system in 2008 by taking control of 63% of the market share of internet-based searches by the mobile phone users (Gamble, 2008). Additionally, it was also able to consolidate the market share of the video as well as banner ads on the mobile phones. The Android’s GI was superior to the Apple iPhones in the design of its QWERTY keyboard compared to the latter’s virtual design which entailed the typing on the video image of the keyboard (Gamble, 2008). The aforementioned characteristics enhanced the GI’s competitive advantage in comparison to its rivals in the market hence the success witnessed in 2008 (Porter, 2008).
However, this product had its weaknesses too. Its size was the main undoing given the unique taste and preference of the mobile phone users. The GI product was thicker in design compared to Apple’s iPhone which was slim and therefore more preferred by the mobile phone users. Apple therefore had a competitive advantage over Google on the GI product. Moreover, Nokia and LG were planning to launch similar product in 2009 that would increase the number of competitors in the market (Gamble, 2008). Google Inc. also faced competition in the communication sector mostly from social networking sites. The company’s initiative of developing a social networking site referred to as orkut.com did not perform as expected in the industry. The site received challenges due to stiff competition presented by MySpace.com as well as Facebook.com (Gamble, 2008). It had to be faced out of the market following its failure to outcompete the aforementioned giants in the social networking arena.
Strongest competitive force
Threat of substitutes
Generally, threat of substitutes form the strongest competitive force within the search industry. To begin with, Google Inc. faces stiff competition from a variety of rivals including internet providers such as Yahoo and Microsoft, as well as software producer such as Apple among other close rivals. Despite its profound dominance in the internet provision within the industry, Google is facing challenges in provision of other products. As earlier mentioned, the quality of products such as Android GI produced and launched by Google in 2008 was initially successful but later met stiff competition from Apple iPhone due to its size that was not preferred by the mobile users (Gamble, 2008). Moreover, the company performed poorly on the office productivity software compared to Microsoft as witnessed in the minimal amount of revenue realized from the sale of Google applications to corporate customers compared to Microsoft’s huge 2008 fiscal sale that commanded ninety eight percent of the market shares on the software (Gamble, 2008).
Besides, the Microsoft bid to launch its model of cloud computing would enhance competition as two different products of high quality were to be made available for possible substitution by the customers. The launching of Windows Live in 2008 further heightened competition as internet users could now be allowed to store their files in Sky Drive sites that are protected through passwords. Google’s cloud computing presented a variety of benefits including lower cost of acquiring the software, easier connection between employees in different locations as well as lower costs of computing support.
It is also worth mentioning that the customers of the information technology products are always flexible and therefore may be willing to substitute in cases where flaws are noticed. For instance, it is highly likely that a customer can shift from one product to the other due to changes in taste as a result of advances in information technology (Porter, 2008). This is evident in the case of Yahoo and Google inc. as far as provision of internet services is concerned. Yahoo Company was initiated in 1994 ahead of Google Inc. and therefore launched its internet services prior to its rivals. However, customers later shifted to Google after the company came into being. Such willingness of the customers to substitutes a product for the other enhances competition in the information technology industry (Porter, 2008).
The relative price as well as the performance of various substitutes in the information technology industry has been encouraging. The price of internet services for instance has been kept low due to the high competition witnessed between the internet providers. Both Google and Microsoft charged competitive fees on the advertisers with success in the magazine and newspaper advertisements placed on their official sites or partners in the media. The performance of various information technology products further raises competition levels within the industry.
Finally, competition has been heightened in the information technology industry due to the ease with which customers can switch to another service provider (Porter, 1998). The industry is characterized by consistent changes brought about by the advancements in technology. As mentioned earlier, Yahoo customers found it easy to switch from using Yahoo as their preferred search engine to Google following the coming into being of Google after the establishment of Google. Moreover, switching from Microsoft application software is easy too especially when the alternative product presents suitable features that the customer requires. For instance, cloud computing is a technology developed by both Microsoft and Google to enhance computing in the modern world. The technology is meant to store as well as protect important files. Microsoft has been protecting vital user-specific information from being accessed by Google (Gamble, 2008). This information would be used by Google in important ads but protected via its Microsoft internet explorer 8 which helps the internet user to hide its task bar thereby protecting access of such important information by the third party. Google on the other hand has utilized Chrome technology that enabled the use of applications in many tabs simultaneously as well as enhancing security for the applications in case a disruption occurs. Moreover, Chrome ensured that Google had satisfactory security against offensive attacks from Microsoft (Gamble, 2008).
Weakest competitive forces
Unlike the above discussed competitive force, the information technology industry presents a variety of weak forces. To begin with, the rivalry between internet service providers is not intense due to a variety of factors. Firstly, Google Inc. has demonstrated clear lead in the information technology industry compared to its rivals in the industry (Gamble, 2008). The Company has been able to control the market share of internet search-based users by dictating more than sixty percent of the total market shares in internet searches in 2008 followed by yahoo at slightly above twenty percent and Microsoft at about nine percent among other internet-based companies (Gamble, 2008). This is attributed to the firm’s ability to sustain its positive relationship with advertisers, internet users, as well as websites. Besides, the firms posing as rivals are large sized but few companies hence minimize competition within the industry (Porter, 1998). However, Google is facing some challenges within the industry as far as production and sale of other products is concerned. This is mainly attributed to the structure of the market which makes it easy for the firms to out-compete Google in the aforementioned sectors. Moreover, products are not differentiated thereby facilitating high competition within the industry (Lele, 1992).
As mentioned earlier, there are little or no costs associated with switching from consumption of one firm’s products to the other company’s. Buyers will not be required to pay anything when they get attracted to the products of a different firm. For instance, switching to Apple iPhone from GI due to the appealing design and size in relevance to its use should not attracts no fine.
Threat of New Entrants
The new entrants of firms in the information technology industry pose little or no threats to the established companies. Firstly, the potential competitors need to have a large financial base as that owned by the already existing companies such as Google, Yahoo, Microsoft, and Apple among other firms in the industry. The firm is required to have a huge capital before contemplating joining the industry. This is due to the many financial requirements as well as large miscellaneous budget due to the current and potential changes in the management strategy as a result of changes in technological advancements (Porter, 2008). The access to technology is higher among individuals or corporate with greater revenue base compared to the poorer lot. The potential firms are therefore unable to meet the expensive requirements in an attempt to fund the modern technology which can therefore ensure their survival and may be make profits in the end.
Moreover, it is highly unlikely that the customers may be loyal to the new firm’s brands before such brands are well established. Customers can only gain loyalty after the products sold to them by the new firm are confirmed to be suitable and the management of the firm is transparent and know how to handle customers. On the other hand the existing and highly established companies including Google, Yahoo, as well as Microsoft stand in a better position to win the loyalty of their customers by offering high quality products as well as services (Gamble, 2008). In essence, the entry of new firms into the IT industry poses little threat to the current firms due to the aforementioned reasons.
Besides, it is always rare for a government to offer subsidies for newly firms that are contemplating entry into the market industry when the present firms are able to serve the current population. Consequently, there are minor chances of competition hence the weak competitive force. However, it is noteworthy that the entry of new firms into the search industry would ensure that there is a reduction in the charges of products or services offered in the college. Such a reduction in prices of products will trigger the firm’s aggressiveness in an attempt to sell many products to recover the lost finances (Lele, 1992).
Bargaining Power of Buyers
Information technology industry is characterized by a high number of users spread all over the area of a firm’s jurisdiction. The sellers on the other hand are few hence little competition chances between the companies within the industries. Moreover, the sellers are entitled to offer high quality services and/or products (Porter, 2008). For instance, Google provides high quality internet services as exemplified in the firm’s goggle search methods that can open more than one tab and run all the tabs simultaneously. Moreover, Chrome provides a defensive mechanism that is able to protect the search site from invasion especially from the Microsoft. All of the above initiatives are meant to protect the interest of the buyer. Competition may be a bit high in such situations (Lele, 1992). Finally, the products are differentiated though similar in some circumstances. Different firms embark on their own strategies of producing items as well as services that would satisfy the needs of customers. In essence, competition is weaker here given the lack of uniformity in the quality of goods and services required of a producer (Porter, 1998).
Information technology industry is a fast growing industry characterized by a large market size as well as capital requirements. The rapid advances in technology have highly impacted on the operations and functioning of search industry. For instance, developments in IT have opened investment opportunities thereby facilitating the expansion of market share either through acquisition of other business ventures or initiating new businesses (Gamble, 2008). However, the high capital requirement in order to invest in the aforementioned industry makes the business even more risky given the constant changes in technologies. The stiff competition usually witnessed in the IT industry has shaped up the industry to an extent that the services offered are of high quality and of affordable costs. The industry is however affected by a variety of factors including political, social, as well as environmental factors. For instance, government intervention through rules and regulation such as licensing or provision of subsidies greatly affect the business industry to a large extent. The environmental factors including competition have also contributed to the performance of the industry in both positive as well as negative manner (Porter, 1998).
Changes in the search industry
Search industry has undergone rapid changes in the recent past and such changes are still constant. Google Inc. for instance has achieved tremendous changes since its inception in 1997. To begin with, Google Company started from scratch as witnessed when Sergey and Page disposed off the company known as BackRub to a certain investor in 1998 at a cost of $100000. This company was subject ted to a lot of changes to the current Google Inc., the world’s largest search company (Gamble, 2008). The search industry is changing in all perspectives from management approach to the reduction in prices as well as improvement in the quality of service offered and the items produced. The changes have occurred both in complexity as well as in scope. For instance, Google Inc. has introduced a cloud computing technology that enables an individual to store data online and thereafter protect the stored information through use of Chrome. Such technologies were inexistent during inception of the search company. Moreover, a larger number of the world populace have managed to acquire the new skills of internet use from the internet providers contrary to the past when such knowledge and technologies were inexistent and no one could access them (Gamble, 2008). A variety of factors have contributed to such changes as witnessed in the recent past.
Forces driving the changes in the search industry
The forces driving the major changes in the search industry include such factors as the environment, social factors, political factors as well as the advances in technology. At the outset, environmental factors such as competition have contributed to the shaping up of the search industry. Through competition, various companies have embarked on strategies to improve their service delivery in an attempt to survive in the highly competitive market. Consequently, high quality affordable products and services have been made available to the consumers. Competition has also enhanced the rate of productivity of various firms in the search industry hence increasing the rate of general supply of new products in the market. A part from environmental factors, political factors have also contributed to the changes in the search industry and will continue to do so in the near future. For instance, government’s involvement in business activities through imposition of tax, subsidies as well as issuance of licenses among other regulatory mechanism has influenced the search industry in one way or another. Provision of subsidies to the potential business venture so as to enhance investment in information technology has catapulted the growth in the industry as more suppliers means more products and services in the market which is vital for the general development of an industry (Lele, 1992).
Search industry has undergone rapid changes to acquire a modern outlook that is not only appealing but also commendable. At the outset, the transformations witnessed in the search industry in the recent past are attributed to a variety of factors that have shaped up the changes currently witnessed in the search industry. These changes have drastically occurred in the recent past courtesy of a variety of factors including environmental factors, social factors, political factors as well as changes in technology. For instance, environmental factors such as competition have greatly impacted on the transition of the search industry in the recent past. Such competitions have highly contributed to the changes in the quality as well as the affordable prices of the information technology products. Business ventures usually attempt to provide the best products in the market so far with the aim of attracting customers. Competition has been evident between reputable companies including Google Inc., Microsoft as well as Yahoo.com and the outcome of such competition is commendable! Political factors on the other hand may entail the government involvement in business issues such as the issuance of license, granting subsidies, imposition of taxes among other rules and regulations. Through subsidies for example, the government has managed to catapult the development of technology by encouraging information technology companies to invest in an area thereby creating employment opportunities as well as facilitating spread of knowledge on IT. The changes in the search industry have occurred in all perspectives including complexities and scope and have been driven by a variety of factors including social, political, technological as well as environmental factors.
Gamble, J. (2008). Google’s strategy in 2008. John E. Gamble.
Porter, M. (2008). On competition. 2nd Ed. Boston: Harvard Business Press.
Porter, M. (1998). Competitive advantage: creating and sustaining superior performance: with a
new introduction. London: Simon and Schuster.
Lele, M. (1992). Creating strategic leverage: matching company strengths with market
opportunities. New York: John Wiley and Sons.
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