When looking at a firm such as Google from the viewpoint of a user, I am first struck by the number of quality products and services they provide at no cost to the consumer. One might expect that given the lack of fees, subscription or otherwise, you would be inundated with ads. Yes, in every search ads will appear. However they are unobtrusive in their placement and do not take away from the online experience, unlike some sites such as www.boston.com with its constant pop-up advertising.
The collaboration and communication tools have been extremely valuable in during my years at WPI. Interestingly enough, until the need arose, I was unaware of these applications. Despite using Google to search for information on the web, it took word of mouth to find out apps such as these existed. Are there some shortcomings to Google Docs, especially related to formatting? Yes. However the functionality it brings and ease of use far outweigh this. Gmail, Google's free email service, allows you to maintain up to 10Gb of emails and attachments. Email and web hosting companies such as XO Communications charge a premium for space on their servers, yet Google offers it at no charge.
Below is a SWOT analysis of Google from my perspective. I do not know the inner workings of this particular company, so I can only identify strengths and weaknesses as I perceive them. My recommendations to counter threats or take advantage of opportunities may already be taking place, although I am unaware, or may not make sense to them in the scheme of things, given the internal knowledge they possess.
Although Google has become a staple in the internet experience, I believe that they could do a better job of marketing and educating the public of the other truly valuable products and services they offer. Are they taking advantage of all revenue streams possible? I am not so sure.
"I am first struck by the number of quality products and services they provide at no cost to the consumer."
ReplyDeleteIt's interesting that you framed Google's value proposition this way because it represents to me an intersection of a strength and a weakness.
A friend of mine once mused to me 'if the product is free, then you are the product.' At the time he was talking about facebook but I think the same corollary can be drawn about Google as well.
Why is Google not only able to offer their products and services at no charge, but invest heavily in making them the most appealing, user-friendly products on the market? Why does Google invest in so many products that fail or are discontinued (http://en.wikipedia.org/wiki/List_of_Google_products#Discontinued_products_and_services)? It's because Google's entire revenue model is based on soaking up as many users of as many products as possible, and using each product as a channel to a) collect more information about users, and b) drip AdSense ads to them based on that information.
So in a sense, Google is offering products along two dimensions:
- They are offering products to end users which have little to no opportunity cost (i.e. they are free) and substantial utility
- They are offering the user base of the aforementioned applications (and the mine-able data about those users) to businesses as a marketing/advertising opportunity.
In your weaknesses section, you posed the question of how exactly Google is making money, considering they give all or most of their offerings away at no cost; If you think about their products along those two dimensions, its easy to see both why they opt to offer products for free, and how that practice is sustainable.
I love that!!! "If the product is free, than YOU are the product". So true.
ReplyDeleteWhat I found interesting about your post David is you suggestion that Google needs to do some more self promotion to educate the average user about their features beyond search. I agree in part, however, much of Google's success is do to it's perceived simplicity. Power users know that Google is anything but a simple company but the average user likes how simple Google is.
I wonder if the average user learned of all of Google's many features and products if it would be overwhelming and cause them to search else where.
Very interesting weakness you point out about being forgotten after they have served their purpose. That statement makes me start to believe that the common user is not in fact the target customer. The fact that Google is such a success on many levels makes me want to believe they do have a revenue strategy that I don't completely understand. The fact that common users like use Google for a task and move on strengthens the need to depend on advertisements and B2B solutions. Take the google shopping feature that has been around for a long time but just recently became a commercial site, or Google Documents which has been redesigned as Google Drive and charges for storage over a relative small free max.
ReplyDeleteRemaining a simple to use, high utility site will maintain high traffic volume from common users, while providing the paying business with a large number of potential customers. In a way, Google has become one of the biggest "middle-men" in the world, connected consumers to providers in almost every market segment. I assume that Google knows this is will slowly migrate to greater revenue building platforms.
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