Agenda - History and Background - Key Success Factors - The Future of the Search Business - Competitors - Google’s Next Move - SWOT Analysis - Board of Directors - Corporate Governance, Culture & Processes - Current Situation - Major Competitive Moves - Current Financial Ratios - Q&A

Background - March 1995 Meeting of Sergey Brin & Larry Page - BackRub 1996-1997 - PageRank algorithm 1998 - 1998 – 10,000 queries a day - 2000 – 60,000,000 queries a day

Background (cont.) - 37% of all U.S. searches in Q3 2005 - 68% of all search traffic outside U.S. as of Q3 2005 - Google's mission is to organize the world's information and make it universally accessible and useful.

Key Success Factors - PageRank-the better algorithm vs. directory based searches - Reliable delivery of more relevant searches - Google adopts Overture’s cost-per-click - 55% of Internet search volume for Google’s paid-listing advertisers - Constant innovation – Google launches contextual paid-listing

The Search Business - Google Most relevant searches 67% market share - Yahoo! Acquired Inktomi & Overture in 2003 20% market share - Microsoft Replaced Inktomi in 2005 with in-house search engine 7% market share

Google’s competitors - Yahoo - MSN - Others

Yahoo! - Yahoo is the leading internet portal with revenue of 5.3billion & 345 million monthly visitors. - Yahoo’s competitive advantage over Google is being a full-fledged portal which has the third party content and related transactional services and the channel to different sections such as: - Autos - Finance - Game - Health - Kids - Movies - Hot Jobs - Personals If Google wants to diversify the business Full fledged portal would be one of the options

Microsoft’s MSN - Microsoft is the dominant player in OS - They are trying to compete with Google in the Search Business - Google is trying to compete with MS through open office

eBay - eBay has 15 million current U.S. listing as of 2005 -The number of listing fell because: Google offered Base which got 10 million listing in just 6 month Through Base, customers who used to go to eBay to find a qualified seller, could find the vendor through Google Previous full-frontal assaults on eBay was expensive failures and negative experience for the users Higher transaction costs on eBay compared to Google paid listings for small businesses - eBay could keep its market share because of the online payment service (Pay Pal) - Google tried to come up with Google’s Electronic Wallet

Next Move? - Building a full-fledged portal like Yahoo!’s - Targeting Microsoft’s desktop software hegemony - Becoming an e-commerce intermediary like eBay If Google wants to diversify the business Full fledged portal would be one of the options

SWOT STRENGHTS WEAKNESSES OPPORTUNITIES THREATS Experience in Developing & Improving the Best Search Engine High Quality Services & Products Knowledgeable and Motivated Workforce Creativity & Innovation Rapid Product Delivery to the Market Decision Making Concentrated in Management Trio Narrow Spectrum of Products OPPORTUNITIES THREATS Diversify Products & Services Expand into New Search Areas Internet Portal Financial Intermediary Software development New Entrants New Technology & Algorithms

AOL: Google or MS In renewing its deal with AOL, could Google afford to pay more than 100% of the revenue generated from AOL searches? How did Microsoft maximum affordable bid for AOL’s search traffic compared to Google’s? - Google: 5% stake in AOL, 85-90% Revenue split, 300m ad Credit Google blocks the move by Microsoft (Strategic move) AOL provides communications channel to Google AOL had 17.7 million subscribers nationwide in 2005. MS lower search volume than Google, cannot necessarily pay the same share of ad revenue

Board of Directors Dr. Eric Schmidt Chairman of the Board and CEO (10% voting control ) Larry Page Co-Founder & President, Products (30% voting control ) Sergey Brin Co-Founder & President, Technology

Corporate Governance, Culture & Processes - Anything but shareholder friendly - Two-tiered stock system - Shares held by insiders are 83 percent of the voting power & Board of directors largely packed with insiders - Viewed by Wall Street as risky corporate governance in long run - Groupthink - Compressed business lifecycle vs. “innovative” managers

Corporate Governance, Culture & Processes - Technology and strategy at Google are inseparable - Google is in a fast changing & unpredictable environment; must limit its strategic planning to a few principles & guidelines; the rest must emerge as circumstances unfold - Innovation as a source of competitive advantage - Organizational climate encouraging innovation - Clear sense of direction (Vision and Mission)

Current situation - Google's core business: - Engine services and advertising - Web portal services Webmail (Gmail) Blogging (Blogger) Photo sharing (Picasa) - Image library (Google Images) - General news stories (Google News) - Financial news (Google Finance) - Interactive maps (Google Maps) - Comparison shopping services (Google Product Search) Google interface is available in some 115 languages

Major Competitive Moves - Purchase of YouTube for more than $1.6 billion (Google Video) (2006) - Purchase of dMarc Broadcasting (audio ads) (2006) - Acquired email security company Postini for $625 million (2007) - Bought mobile social network firm Zingku (2007) - Bought Adscape Media (placing advertising within videogames) (2007) - Bought Jaiku (mobile and Web-based instant messaging) (2007) - Acquired digital ad firm Doubleclick for $3.2 billion (2008)

Current Financials & Ratios Dec 07 Dec 06 Dec 05 Revenue 16,594.0 m 10,604.9 m 6,138.6 m Gross Profit Margin 59.9% 60.2% 58.0% Net Profit Margin 25.3% 29.0% 23.9% Return on Investment 22.41 20.83 21.42 2007 Sales 2007 US 52 % UK 15 % Other 33 % Advertising 2007 $ mil. % of total Google sites 10,625 64 Google networks 5,788 35 Licensing & other 181 1 Total 16,594 100

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