Web Searching as an Important Revenue Source for Various Online Firms - Essay Example

Introduction Web searching has become an important revenue source for various online firms. The web search engine business is growing as every year new users subscribe to the Internet for accessing to a wide range of websites. This thrust has not fully matured as current users are expecting more active and useful features in the world of the Internet browsing. And in order to cater and satisfy this expectation from the web users, many technology firms have launched different web browsers for attracting and retaining the current and potential users. For this objective, the firms are required to providing easier, faster and smoother search engine to the users by keeping in view in their current and potential expectations. In order to assess and highlight the current web browsing trends, the paper compares the performance of different browsers and their individual and market performance as well. This comparison would enable to determine the most effective way to gain digital competitive advantage for Google chrome. Our goal from the analyzation of these market shares to company perceived value is to be able to finally bring google chrome over the top and make it the number one most used web browser. We are in a position and ready to do this, however first, we need to better understand what we can gain from this. We will be able to gain a better understanding of our competitors and their reliance upon web browsers as a source of revenue for their company. Seeing as web browsers have almost no cost, this seems to be a very effective method of raising profits without raising costs. Since google has a primarily web based source of total income, it would be wise of us to increase this even more; this has been difficult in recent years seeing as how google sells only the chrome book as hardware. This will give us a good idea of who may be a possible target for a business deal in which we are allowed to download our web browser as the default. As we are able to see from the numbers alone, we have been able to gain twenty-eight percent of web browser market share within the two years of our introduction of chrome in 2010. The majority of this share was at the expense of Firefox and Internet explorer who had held 32.7% and 52.4% respectively, at the time of our introduction. At the time, safari had only held 3.72% of the market share, which although halved by 2012, does not explain the significant increase that we have experienced with chrome. Currently, the market share for Internet Explorer, Fire Fox, Safari and Chrome are: 34.6%, 5.14%, 1.39% and 28.24%, respectively; meaning that we are 6.36% of market share away from being equal to the market share of internet explorer. Although with steady growth visible with each new version of chrome, this was only done through the use of aggressive marketing and word-of-mouth marketing. From this base observation, we create our hypothesis. If we are to implement a plan of attack for which to become the market share leader of these web browser wars, then we are going to need a platform of hardware for which we base our attack. We have been only receiving more market share through people actively searching for Google Chrome and downloading it on their own. As we can see in figure one, 7% of Internet Explorer users are between “Somewhat Unsatisfied” and “Very Unsatisfied.” This would imply that around 7% of Internet Explorer’s customers would be willing to change if given the chance. This gives us our final hypothesis: If Google is to implement an anti-Internet Explorer campaign and/or come to an agreement with an already established hardware manufacturer to have chrome be their default, Google will be able to raise their Revenues as well as perceived value and stock price share through the increased market share of web browser activity. For this experiment there is necessary background information that each company has, that will be necessary for the understanding and interpretation of the dissection of this analysis. Mainly, this background information is about the way these companies receive revenue from their respective web browsers. Firstly, web browsers make money off of search royalties. This means that google pays search royalties to all of the other web browser companies, lowering revenue even further for google. Google receives 62% of their profits from their Google Websites which are featured and free of costs when using chrome (figure 2). This was increased due to chrome book, but has been the majority profit maker for google since google was founded. This is significantly larger than that of Microsoft’s revenue of around 10%, suggesting that Microsoft is using internet explorer more of a launching point for the rest of their company rather than as a revenue source like we are using. While on the other hand 97% of Firefox’s revenue was coming from Google’s search royalties. Lastly we have safari, which only accounts for around $12 million dollars of yearly search royalties from Google. As you can see (figure 3), apple is only making around 6.92% of their total revenue from “software and other services.” This would mean that they are not investing too much money into their operating systems and things of the sort. With Apple’s total yearly revenue for 2013 being $199,800,000, this would seem to be the most intelligent business decision for the both of them; for their collaboration is accounting for the majority of their ‘others,’ category. This would seem to us to be the best partnering. The two companies would both increase their revenues from the joining of googles search engine with the apple’s hardware. In figures four, five and six, we can see that based off of the firstly, google has seen the most growth and that would be largly a function of the growth of their chrome web browser. Also from this, we can see that from the standard deviations between Internet Explorer and Chrome that both proportionally gained similar amounts of market share of the web browser market. As we can see from figures seven, eight and nine, the correlation is only relevant for Google. This can be interpreted as google being the one who has the most inelasticity when compared to market share of the web browser market. This is exactly as we had expected. Furthermore, we are able to see from figure six and seven that Microsoft is far more diversified than both Apple and Google. With Apple being the second most diversified, we can conclude that it would be a good decision for Google to partner with Apple to make a better and more diversified income statement. We can lastly believe that although Microsoft may be a large percent of the search royalties for Google, it would not help Google to try and cancel out this share because they would presumable lost more revenue, proportionally, than would Microsoft. (Figure 1) (Figure 2) (Figure 3) IE Descriptive Statistics N Minimum Maximum Mean Std. Deviation VAR00002 1367 32.08 71.70 52.7391 9.88230 VAR00004 943 15.15 32.85 25.4893 3.52169 Valid N (listwise) 943 (Figure 4) Safari Descriptive Statistics N Minimum Maximum Mean Std. Deviation VAR00005 1367 .00 4.55 2.3722 1.56986 VAR00006 943 11.17 88.23 36.4716 16.83817 Valid N (listwise) 943 (Figure 5) Chrome Descriptive Statistics N Minimum Maximum Mean Std. Deviation VAR00007 1367 .00 31.85 7.4963 10.25414 VAR00008 943 128.59 333.81 252.5550 47.66894 Valid N (listwise) 943 (Figure 6) Correlations VAR00002 VAR00004 VAR00002 Pearson Correlation 1 -.480** Sig. (2-tailed) .000 N 1367 943 VAR00004 Pearson Correlation -.480** 1 Sig. (2-tailed) .000 N 943 943 **. Correlation is significant at the 0.01 level (2-tailed). (Figure 7) Correlations VAR00005 VAR00006 VAR00005 Pearson Correlation 1 -.535** Sig. (2-tailed) .000 N 1367 943 VAR00006 Pearson Correlation -.535** 1 Sig. (2-tailed) .000 N 943 943 **. Correlation is significant at the 0.01 level (2-tailed). (Figure 8) Correlations VAR00007 VAR00008 VAR00007 Pearson Correlation 1 .617** Sig. (2-tailed) .000 N 1367 943 VAR00008 Pearson Correlation .617** 1 Sig. (2-tailed) .000 N 943 943 **. Correlation is significant at the 0.01 level (2-tailed). (Figure 9) In summary, Google needs to change its investment strategy for improving the market share for the Google chrome. For this objective, it is highly essential that Google should invest in software and other operating systems so as to improve the search engine capacity and performance of the Google chrome. At the same time, it will enable Google to increase number of users besides increasing number of users as well. Additionally, Google lacks diverse investment when it is compared with the market share of Apple and Microsoft. As a result, it is highly encouraged to invest in diverse areas of the business for gaining market share for Google Chrome. Bibliography https://aytm.com/blog/daily-survey-results/internet-explorer-survey/ http://techtainian.com/news/2014/2/7/report-how-does-google-make-money-off-chrome-os http://ask.metafilter.com/142688/How-does-Internet-Explorer-make-money http://www.computerworld.com/article/2850881/mozilla-reports-flat-revenue-from-google-firefox-search-deal.html http://www.zdnet.com/article/how-much-is-that-safari-search-box-worth/ http://en.wikipedia.org/wiki/File:Apple_revenue_breakdown_2007Q4.svg http://www.nasdaq.com/symbol/aapl/financials?query=income-statement&data=quarterly Read More