A SWOT Analysis of Google
Google is one of the leading technology brands with strong brand recognition and a large range of innovative products and online services. Apart from the leading and fastest search engine, Google has also brought a large range of other products and services used by individuals and businesses worldwide including cloud-based services. At the core of the business model is online advertising which drives the largest part of the company’s revenue and profits. However, the entire business of Google is based upon technological innovation whether it is search advertising or cloud-based services. To find faster growth, the company is also investing in several new areas including autonomous driving. In recent years the company has also grown its investment in research and development fast. However, while on the one hand while its online products and services have found huge popularity worldwide, on the other the company is also dealing with problems that are legal and political in nature. Globally the leading technology brands are dealing with a large number of challenges and particularly the trade wars between the US and China have affected all of them. Google, led by Sunder Pichai (who became Alphabet CEO recently) is still one of the most cash-rich companies which means it is sitting on a large pile of cash to invest in new projects and expand its business into newer areas.
Read more about Google and its business in this SWOT analysis, analyzing the strengths, weaknesses, opportunities, and threats before the company.
Most innovative search engine:
Google’s search engine is considered the smartest of all and while several more search engines are there, google enjoys the largest share in the search engine market. According to Statista, Google dominates the search engine market and its share in October 2019 was close to 88%. There are several more search engines in the market including Microsoft’s Bing and market-specific search engines like Baidu in China. However, Google is still the most preferred search engine of users worldwide because of its smarter and innovative algorithms. It is the world’s most advanced search engine and at the core of Google’s multi-billion advertising empire. The strong brand recognition that Google enjoys worldwide is also because of its search engine.
Large range of online products and services:
Google has brought a very large range of online products and services used worldwide by individuals as well as business users. Starting from its search engine to google maps, Gmail, google news, chrome browser, Google has brought a large range of products that serve the needs of billions of users on the planet. YouTube also has more than 2 billion active users worldwide. However, apart from its online products and services, the company has also brought some hardware products like Pixel smartphones as well as Android OS to the market.
Google has continued to strengthen its position in the cloud computing market and gained substantially during the previous two years. According to an estimate by Garner, Google’s cloud platform holds a market share of 4% and could soon overtake Alibaba. In 2018, Google generated around $1.3 billion from cloud-based services and experienced a growth of around 60%. According to Kinsta, more than 8 million live websites are hosted on the Google cloud platform.
Online advertising is the main source of revenue for Google which is currently the leading player in the digital advertising industry. While Amazon has gained a little in the digital advertising industry, the market share of Google in the digital advertising industry is still substantial. According to sources, Google held a market share of more than 73% in the search advertising industry in 2019. Facebook and Google currently together hold the largest share in the overall digital advertising industry worldwide. In 2018, google’s revenue from advertising was $$116,318 million which was around $21 billion higher than the previous year.
In the last several years, Google has enjoyed consistent growth in its revenue and income. Net revenue of Google (parent company: Alphabet) stood at around $74 billion in 2018 which jumped to higher than $136 billion in 2018. Apart from a robust increase in its revenue from advertising, the revenue of Google from other sources has also climbed a lot. Currently, Google is among the most cash-rich enterprises in the world. Its string cash-flow gives the company extra leverage. It can invest in potential new areas to find faster growth.
Google’s Android OS holds the largest market share in the smartphone market. According to IDC, the market share of Android OS was 87% in 2019 which is expected to increase over the next years with 5G. Except for Apple’s iPhone, the other smartphone brands rely on Android OS for their smartphones. Google has kept updating and releasing new versions of the Android OS for its users worldwide. Android is currently the world’s most popular mobile OS which is used across smartphones, watches, televisions and even in cars.
Google is a leading technology enterprise that enjoys strong brand recognition in all corners of the world. While Google search engine has played a major role in making the company a household name in all corners of the world, many more Google products including the Chrome browser enjoy very heavy popularity and brand recognition worldwide. Strong brand recognition has also led to higher growth, sales, and revenue. Google’s large empire touches billions of users’ lives every day. The company also invests a lot in social responsibility and in communities where it operates to build a strong social image.
Fast Growing Non-Advertising Revenue
The revenue of Google from the nonadvertising sources is growing fast. Advertising is the core source of revenue for the company. However, the growth of nonadvertising sources will help the company reduce its dependence on advertising. In fiscal 2019, the revenue of Google from nonadvertising sources reached $25.93 billion which includes Google’s revenue form Cloud and other sources. In fiscal 2018, the nonadvertising revenue of Google was $19.9 billion. The cloud revenue of Google also rose from $5.84 billion in 2018 to $8.92 billion in 2019 (Alphabet Annual Report, 2019).
Over-reliance on digital advertising:-
Google’s business empire currently stands on one central pillar which is advertising. Apart from that, the other sources of revenue have an overall very small contribution to its entire earnings. While Google and Facebook together hold the largest share in digital advertising worldwide, the smaller players have also continued to gain market share including other social media channels like Twitter and Pinterest. Moreover, google needs to build new channels of income to reduce its reliance on search advertising. The company’s advertising behavior was also called aggressive and has faced legal scrutiny.
Privacy concerns and resulting damage:
Google has faced a lot of controversy related to user privacy. However, not just Google, Facebook another leading player in the online industry has also been through a lot of controversy and legal tussle related to user privacy on its platform. In December 2018, CEO Sunder Pichai appeared before Congress to respond upon several issues related to privacy, censorship and user data. These issues have continued and the company had to close several projects including the Dragonfly project.
While Google has since its foundation focused upon employee satisfaction and motivation, the CEO Sunder Pichai recently publicly accepted that the company was dealing with employee discontent. Employee protests inside Google grew stronger towards the end of 2018. During November 2018, more than 20,000 Google employees walked out of their offices to protest against sexual assault and other forms of alleged misconduct. Employee protests were also related to other issues like workplace culture and Google’s projects with the US military and the Dragonfly project.
Google’s revenue from cloud computing has grown a lot in the last year. However, it still holds a small market share in the entire industry which is currently led by Amazon and Microsoft. However, the increased use of cloud-based technology products globally has shown that the cloud industry is poised for faster growth. While Google has brought a large range of cloud computing products, its main focus was digital advertising and the company remained lagging behind the leading players in the area of cloud computing. The company should focus upon making its cloud computing products more accessible and affordable to grow its revenue from them.
The number of mobile device users around the world has grown rapidly leading to growth in revenue from mobile advertising. In the coming years too and after the arrival of 5G, the number of mobile users will continue to rise and so will the revenue being generated from mobile advertising. In this way, mobile advertising offers Google a major opportunity to grow its revenue faster.
AI, Machine learning and emerging technologies:
Google has also introduced a large range of AI and Machine learning products. These are some areas where the company can find more growth opportunities. Moreover, wearable technologies and autonomous driving are also generating a high level of interest. Google has already invested in autonomous driving through its Waymo platform.
Google is facing intense competition from other companies including Microsoft, Amazon and Facebook which are the leading rivals of Google. Microsoft apart from search advertising where it enjoys a comparably very small market share competes with Google in the area of cloud computing. However, Microsoft and Amazon both have very large market shares in the area of cloud computing compared to Google. Facebook is also a leading competitor of Google in the area of digital advertising as well as mobile advertising.
Laws and regulations as well as, regulatory threats continue to remain an important obstruction in the way of faster growth of technology brands like Google. While on the one hand regulatory barriers are to stop large businesses from establishing their monopoly, on the other they can drive operational costs higher for businesses and create pressures that can make it difficult to expand market share. Google is already dealing with a large number of regulatory and legal challenges including antitrust issues, anticompetitive behavior, and investigations into its attempts to establish its monopoly in the internet world.
The trade wars between the US and China are also causing operational costs to escalate and related challenges grow for the technology businesses. The company is already dealing with several difficulties in the Chinese market including the controversial project Dragonfly. Now, the tariffs are driving operational costs higher for all the leading players including Apple, Microsoft, Amazon, Google, and Facebook.
Pratap, Abhijeet. “STRENGTHS AND WEAKNESSES OF GOOGLE: A SWOT ANALYSIS .” Notesmatic, Jan. 2020, notesmatic.com/2020/01/strengths-and-weaknesses-of-google-a-swot-analysis/.
Pratap, A. (2020, January). STRENGTHS AND WEAKNESSES OF GOOGLE: A SWOT ANALYSIS . In Notesmatic. Retrieved from https://notesmatic.com/2020/01/strengths-and-weaknesses-of-google-a-swot-analysis/