Analysis of Google's Strategy

Analysis of Google’s Strategy On Android

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A Blog on Analysis of Google’s Strategy on Android










Submitted By:
-Kanika Shetty (2013029)
-Cliffton()


Agenda:

To understand the analysis report of Google’s Strategy on Android.

Analysis of Google’s Strategy On Android

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About the Company:
Google was first incorporated as a privately held company on Sep. 4, 1998, and went through initial public
offering on Aug. 19, 2004. Through its continuous growth and expansion, it attributed to a series of
aggressive moves, including new product developments, acquisitions, and partnerships. It lays great
emphasis on innovation, technology and employee quality, being a highly Tech-based Organization. It
positions itself as a top-tier search company and acts as the gatekeeper of the world information.
Majority of their revenue is earned from targeted advertising related to its internet search.
Android & its Integration with Google:

Android delivers a complete set of software for mobile devices: an operating system, a middleware and
key mobile applications. It is built on the open Linux Kernel and hence does not differentiate between the
phone's core applications and third-party applications. It also enables its users to fully tailor the phone to
their interests.

Google has paid great emphasis on its integration with Android by firstly having a Resource Based View
which combines the internal analysis within the company itself and the external analysis of the industry
and the competitive environment, which gives the management team a clear explanation as to how they
can make profits and sustain in the high competition level. Competitive resources should follow the VRIN
criteria, that is Valuable, Rare, In-imitable and Non-substitutable. Based on their RNV Analysis they have
had an advantageous position in the Android project and in the overall Smartphone market as well.

Key Factors to Success:

? Advertising:

Google relies heavily on targeted advertising to earn profits and developed advanced distributing
and analyzing technologies that could make advertising user friendly. It could trace the browser
history of mobile users with the introduction of android, thus combining two advertising media
the Internet and smart phones. As Android is not a self-contained device but rather a family tree
of many devices, the revenue from advertising programs due to the penetration of Android into
the global Smartphone market would be remarkably huge , with its Web Search engine being its
most valuable asset with a 53.6% market share,and Google should fully utilize this advantage to
promote Android.





? Halo Effect:

With a number of its popular applications already in the market, like Gmail, Google Calendar,
iGoogle, it owns a non-substitutable resource of integrating these killer applications into the
Android phones. Android will have the enhanced bargaining power towards carriers, handset
Analysis of Google’s Strategy On Android

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makers and consumers by establishing a sizeable consumer base, thus creating a virtuous circle
beneficial for Google Android’s long term dominance. The HALO Effect is thus created utilizing
Google's killer apps & Android being free and open is the key to it.

? Acquisitions & Partnerships:
Google is especially good at acquiring small promising start-ups and integrating them into its own
system. Successful acquisitions include the purchases of Earth Viewer (later was renamed as
Google Earth) in 2004 and YouTube in late 2006. With its ideology of catching opportunities they
quickly responded to the Smartphone market by acquiring Android, which presented itself with a
huge potential. They felt comfortable to initiate and handle a big project like Android through
collaboration as this acquisition/partnership experience is a valuable resource that other smaller
companies could rarely have.
? Company Culture:

Positive employee relations have been important in the high-efficient operations within Google
and boost lots of creative ideas through non-serious working hours. One good example is
Innovation Time Off, which is well-known for Googlers. All Google engineers are encouraged to
spend 20% of their work time (one day per week) on projects that interest them, which laid the
introduction of majority of their new products like Gmail, Google News, Orkut, and Ad Sense.
Google’s resources are valuable and hard to imitate & thus their company culture is a unique,
non-substitutable and valuable resource that spurs the long term success of the company.

Barriers to Success:

? High Requirements for capital & Technology:

The size of the OS for a Smartphone is not huge however the specific requirements of high
stability, low power consumption, high flexibility for customization & tight Integration with the
Hardware makes it complicated process.

? High Switching Cost for Manufacturers and Carriers:

The cost of building a new OS for the manufacturer is a huge cost as they have to also invest in
developing the drivers for them, ensuring they meet all its software requirements as well & the
same obstacle is faced by carriers as well.


? Considerable learning curve for hardware manufacturers and software
developers:

The learning curve for the OS maker to design an OS architecture that is easy to use, and the
learning curve for the partners to use the OS, is still a high barrier for this market.

Analysis of Google’s Strategy On Android

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? Patent Contention:

A war of patent creates barriers for competitors from copying each other.

? Supplier: Not Exist

There are no clear suppliers present in this industry as all the major players develop their
products either from other products they already have (iPhone from OS X), or from free open-
sourced product (Android from Linux).

? Bargaining Power Of Buyers: High

The buyers of Smartphone OS consist of hardware manufacturers, software developers & Smart
Phone users. The inclination of Hardware manufacturers is to choose a platform that has better
applications although there is a switching cost between different OS, as having killer applications
is more important than the OS. For software developers, the popularity of the online application
store usually decides their potential profit of creating and selling software for that OS. The cell
phone users have the strongest bargaining power towards the platform as they have the
information about which platform has more interesting applications.


? Rivalry:

There is a cut-throat competition in the market of Smartphone OS, with all the Major competitors
are all using the strategy of online application store to provide a better user experience of
purchasing software. Competitors also change their strategy quickly to adapt to the trend of the
market as they would become obsolete if they don’t change.











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