Let's Google it!

Google, a company which was founded by two Stanford University PhD students in 1998, is one the most recognised brands in the world and probably the company most associated with the Internet. Its main product is its search engine called as we all know....Google (that I extensively use to check out recipes and find restaurants), which is the global market leader (90%market share, see figure 1). In the last years it has had a business development strategy of going into other Internet services like e-mail (Gmail), document and spreadsheet software (Google Docs), and location-based services (Google Maps and Google Earth), and also of investing in other companies to develop and integrate with Google products, like YouTube - bought for $1.65bn in 2006 for online videos, operating systems (Android) and online advertising (DoubleClick, bought for $3.1bn in 2008, and recently AdMob, bought for $750m in 2009).


Figure 1 - Google search engine market share:
















However, Google is now a company of nearly 20,000 employees, $23,651bn in revenues in 2009 and a market capitalisation of $155bn, and it is beginning to face a number of problems…


Privacy issues

Every time we use Google search engine we provide individual data about our choices and preferences simply by putting in words, pressing “search” and using the results of the search. Google monitors these searches and uses this information not only to improve its products but as well, importantly, to sell online advertising (97% of Google’s 2009 revenues!) to other companies . Most users have probably not been aware of this and, even though most data we provide might not be “private”, it is “personal”, and people may not be happy that this is being used for commercial uses like advertising (indeed, each time i google a restaurant where to go or a recipe, on the right side banners start popping up suggesting me things about food I might be interested in). Indeed, Google (alike Facebook which is also having troubles in this area) may be pressured in the future to explain better how it uses the data we provide it with and give us more control over what it does with this data .

Providing global Internet services

Even though Google comes from a country with a strong tradition of free enterprise, the global scale of the Internet means that Google has to respect the laws of other countries in which its services are used. Examples of recent problems that Google has had with different laws are:
•Google’s decision to step-back from China, possibly the most promising Internet market in the world, because it did not want to continue censoring search engine results;
•Google’s problem with the YouTube service in Italy: where three of its employees have been legally condemned for not eliminating an abusive video from YouTube.

Dominance of Internet markets

Google is the dominant company in Internet search engines and it is using this strength to enter other Internet markets. This can be problematic from an antitrust perspective if Google uses its power to reduce the competition in other markets where it has a strong presence like the online advertising market . Like the problems that Microsoft has had in recent years with antitrust authorities over its practice of bundling other products( eg Internet Explorer with its Windows operating system) Google may be pressured in the future to adopt business practices that stop it from hurting competition in the markets it is dominant.

Google is today a household name across the world and its company motto, “Don´t be evil”, summarises for many people what the Internet is and should be about. However as Google matures it will face many challenges similar to ‘normal’ companies and how it responds is likely to determine a lot of its future success

Microsoft, a recipe for success

As most of you may have noticed, I am not exactly a genius (or is ‘geek’ the word?) when it comes to information systems... so, when asked to talk about Microsoft, and in particular at what point Microsoft is today, I am inevitably forced to open my laptop to do some research. I realise two things right away: looking at my screen I realise that Microsoft Windows is the only OS I have ever used and that most of my friends see it as the devil... as they are obviously Apple and Mac fans!
Thus I have decided to dig a little bit to understand the reasons behind Microsoft’s success and find out where Bill Gates’ company stands today.

What does Microsoft do?

Microsoft is a company founded in 1975 which operates in the computer software, consumer electronics and video games consoles. It principally makes (very successful!) software that is a household name to anybody that owns a computer. The best known examples are the Microsoft Windows operating system - the latest version called Windows 7 was launched in July 2009 and has now installed in more than 12% of operating systems installed worldwide - and the Microsoft Office suite, which includes the well-known Word, Excel and Powerpoint programmes. Additionally, Microsoft also seems to be a player in the software market for businesses (“client and server” market) and has a portfolio of products for servers and business software and applications.
Then there is also the Internet stuff that Microsoft does: the Internet Explorer for web browsing, the search engine Bing (launched in 2009, and also used to power the searches of Yahoo!) , the Windows Live services (Hotmail, MSN messenger, photos, images, news, etc) and the Zune entertainment platform for things like music and video software.
In recent years, Microsoft has also entered new markets such as the videogames, with its Xbox and Xbox-360 products, and the smartphone market with its Windows Phone product range.
In conclusion, Microsoft seems to be a big player in a number of information systems markets, although not with the same success everywhere…

Where does Microsoft make its money?

The revenues of Microsoft in 2009 were $58.437 billion , 3% below the 2008 figure of $60,420 billion, and its operating income was down 9% to $20,363 billion.
Microsoft dominance in the software (like Office) and client server business (see figures 1 and 2) makes 81% of revenues and in 2009:

Figure 1:



















Figure 2:












However, the Internet services results were not very positive in 2009 (about 5% revenues in 2009 but a growing operating loss of $2 billion).

Who are the main competitors of Microsoft?

Being in different sectors Microsoft has wide variety of competitors, the principal ones being the following:











What next for Microsoft?

It seems Microsoft will continue leading its core market of operating systems in the near future, but:
1. Does Microsoft dominance of software and operating systems give it a unique competitive advantage for the future?
2. As information systems markets converge, will the value move from markets Microsoft is in and what can it do about this?
3. How will Microsoft do in other markets against companies like Apple and Google that seem to be more popular and with stronger and more attractive brands?

TBC....



Source
http://www.netmarketshare.com/operating-system-market-share.aspx?qprid=8
http://gs.statcounter.com/#os-ww-monthly-201004-201004-bar
http://news.bbc.co.uk/2/hi/business/8174763.stm
See Microsoft.com

Foursquare and how to get a Michelin guide star

Again, I am more and more convinced of how much new technologies and cookery have in common. This reinforced belief comes from a recent discovery which is called Foursquare. But let’s start from the beginning. Being the owner of a cafe, even if a virtual one, I am very concerned about making sure that my establishment becomes very well known and popular . More, I am particularly interested in ensuring that my customers are so happy that they will return to visit me bringing with them also their friends and families. Even more, I aim at becoming one of the coolest restaurants in town, therefore I want to attract real trend-setters, those guys who are always the first ones in trying something and everybody wants to know what they do and, especially, where they do it, possibly in real time. But how could I achieve this without spending too much time and money and, above all, being able to reach my customers in real time, at the right moment and place?
Standard and traditional ways of advertising would be putting an ad in ad-hoc magazines and newspapers whose readers belong to the cluster I am longing for; getting a superb review from the culinary expert of El Pais or The Financial Times ‘How to spend it’ or, even better, getting a Michelin Star. And I could set up a loyalty card system offering special discounts to returning customers and encouraging my habitué to post reviews in my or their blogs becoming some sort of ambassadors. Nonetheless all of this would require a huge investment in terms of money and time as I would have to use different partners and channels. Moreover, it is not sure I would obtain my result, i.e getting a trendy, loyal and evangelising customer base. While putting an ad into a magazine is pretty easy it can be very expensive but it does not guarantee I will attract the right clients. Again, creating a loyalty reward program is not an assurance that they will be returning customers and they would recommend Cafe de Genes to other people via the classical word-of mouth - giving for granted that my cookery skills are awesome which is obviously the case. On top I want to offer my customers a special and unique experience which classical marketing channels would not realize.
The more I thought about my perspective promotional campaign the more I was feeling I needed a revolutionary approach that could give me a competitive advantage. Competition is very tough out there and customers are more and more demanding nowadays. So how can I kill 2 birds (or more) with one stone?
After a bit of research the answer has appeared in front of my eyes: its name is Foursquare. Yeah, exactly like the game for children many of us have played when kids. But here we talk about what Wikipedia describes as a ‘location-based social networking website, software for mobile devices, and also a game.’ In origin just another social game, as even some successful business men have defined it, Foursquare has attracted the attention outside the IT circles in the last months because of its huge potential as location-based mobile advertising. In other words, tell me where you are and I will offer you what you want and maybe also what you don’t know you want yet. For those of you who haven’t heard about Foursquare here a quick user guide which can help in understanding why it can be the right solution for my advertising problem. Each time you go to a place (e.g. a restaurant, bar, shop or museum) you check in via your smart phone and your friends will immediately know where you are. Next to this there is a real social competition as you will earn points for visiting repeatedly a certain venues with the possibility of becoming mayor of the establishment or collecting special badges, thus beating your friends. I think he doesn’t require having an MBA (:-)) to understand the vast business opportunity companies have in front of their eyes. The sign that things have changed for good has been when last January a company of the size of Pepsi has teamed up with Foursquare for charity purposes raising 10000$. As an interesting article explains ‘Pepsi gets some positive publicity, foursquare gets positive publicity and potential increase in user interaction, users enjoy competing and probably a few extra nights out to rack up extra points (to further the cause, of course) and Camp Interactive gets $10,000’. With a web traffic which quadrupled in the first quarter of 2010 to 2.1 million unique visitors monthly and a growth rate around 60% per week there is no doubt that Foursquare is not a game any longer as proved by the fact that companies have started queuing at its door asking for its business services. It could look quite amazing but so far Foursquare is not making any revenues from its users – in line with the fact that it was a social game/network and what has become today was not its initial goal according to its founder Dennis Crowley- and many think that it should continue like that. Surely users should not be charged but, on the contrary, they should be pampered, the reason being that the new technologies have increased and broadened the decisional power customers have and they are willing to participate to the Foursquare game in exchange of some tangible (frebbies) or intangible (becoming mayor) rewards. Otherwise why would they engage in the promotional activity? On the other hand companies and advertisers appear to be as the natural source of revenue of the company. As a shrewd businesswoman, I am willing to pay to get access and exposure to such a high value customer base in a timely and tailor made fashion. Some may argue that Foursquare is just the current darling among the social networks (it has competitors like Brightkite, Gowalla, Booyah and the French Dismoiou similar in the offer but not as succesfull) and, in short time, the general enthusiasm will deflate. Nonetheless I am convinced that, if its founders will be able to successfully manage the transformation which is taking place by creating synergies with companies, users and other social networks there is a bright future lying ahead. This position is somehow reinforced by the fact that companies like Yahoo and Facebook have showed a clear interest in acquiring Foursquare. If you still have doubts about it, just read this article ‘5 ways Foursquare is changing the world’. I have found it pretty inspiring and convinced me that my Café de Genes would enormously benefit from going Foursquare.