For a company that most people knew nothing about as little as five years ago, Google has done well in establishing itself as a household name and a Wall Street favorite. And after only one year as a publicly traded company, the Internet giant is making clear that it has no intention of slowing down.
According to market analysts, Internet advertising is expected to surpass $12.1 billion by the end of this year, or 4.4 percent of the total advertising market. Google’s main claim to fame — and riches — has come from its constant innovation and growth, nearly doubling its workforce to 4,183 since June 2004 and increasing spending on research and development to $96 million.
It has consistently impressed investors and users with product and service improvements and the unveiling of Google Maps, Google Maps API, Google Earth, Google Personalized Home Page, My Search History and Google Web Accelerator all within the past year. And even more products and expansions are in the works. No doubt it is this dedication to improvement that has kept Google’s search traffic at just under 50 percent of the market share, holding competing search engines such as Yahoo and MSN at a far distance.
Google’s expansion beyond search into banners, contextual, video, mapping and perhaps even an online payment processing system such as Google Wallet, which could position Google as a major contender to PayPal, opens a huge potential revenue area. While Google’s share price has more than tripled since its debut last year, peaking at a record $320, the company still derives most of its profit from its AdWords and AdSense programs. Expansion into areas such as payment processing could allow it to add profits similar to those of eBay (parent company of PayPal) and Amazon to its bank statement.
But Google’s expansion doesn’t stop with the introduction of new products and services. It has made known that it would like to enter the Chinese market this year, possibly by securing controlling interest of another search engine that has made a big Wall Street entrance: Baidu. Baidu.com, the second most visited site in China and the sixth worldwide, is nicknamed the “Chinese Google.” And to certify Google’s willingness and ability to play ball with the big boys, there’s even news of Google opening a research and development facility in China to be run by none other than Kai-Fu Lee, who headed Microsoft’s Chinese research facility.
To say that Google is taking over the world would be an overstatement — but not by much. Especially if one has noticed that in addition to its other coups, Google is now the world’s biggest media company, with $80 billion in stock value as compared with runner-up Time Warner at $78 billion. Furthermore, Google’s exposure and success offline have brought increased media attention to the Internet, establishing Internet companies as serious contenders to other media giants.
On the flip side, Google’s success has seriously upped the ante for Internet giants Yahoo and MSN. MSN, which some thought could easily attain success by trading off the Microsoft name, and Yahoo have to at least match if not surpass Google’s track record of innovation and growth. And while to some extent the two have been keeping up with product unveilings, the results are still not appearing where it matters most: in market share. It will be interesting to see whether Google can maintain its reign and growth in the coming years or whether competition and/or a growth ceiling will hinder its success.
