Google: Strategy for Defense Google

Google: Strategy for Defense

Google is perhaps the most well-known name in the internet world. It is certainly the most widely-used search engine. When it first became a publicly-traded company in 2004, its stock sold for $85/share (Google Investor Relations FAQs). Google stock now trades for $605/share (NASDAQ.com). This of course is incredible growth over seven years, but Google is not without its competitors and is not so stable as to be entirely immune to market changes. In order to protect its place in the market and to position itself for future growth, Google has launched a business strategy for 2011 that is targeted towards defending its territory while simultaneously opening avenues for expansion.

In the late 1990s and early 2000s, Google's main competition was Yahoo. Google's search engine capabilities were so powerful that it soon outstripped Yahoo both in market share and in performance. The use of Google's search engine became so pervasive that the word itself entered the vernacular as a verb meaning "to look something up on the internet;" as in, if you want to know more about something, "Google" it. However, the recent launch of the search engine Bing by Microsoft is giving Google a serious run for its money. A study conducted earlier this year found that not only is Bing a more efficient and accurate search engine than Google, it is also nabbing a growing share of the market -- 27% as of February (Rosoff).

In response to the emerging threat of Bing and other search technologies, Google had adopted what is often referred to as a "moat" strategy to defend its business. The name comes from a well-known quote by successful investor Warren Buffet: "In business, I look for economic castles protected by unbreachable 'moats'" (Schonfeld). In the "moat" strategy, a company protects the health of its primary product by creating a diverse layer of other products that feed business towards its primary product and keeps competitors from being able to encroach on the market share.

Google has been pursuing this "moat" strategy since it acquired the Android technology in 2005. With the advent of smartphones equipped with default web browsers, Google has had to ensure that it has access to the burgeoning smartphone market for its search engine. Its solution has been to develop the Android software platform for mobile phones, and to give it away for free. The Android platform has -- what else? -- Google as its default search engine, allowing Google to retain a stronghold in an increasingly mobile web culture.

The second section of Google's strategic "moat" is Chrome, the web browser that the company launched in 2008 to compete with Internet Explorer and Firefox, among others. Its primary target was Microsoft; Google's CEO Eric Schmidt explained that the business strategy behind Chrome was to keep Microsoft from manipulating its tremendous browsing presence (Internet Explorer) to favor its own services (Bing) and as a consequence weakening the presence of the Google search engine. Noting some of the limitations of Microsoft's browser, Google set out to create its own browser that would not only outperform Internet Explorer but would also favor its own search engine (Martellaro). Google is in the process of expanding the Chrome brand into Chrome OS, an operating system designed to compete with Microsoft Windows but tailored towards the niche market of netbooks.

The most recent phase of Google's "moat" strategy is Google+, the company's new social media platform. Its direct competition is Facebook, a company whose product does not directly affect Google's search engine market but whose monopolistic hold on the social media sphere potentially cuts off Google from marketing and expansion opportunities. Google+ has a search engine-related feature that allows users to search shared content. It has been tremendously successful since its launch in June of this year; in the past five weeks, it has acquired over 10 million users and added $20 billion to Google's market value (Schonfeld).