By Nathaniel from Oak Park High School
Google’s products have a sleek, simple design and are very user-friendly, enabling them to reach a broader market. Google’s software can be understood and used by those that are less technologically advanced, especial the old and the young. Even Google’s new logo change is evident of this; its font looks like it’s from a kindergarten classroom. As Google simple programs are used by elementary-aged students in and out of the classroom they become familiar with them and are much more likely to use Google products throughout their life.
All of Google’s services are offered through one account, so it makes sense for users to use more Google services. Its products sync across devices.
Google Docs, Sheets, etc. can all be easily shared and collaboratively edited and commented on, in real time. This free online sharing feature only works when everyone works through Google, creating a network effect. The more people that use Google’s office software, the more people that will switch to use it in order to collaborate with those already using it, and the cycle continues.
Google is planning to combine its Chrome OS and Android into one operating system (Barr). This would create the following cycle, which is instigated by the fact that this new operating system reaches more people and devices than Android did by itself previously:
What started off as a search engine has evolved into a wide range of programs. Google has the potential to enter just about every market and rise to the top. Google’s focus is not confined to a single service, but merely under the umbrella of online technology, and can expand to provide almost any service imaginable. Google+ was a failure, but Google Maps made MapQuest forgotten. Google Forms could run out surveymonkey.com. Google Play is now competing with the Apple App Store and iTunes. Google Wallet could give PayPal a run for its money. As another example, Google just make Google Keep, which has the potential to beat out other productivity apps like Trello, Wunderlist, and Evernote. These new ventures are low cost and low risk, and autonomous from Alphabet’s other high cost, low profit projects. As Google enters these new markets, it has nothing to lose. While many of the other companies providing that service solely rely on that service for their source of revenue, Google will always have the safety net of its search engine to rely on. Google always has been and always will be a creative and innovative company.
Most of Google’s revenue is gained through advertisements. AdWords and AdSense, the programs Google’s advertising is set up through, auction off search-specific ad space to the highest bidder. As markets become more competitive, Google’s profits will rise.
Google recently made public much of its very advanced artificial intelligence software TensorFlow (Metz). This allows other developers to use, tinker with, and improve their code. This can open up new ideas and ventures and will help Google tone its AI software. By open sourcing TensorFlow, Google has shown ambitions greater than making a profit, but rather to expand and improve technology, improve the lives of people, and change the world. Such is similar to their initial interest as stated in their Founders’ IPO Letter: “To objectively help people find information efficiently.” Open sourcing TensorFlow indicates greater purpose than profit, which will increase consumer confidence and trust in Google and its goals.
Google is ubiquitous and practically has a monopoly on the search engine market. The bottom line is everyone uses Google. If they economy ever fails, Google will always have a constant supply of revenue from its search engine to fall back on. Until “Bing it!” becomes a common phrase, Google is pretty safe.
As education becomes more digital, Google’s profits will increase. Google Classroom enables teachers to digitally assign, collect, grade, and return homework as well as manage their class. Google Apps for Education is a package of Google services for schools to use. This is very enticing for schools because it is free, comes with 24 hour support, and syncs across all the different devices that schools may be using (iPads, Chromebooks, PCs, Macs, and students’ mobile devices). Google Docs and Slides become especially beneficial at school as students work together on group projects and reports with great ease. Many schools are buying Chromebooks, which run entirely on Google software, as a cheap alternative to laptops. As more and more schools use Google and as education becomes more digital, kids will become familiar with Google and its services at younger and younger ages. Sites like BozemanScience and Khan Academy and their YouTube videos are growing in popularity, generating more online traffic. EdX and many other platforms that make classes from universities available to the public for free also have large potential for growth.
Google is talking with the Chinese government about allowing an Android app store with only apps approved by the government (Barr, Google Pursuing a Return to China). This is starting to open up a huge market that will surely generate more revenue for Google. The day when China opens up to all of Google will be a good day to be a shareholder. Although that is mostly wishful thinking far in the future, we can be confident that devices running on Android software will likely be sold in China in the near future.
“Google doesn’t have ad space on things like Docs, Drive, News, Calendar, Classroom, Translate, Maps, etc.”
Google makes the large majority of its revenue from ads. However, it only places ads on its search, Gmail, and YouTube. How then will Google increase its profits if these appendage services that it keeps adding are free to consumers and can’t sell ad space? Here are three reasons how:
Technology is changing the way we communicate, learn, teach, plan, pay, collaborate, and interact. Wherever the future takes us, we know Google will be there.
Barr, Alistair. “Alphabet’s Google to Fold Chrome Operating System Into Android.” The Wall Street Journal 29 October 2015. Web. 30 October 2015. <http://www.wsj.com/articles/alphabets-google-to-fold-chrome-operating-system-into-android-1446151134>.
—. “Google Pursuing a Return to China.” The Wall Street Journal 4 September 2015. Web.
Chun, Wesley. How does Google earn money through Google Drive. n.d. Web. November 2015. <https://www.quora.com/How-does-Google-earn-money-through-Google-Drive>.
Metz, Cade. “Google Just Open Sourced TensorFlow, Its Artificial Intelligence Engine.” Wired 9 November 2015. Web.
Nieva, Richard. “Revamped Google for Work puts new spin on courting businesses.” CNET 2 September 2014. Web. 8 November 2015.
Page, Larry and Sergey Brin. 2004 Founders’ IPO Letter. 2004. Web. 17 November 2015.