Google: transitive verb to search for on the internet. Macquarie Dictionary 2006.
Google has clocked up 10 years since its inception in a Californian
garage and it continues to defy critics of its business model
supported by open-source code and funding the creation of technology
through advertising revenue.
While most companies attract criticism because of unethical business
practices, Google sets tongues wagging because it has taken and turned
it on its head the traditional business paradigm of creating and
selling a product.
The greater majority of Google's 20,000 employees are dedicated to
creating products which the company then distributes free of charge
over the internet. The underlying notion is that as long as the
products work and work well, they will attract loyal users who can be
served with advertising tailored specifically to the information they
are seeking or the service they are using.
Unlike the first generation of dot.com businesses, which based their
advertising models on the usual print approach of posting banner ads
on web sites, Google integrates its advertising with its diverse
software applications, tailoring ads that are delivered to users and
tracking the response.
Launched in 2003, Google's AdWords service transformed online
advertising by charging customers only for traffic sent to their sites
from its search engine and not for exposure to advertising on the site
where it appeared. Its model - pay-per-click rather than the
pay-per-eyeball approach - proved so successful it forced change in
the rest of the market.
Listing on the Nasdaq in 2004 with an initial market capitalisation of
$US23 billion Google climbed to $US186 billion in 2007 before
following the rest of the market down to $US80.99 billion where it
hovers at present. If anything, the current cyclical downturn has made
Google's shares a more attractive option, given the company's robust
earnings. Unlike the first generation of dot.com businesses that sold
on promises of future profitability, Google has cash and healthy
profits, and annual revenue of $US20.92 billion, almost three times
that of online advertising rival Yahoo!.
Although its core business focus is on software creation, Google, like
television stations, earns the vast bulk of its revenue from
advertising. And just as a television station spends time and money
attracting quality actors, presenters and screenwriters to create
programming which will attract an audience, Google works to hire
skilled software engineers to create the quality software products
that will deliver it an audience.
And in the same fashion as free-to-air commercial television gives its
content away for free to attract viewers, Google likewise gives its
software away, thereby creating an audience and an opportunity to
"It's a very relaxed environment, people are not micromanaged, they
work collaboratively on different projects, and they are rewarded when
the project they are working on actually manages to drive innovation,
from a monetary perspective but also from a status perspective,"
Google Australia general manager Karim Temsamani explains.
"It's critical to understand that our mission is to make information
readily available so that end users can find it at any time from any
device, then we monetise the search," he says.
"We don't start with a business plan and profitability in mind. We start with a particular
problem in mind and look for ways to solve it. Google is a company
driven by innovation; it's important we continue to develop the
services we provide so that we continue to attract that audience."
A case in point is Google's Chrome web browser, launched in September,
that is designed to challenge the dominance of Microsoft's Internet
Explorer. Rather than funding Chrome's development from software
sales, Google expects end users will adopt the browser, find it easier
to use with other online software, spend more time on the web, and
create more advertising revenue opportunities.
Microsoft's Internet Explorer, which is most commonly bundled as part
of its Office software and paid for as part of that suite, is easily
the most used web browser.
Now in its seventh generation, Explorer was launched for a less
sophisticated web. However, in the emerging era of "cloud computing",
much more of what is done online uses software specifically written to
deliver web-based services to users. Examples include e-commerce,
social networking, online banking, web-based email and online auction
Chrome has been built specifically to make it easy and quick to use
these services, changing the way in which software is delivered, and
potentially unseating established software players.
The danger for Microsoft is that if its web browser loses its
stranglehold, it could lose much of its market. Google's Chrome will
make it easier to access competing software online rather than users
having to buy it and install it on their desktop computers.
"For business, cloud computing will really be the ability to access 10
times the storage, and 10 times the processing power at a 10th of the
cost," Temsamani explains. "From our perspective, it's extremely
exciting because it is going to enable whole new business models for
companies that are looking to really drive innovation and product
Temsamani's vision for Google Australia is to create a
software-development hub which will entice talented expatriate
software developers back from overseas and lead to greater levels of
innovation within the domestic economy.
"There's an enormous amount of talent already in Australia, and we've
been very successful at Google at attracting that talent and keeping
it here in the country," he says. "The greatest challenge is that
there have not been enough companies in this country competing for
that talent and a lot of intelligent young Australians have been going
overseas to look for a job."
Google Australia employs about 250 people and while Temsamani hints he
is interested in increasing this number, he doesn't have a specific
target. He does, however, indicate an interest in taking advantage of
Australia's geographic position and multicultural population to
develop technologies for different languages and cultures.
"About a third of our office are engineers, many from different
backgrounds; we're interested in investing in a lot of different
resources and we're particularly interested in languages," he says.
"Two-thirds of the world's population does not speak English, and
there's enormous growth in content in languages other than English
"We're also looking at continuing to develop different business
partnerships, as much with some of the smaller companies in the
telecommunications, online or advertising space as well as large
In early November, Google announced an agreement with Telstra's
directories arm Sensis, which will see Google Maps and AdWords
software integrated into the Yellow Pages search facilities.
Temsamani also believes Australia provides opportunities for
increasing advertising revenue, suggesting that current online
spending has not kept pace with usage patterns.
"Australia as a whole is under-investing in online advertising," he
says. "Australians spend more that 25 per cent of their media time
online, but advertising spend is just 10 per cent of the total."
"Given our ability to provide a proper return on investment and strong
statistics, we expect to be able to shorten that gap over the next
couple of years."
Having established itself as a leader in the provision of free and
open-source software services, Temsamani is keenly aware that Google
will need to maintain this lead if its model is going to continue to
"Google is a brand that is entirely based on trust, and that trust is
based on providing our users with relevant information in a format
they understand. It's critical for us to continue to do that and to
continue to come up with new applications, or we'll lose that trust."
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