Str~tegfc Use of '"formation 1"ecJtno1ogy
`· Google
`
`Atuhors:
`Rex Olett (rex ic:s.utledu)
`Olsu \.;lm (ols-:ze04
`;llumni .uci !!d11)
`K<:flflctlf l<r.tmu · ·JaP m i!
`l.l<:i.ed11l
`Unt~n;lty of <.allt'orn a, II'\IIM
`lrvtne, CA 925~7-4 SO USA
`
`F'ebrulfY 2007
`
`EXHIBIT 2063
`Facebook, Inc. et al.
`v.
`Software Rights Archive, LLC
`CASE IPR2013-00479
`
`

`

`INTRODUCTION
`
`Arguably the most popular search engine available today, Google is widely known for its
`unparalleled search engine technology, embodied in the web page ranking algorithm, PageRanki
`and running on an efficient distributed computer system. In fact, the verb “to Google” has
`ingrained itself in the vernacular as a synonym of “[performing] a web search.”1 The key to
`Google’s success has been its strategic use of both software and hardware information
`technologies. The IT infrastructure behind the search engine includes huge storage databases
`and numerous server farms to produce significant computational processing power. These
`critical IT components are distributed across multiple independent computers that provide
`parallel computing resources. This architecture has allowed Google’s business to reach a market
`capital over $100 billion and become one of the most respected and admirable companies in the
`world.
`
`
`MARKET ENVIRONMENTS
`
`Search Engine
`Internet search engines were first developed in the early 1990s to facilitate the sharing of
`information among researchers. The original effort to develop a tool for information search
`occurred simultaneously across multiple universities is shown in Table 1. Although
`functionalities of these systems were very limited, they provided the foundation for future web-
`based search engines.
`
`
`TABLE 1. Early Search Engines
`
`Search Engine Name University
`Archie
`McGill University
`Veronica
`University of Nevada
`WWW Wanderer
`Massachusetts Institute of Technology
`Source: Battelle, 2005.
`
`
`Search Industry
`During the 1990s, the Internet experienced exponential growth with thousands of new web pages
`being created daily. Online document search became the chief method of navigating the ever-
`expanding World Wide Web, as Internet users sought useful information among the largely
`disorganized pages. As a result, the online search industry was born.
`
`Early web-based search engine had roots in university-based research, with the exception of
`AltaVista (Table 2). WebCrawler was known as the first search engine to perform full-text web
`search as opposed to searching library indices. In 1996, increased competition between search
`engines triggered the search engine size wars, as the companies competed to index the largest
`
`Inventor
`Alan Emtage
`Many students
`Matthew Gray
`
`Year
`1990
`1993
`1993
`
`
`i PageRank was named after co-founder Larry Page. The PageRank patent (U.S. Patent # 6,285,999), granted in
`2001, and belongs to the trustees of Stanford University rather than Google with Larry Page as the inventor.
`
`
`
`2
`
`

`

`number of textual documents over the Internet. AltaVista was the first forefront search engine
`winner, becoming the most successful and widely adored search engine in the mid 1990s.
`
`
`TABLE 2. Web-based Search Engines
`
`
`Inventor
`Year
`Search Engine Name University
`1994 Brian Pinkerton
`WebCrawler
`University of Washington
`1994 Louis Monier
`AltaVista
`Digital Equipment Corporation
`1994 Michael Mauldin
`Lycos
`Carnegie Mellon University
`1994 Six alumni
`Excite
`Stanford University
`Inktomi
`University of California at Berkeley 1996 Eric Brewer and Paul Gauthier
`Google
`Stanford University
`1997 Sergey Brin and Larry Page
`Source: Battelle, 2005.
`
`
`Many start-up search engine companies were founded by technically brilliant academic
`researchers and graduate students. However, many of these founders were young, arrogant, and
`lacked business knowledge and experiences necessary to run a company. In addition, most of
`these start-up companies were impacted by the dot-com bubble and failed to remain operational.
`Some search companies tried to raise capital by going public, but failed on most occasions, as in
`the case for AltaVista. The majority of web-based search engine companies went through a
`series of acquisitions one after another, and some, such as Excite, Lycos, and AltaVista, were
`acquired by companies outside of the search industry. For example, Google’s main competitor,
`Yahoo, acquired or licensed technology from a number of other search engine companies
`including AltaVista and Inktomi.
`
`The lack of focus on core products in many search engine companies led to the decline of quality
`search results, driving users to hunt for better alternatives. Many found their way to Google.com
`because of the positive user experience. Google’s popularity spread quickly by free advertising
`and by the word of mouth. Google was not the first company to enter the search industry, but it
`produced search results that were the most relevant to its users. The co-founders of Google had a
`vision of a distinguishing search engine from other platforms by providing fast, accurate and
`reliable search results. However, during the early stages, Google tried unsuccessfully to license
`its PageRank system to AltaVista, Excite, Yahoo, and other search engines. These companies
`were too focused on selling advertisements and were not interested in funding new “search” tools.
`Google then turned to other sources of capital, first from angel investors and later, venture
`capitalists. As the number of queries on Google.com grew, Google became a popular brand
`name that attracted additional investors.
`
`Search Engine Market Share
`Prior to the dot-com bubble in 2000, the search engine market was highly fragmented with fierce
`competition in the market space. However, after undergoing industry consolidation, the search
`engine industry was led by Yahoo, and followed by MSN, AOL, and Google. At the time,
`Google had less than 1% market share in 2000 but quickly gained momentum in 2001 and 2002.
`In 2001, Yahoo still led the search industry market share. Toward the end of 2002, Google
`surpassed Yahoo as the market leader in search engine, and has never looked back since,
`
`
`
`3
`
`

`

`claiming more than 50% of the market for the past three years (Table 3). As of 2006, major
`players in the search industry market include Google, Yahoo, and MSN, with Google
`maintaining its market dominance.
`
`
`TABLE 3. Search Engine Market Share
`
`
`2006
`66.63%
`14.74%
`10.92%
`3.93%
`1.31%
`2.47%
`
`2005
`2004
`Company
`63.16%
`57.81%
`Google
`16.51%
`18.24%
`Yahoo!
`12.06%
`13.83%
`MSN
`3.81%
`0.68%
`AOL
`1.13%
`1.24%
`Ask Jeeves
`3.33%
`8.20%
`Others
`Source: Netapplications.com, statistical data
`
`
`GOOGLE’S BUSINESS MODEL AND STRATEGY
`
`Business Model
`Since its beginning as a research project from two Computer Science doctorate students at
`Stanford University, Google has continued to follow its mission “to organize the world's
`information and make it universally accessible and useful.”2 From Google’s founding in 1997
`until 2000, the company did not have a well-defined business model to generate revenues. In
`2001, Google’s two co-founders hired Eric Schmidt, the chairman and CEO of Novell and
`former CTO at Sun Microsystems, as the new CEO of Google to help drive the effort in creating
`a business model for Google.
`
`With new management leadership, Google created a core business in online advertising, enabled
`by the millions of users using its search engine everyday. Revenue generation and profit growth
`in online advertising came from both Google’s search engine homepage and partner websites
`that display Google sponsored advertisements. Google created a cost-per-click pricing scheme
`for sponsored advertisements such that advertisers only pay a base fee, and for the number of
`referrals to their site.
`
`
`Equation for calculating Google’s Revenue
`
`
`
`Ads
`Clicks
`Queries
`Revenues = Users * * * *
`User
`Query
`Ad
`
`Revenue
`Click
`
`
`
`
`Source: Varian, 2005.
`
`
`From the metric above, Google’s revenue is affected by three factors: quantity (users *
`queries/user * ads/query), quality (clicks/ads), and price (revenue/click). Quantity is dependent
`on the number of keywords, advertisers, and users. Quality is based on advertisements relevant
`to users and is determined by the click-through rate. Lastly, price is affected by the conversion
`
`
`
`4
`
`

`

`probability between the click-through rate and the consumers actually purchasing products or
`services on the advertiser’s site.
`
`The ability for advertisers to determine the value per click can be computed using Google’s
`conversion tracking or internal tool to calculate online advertising retention rate. Furthermore,
`advertisers can bid on the maximum price they are willing to pay per click for their specific
`advertisements. Minimal value of the bid starts from $0.01 cost-per-click with an upper limit of
`$100. To control costs, advertisers can set an upper bound dollar limit they are willing to spend
`for online marketing. Once cost-per-click reaches the budget limit set by the advertiser, their
`advertisements are taken offline.
`
`Business Strategy
`Google is generally secretive about its business strategy, but it is evident that Google is building
`the foundation for all of its products and services under the central theme of leveraging advanced
`search technology and personalized advertising. For example, Google’s popular web-based
`email service called GMail, allows users to store and search old emails rapidly using text search
`integrated into the email client and then placing sponsored advertisements on the side based upon
`email content a user is currently reading. The GMail client is also able to identify email contents
`in which it can link information onto Google Maps and track packages from UPS and USPS.
`
`Existing search results are primarily textual-based. More advanced search technologies will
`allow users to search for other information besides textual data, such as multimedia content (e.g.
`audio, image, video). To maintain its reputation as a forefront technology leader and innovator,
`Google has been aggressively acquiring software start-up companies that can be easily integrated
`into its existing solutions, and can instantaneously gain visibility through Google’s leverage.
`However, this strategy of growing through small acquisitions is also used by Yahoo, one of
`Google’s major competitors, although the underlying methodology of the acquisitions is different.
`Yahoo’s acquisitions have been focused on acquiring search technology companies having
`specialized search functionalities. For example, Yahoo acquired Inktomi, Overture, and Stata
`Labs to perform web search, locating advertiser key words, and retrieval of Yahoo email client,
`respectively. Yahoo has a group of search technologies for different products and services, while
`Google has only one search technology.
`
`Over time with greater competition, an online advertising network may be commoditized and
`Google will need to develop new business models to entice new customers and enhance
`relationships with existing ones for customer lock-ins (Elgin, 2004). For existing customers,
`Google has Advanced Tools & Reporting to support sophisticated advertisers, and Google plans
`to tighten integration with other Google related products in advertising. Since Q4 of 2005,
`Google is offering Google Analytics as a free service. Google Analytics, formerly called Urchin,
`is a web-based service that provides log analysis and web statistics that lets advertisers know
`about their visitors and how they interact with their site. Google Analytics is integrated with
`AdWords and allows advertisers to optimize their keywords so they can better target resources
`for their marketing campaigns and deliver higher return on investment. This has served well for
`many small and medium size businesses using AdWords as the primary marketing tool for
`reaching to the customers.
`
`
`
`
`5
`
`

`

`Google has begun targeting its vertical sales in advertising to focus on Fortune 1,000 companies,
`where they have only captured one-forth of the market share.3 Fortune 500 companies have not
`caught on as quickly using online marketing, and have relied more on traditional marketing
`techniques. However, according to a study conducted by Advertising Age, “Nearly half of the
`chief marketing officers at Fortune 500 companies said they plan to increase their online
`advertising budgets by 30% in 2006.”4 Out of the $250 billion dollar advertising industry in the
`United States alone, only $11 billion is spent online with about $5 billion attributed to search
`advertising where Google has 79% of the market share. To reach new markets faster, Google is
`expanding its advertising business beyond online marketing to other mediums, including radio
`and print. Google has already exhibited some efforts to diversify its advertising business by
`acquiring dMarc Broadcasting in January 2006, a company that develops a unique automated-
`radio–advertising-selling process between radio stations and advertisers (Perez, 2006). Google
`plans to integrate its AdWords platform with dMarc’s software that automates the buying and
`placing of radio advertisements. Google is also experimenting with integrating its AdWords
`platform with print media by running classified advertisements for its AdWords customers
`through a limited trial in PC Magazine, Maximum PC, Budget Living, and the Chicago Sun
`Times (Hoover, 2006).
`
`
`GOOGLE’S PRODUCTS AND SERVICES
`
`Key Product and Services
`Online advertising is Google’s core product and accounts for 90% of the company’s revenue.
`AdWords, a cost-per-click pricing scheme, was a result of Google’s newly formed business
`model in online advertising. AdWords allows advertisers to pay Google once visitors click on an
`advertisement after entering a search query (Figure 1). Unlike other online marketing that use
`image and animated banners, these advertisements are text-based to maintain an uncluttered page
`design. This is a concept that Google’s co-founders believe is essential for an enjoyable user
`search engine experience since most users typically want to find information and promptly leave
`the search results page. Increasing the covered audience is a complementary product called
`AdSense which involves placing targeted AdWords advertisements on Google’s partner websites
`(Figure 2).
`
`
`FIGURE 1. Google AdWords
`
`
`
`
`
`
`
`6
`
`

`

`FIGURE 2.. Google AdSense
`
`
`
`
`FIGURE 3. Google Toolbar Plug-in for Web Browser
`
`
`
`
`
`
`
`
`Other Google Products and Services
`Besides online advertising services, Google leverages its search technology into a number of
`other search related services. One of these services is a product search website called Froogle.
`Froogle allows online shoppers the basis to search for product categories and brands, access to
`product reviews, and compare item prices. The use of search was further expanded beyond
`finding content on web pages to assist users to search for imagery information such as maps and
`satellite overlays through Google Earth. A similar concept was developed in a location-based
`service called Google Local in which users can search for nearby locations such as the closest
`coffee shop which will be labeled on a map displaying the shops in the surrounding area. Other
`search related services offered by Google that have gained popularity among users include an
`image search: Google Images, a searchable email client: GMail, a desktop file search tool:
`Google Desktop, and a web-based video streaming tool: Google Video. As the number of
`Google search queries increased, Google expanded their search accessibility by offering a
`Google search toolbar that users can download as a plug-in to many standard web browsers such
`as Internet Explorer and Mozilla Firefox (Figure 3). Many of the products and services Google
`develops depend on advertisements to generate revenues, but some such as Google Images,
`Google Earth, and Google SketchUp do not.
`
`The only hardware equipment that Google sells to date is a standalone search product solution
`for the enterprise market. A listing of products and services offered by Google is shown in Table
`4. The product offers corporate employees, partners, and customers to easily find information
`and product solutions through their internal networks. These products are known as Google
`Mini and Google Search Appliance, depending on the documents index capacity. Google pre-
`
`
`
`7
`
`

`

`installs its own search software and other customized software components in these hardware
`products. Google’s bundling of software packages and hardware platform has alienated external
`hardware and software vendors the same services in other platform configurations.
`
`
`TABLE 4. Other Notable Products and Services by Google
`
`
`Description
`Product/Service Name
`Satellite imagery of geographical locations
`Google Earth
`View driving maps and directions
`Google Maps
`Search for local businesses and shops
`Google Local
`Search for news stories
`Google News
`Search for TV programs and video clips
`Google Video
`Search for offline information stored on computers
`Google Desktop Search
`Search for images online
`Google Image Search
`3-D model design tool
`Google SketchUp
`Online payment processing service
`Google Checkout
`Google Search Appliance Enterprise search engine
`GMail
`Web-based email client
`GTalk
`Internet instant messaging and VoIP
`Orkut
`Online social network community
`Froogle
`Electronic shopper product search
`Others: Google Page Creator, Google Analytics, Picasa, Blogger, Google Mobile, Google
`SMS, Google Finance, Google Groups, Google Scholar, Google Pack, Google Book
`Search, Google Code, Google Alerts, Google Calendar
`Source: Google website, listing of services and products
`
`
`How Google Innovates
`Google is a technology innovator that focuses on developing revolutionary ideas as well as
`complementary products and services. More than two-thirds of the company’s employees are
`engineers and scientists. The company is a powerhouse of new technology innovations driven
`by software, and has a division unit called Google Labs which the company termed as an
`“engineer’s playground.”5 Google Labs was developed since the early days of the company, and
`there is a place on the website to showcase new experimental products developed by Google
`employees. The product prototypes are available for anyone to download as beta version prior to
`commercial release. Unlike many engineering developments that never see daylight, this gives
`engineers a sense of satisfaction that their ideas turn into products that people can use.
`
`One of the most important characteristic for Google’s innovative thinking is attributed to its
`work atmosphere. Unlike a typical corporate environment, Google’s headquarters in Mountain
`View, called the Googleplex, is reminiscent of a college campus, and operate like a graduate
`school atmosphere with numerous guest speakers everyday and where open mind is encouraged.
`Other technology companies have previously tried to mimic a similar university culture but
`Google goes a long way in providing flexibility, openness, and fun workplace for its employees.
`To minimize management from getting into the way of the engineers, Google adopts a very flat
`organizational structure.
`
`
`
`
`8
`
`

`

`Google engineer Joe Beda praised the positive atmosphere inside the Google headquarters: “The
`intrapersonal environment at Google is very energizing. When someone comes up with a new
`idea, the most common response is excitement and a brainstorming session.” 6 Google
`implemented a 20 percent rule in which engineers spend 80% of their time at work on Google’s
`core products, and the freedom to dedicate the remaining 20% of their working time on any “pet
`projects.” The 20 percent rule was a way of encouraging innovation at Google. Adopting the
`philosophy of 20 percent rule has enabled the engineers at Google to develop a number of
`products including Froogle, Google News, Google Finance, Orkut, and GTalk. In 2005, the
`company changed this policy slightly with a 70/20/10 rule, where 70% of time is spent on search
`and advertising, 20% on a work-related product, and 10% on other ideas. Google’s product
`framework following this work policy is shown in Figure 4 below. Following the principles
`from management guru Peter Drucker that “knowledge workers believe they are paid to be
`effective,” Google employees are provided with free laundry services, free gourmet food, barbers,
`massages, gym, commuting buses with Wi-Fi access, as well as on-site oil changes, car washes,
`and physician doctors.
`
`
`FIGURE 4. Google 70/20/10 Product Framework
`
`
`
`
`
`Source: Google Analyst Day, slide presentation, March 2006.
`
`
`Acquisition and Incorporation of Companies
`Google is very aggressive in acquiring innovative technologies and ideas. For the past five years,
`Google has acquired over 25 technology companies (Table 5). Google has subsequently
`transformed many of these technologies acquired from the buyouts into Google products and
`services such as Google Earth and Google Analytics (Table 5, Derived Google Services).
`
`
`
`9
`
`

`

`Technology
`Usenet Search Services
`Personalized Internet Search
`Blogging
`E-Mail Customer Support
`Online Advertising
`Personalized Internet Search
`Blogging Entity
`Paid Advertising
`Web Templates
`Photo Management Software
`Internet Mapping
`Satellite Imagery
`Mobile GPS Traffic Updates
`Web Analytics
`Mobile Social Networking
`Wireless Software
`Distributed Data Processing
`Mobile Phone Software
`Radio Advertising
`Blogging Analytics
`Web-based Word Processing
`3-D Design Tool Maker
`Web Spreadsheet
`Biometric Identification
`Wiki Host Site
`Internet Video
`Internet and Mobile Mapping
`Video Game Advertising
`
`Date Acquired Derived Google Services
`February 2001
`Google Groups
`February 2003
`Personalized Internet Search
`February 2003
`Blogger.com
`April 2003
`E-mail Groups, GMail
`April 2003
`AdSense, AdWatch
`September 2003 Google Personal
`October 2003
`Blogger.com
`October 2003
`AdSense and AdWords
`April 2004
`*
`July 2004
`Picasa/Blogger
`August 2004
`*
`October 2004
`Google Maps/Google Earth
`December 2004 Google Ride Finder
`March 2005
`Google Analytics
`May 2005
`Google Mobile/Google SMS
`June 2005
`*
`July 2005
`*
`August 2005
`Google Mobile/Google SMS
`January 2006
`*
`February 2006
`Google Analytics
`March 2006
`*
`March 2006
`*
`June 2006
`Google Spreadsheet
`August 2006
`*
`October 2006
`*
`November 2006 *
`December 2006
`*
`February 2007
`*
`
`TABLE 5. Companies Acquired by Googleii
`
`Company
`Deja
`Outride Inc
`Pyra Labs
`Neotonic Software
`Applied Symantics
`Kaltix
`Genius Labs
`Sprinks
`Ignite Logic
`Picasa
`Where 2 Technologies
`Keyhole
`Zipdash
`Urchin Software
`Dodgeball
`Reqwireless
`Akwan IT
`Android Inc
`dMarc Broadcasting
`Measure Map
`Writely
`"@"Last Software
`2Web Technologies
`Neven Vision
`JotSpot
`YouTube
`Endoxon
`Adscape
`Source: Various news sources
`
`
`Acquisition of People
`Likewise, Google is among the most active high-tech company in the footprint for hiring top
`engineering talents. During the technology bust, Google seized opportunity to hire bright
`technologists and focused on doing what they do best: search. Google co-founders Brin and
`Page had their pick of talents since they were hiring while everyone else was firing (Vise, 2005).
`Google’s revenue did not grow rapidly at first, but its employee brainpower was. Instead of
`paying these engineers high salaries, Google offered them mediocre pay but generous stock
`options. Many of these individuals hired by Google were either inventors of successful
`technologies or technical leads for a division of their former employer.
`
`The knowledge and skills from these talents were difficult to replace and in some cases,
`irreplaceable. A high profile example of this to date was when a former Microsoft Vice
`President and academic professor, Kai-Fu Lee left Microsoft to work for Google. Lee was
`known as an industry expert in speech recognition and played a pivotal role in driving
`
`ii * Denotes unidentifiable derived Google services
`
`
`
`10
`
`

`

`Microsoft’s China strategy. Microsoft feared this was not only a loss of talent, but a leakage of
`critical confidential information which resulted in a legal battle against Google for a one year
`non-competitive agreement signed by Lee. The case was settled between Microsoft and Google
`with the court judge placing a temporary restraining order for the type of projects Lee can work
`on at Google. Lee effectively started working for Google without further delay.
`
`Various news surfacing in the technology industry estimates that over 100 former Microsoft
`employees to date have left their former employers and opted-out to work for Google instead. If
`this estimated figure is fairly accurate, approximately 1.76% of Google’s total employee pool
`would be ex-Microsoft workers.iii Among the complaints, these former Microsoft employees
`criticized that there were duplicate efforts within the company and more time spent on
`maintaining software at Microsoft instead of innovating new product ideas. Google has hired
`many notable technologists which include technology industry legends and young guru
`programmers (Table 6).
`
`Working at Google is not only attractive in the industry, but is equally enticing from many of
`those in academia. In fact, many university professors have opted out from their academic career
`track of getting tenureship to work for Google. For example, in December 2005, Andrew Moore,
`Professor of Computer Science at Carnegie Mellon University and an expert in data mining and
`artificial intelligence, decided to join Google and lead Google’s new Pittsburgh engineering
`office.7
`
`To ensure the quality of its workers at Google, the employment screening process has become
`one of most rigorous among all technology companies, comparable to Microsoft, and perhaps
`even more difficult. Applicants are asked to solve complex technical questions from at least half
`a dozen interviewers. Google is very careful in their recruiting and their hiring process is based
`on a committee hearing everyone’s feedback (Schmidt & Varian, 2005). An entire interview
`process at Google can take several months before a decision is made.
`
`
`iii As of December 31st, 2005, there are 5,680 full-time employees. Calculation for 1.76% (~100 / 5680).
`
`
`
`11
`
`

`

`TABLE 6. Respected Individuals Hired by Google
`
`
`Previous Positions Held
`Top Talents Hired
`Senior VP at Worldcom, also known as the Father of Internet
`Vint Cerf
`VP at Microsoft, lead Microsoft China Research Lab, VP of Apple
`Kai-Fu Lee
`BEA and Microsoft, pivotal role in Internet Explorer
`Adam Bosworth
`Lead of Avalon team at Microsoft
`Joe Beda
`Microsoft, pivotal role in Windows operating system
`Mark Lucovsky
`Microsoft and AOL executive
`Meir Brand
`Director at EBay, founder of AltaVista search engine
`Louis Monier
`CEO of Amazon spin-off A9 online search, Chief Scientist at Yahoo
`Udi Manber
`Scientist from Bell Labs, worked on operating systems
`Rob Pike
`scientists at NASA, Junglee, SUN Microsystems Labs
`Peter Norvig
`Java coder guru from SUN Microsystems
`Joshua Bloch
`Inventor of Python programming language
`Guido van Rossum
`Weblogic developer at BEA Systems
`Cedric Beust
`Firefox developer
`Darin Fisher
`Firefox developer
`Ben Goodger
`Mozilla developer
`Brian Rydner
`Lead Camino developer open source project
`Mike Pinkerton
`Lead Gaim developer open source project
`Sean Egan
`Award-winning physician
`Dr. Larry Brilliant
`Apple Computer's original Macintosh development team
`Andy Hertzfeld
`Business and Foreign Policy at the Council on Foreign Relations
`Elliot Schrage
`Carnegie Mellon University Professor of Computer Science and Robotics
`Andrew W. Moore
`Associate Director for Advocacy Group Center for Democracy & Technology
`Alan Davidson
`Chief Marketing Officer at T-Mobile
`Nikesh Arora
`President of UTStarcom China operations
`Johnny Chou
`Director of Engineering at SUN Microsystems
`Joerg Heilig
`Consultant for Google, Management Professor at UC Berkeley
`Hal Varian
`Consultant for Google, Senior Research Scientist at Helsinki Institute of IT
`Wray Buntine
`Source: Various news sources
`
`
`Strategic Partners and Alliances
`As a formidable player in search technology, Google has gained respect and visibility in the
`technology industry. It is without surprise that other technology companies are considering
`partnering or forming business alliances that can leverage synergies with Google’s search
`expertise. Interestingly, companies that have been competing with Microsoft in some market
`sectors seem to be partners with Google, as in the case for America Online and SUN
`Microsystems. In late 2005, Google invested $1 billion in AOL for a 5% stake (Mills, 2005).
`The partnership enables AOL to use Google’s search engine power while Google receives rights
`to sell additional sponsored advertisement through AOL’s user network. An unconfirmed article
`from News.com reports that up to 10% of Google’s advertising revenue came from AOL (Olsen
`& Mills, 2005).
`
`In a joint R&D collaboration, Google has partnered with NASA where Google applies its search
`technology on terabytes of incoming data to Earth from various NASA space projects. For the
`project, Google agreed to supply capital to build a new R&D facility in Mountain View that will
`occupy both Google and NASA engineers (Lewis & Fox, 2005). To expand the enterprise
`search business, Google has partnered with BearingPoint, formerly KPMG consulting. Google
`
`
`
`12
`
`

`

`endorses customized Google Search Appliance hardware, and Google Desktop software that
`BearingPoint can offer its customers a new enterprise search solution. Google has already
`trained over 100 BearingPoint IT professionals to facilitate the technology consulting firm
`(Regan, 2006).
`
`Perhaps the most important of all partnerships is between Google and SUN Microsystems. In the
`joint effort, Google is hiring engineers to assist on the OpenOffice project, an open source office
`suite that SUN Microsystems supports. In addition to the collaboration, Google has deep
`historical relationships with SUN Microsystems; Google’s CEO, Eric Schmidt, and the
`company’s first angel investor, Andy Bechtolsheim, are both co-founders of SUN Microsystems.
`A summary of the strategic alliances Google has formed with these technology companies is
`shown in Table 7.
`
`
`TABLE 7. Strategic Google Partners and Alliances
`
`
`Collaboration Efforts
`R&D; Google provide funding for a new joint R&D center
`OpenOffice, an open source office suite
`
`Date
`September 2005
`October 2005
`
`Company
`NASA
`SUN
`Microsystems
`America Online
`
`December 2005
`
`February 2006
`
`AOL adopts Google’s search engine; Google advertises in
`AOL network
`Enterprise search technology services with unstructured data
`Bearing Point
`Source: Various news sources
`
`
`INFORMATION TECHNOLOGY AT GOOGLE
`
`The focus of information technology at Google for both software and hardware is speed and cost.
`These two metrics are valued more than any other criteria such as reliability of machines or high-
`performance enterprise computing hardware. Ultimately, the result must transform a response
`time of user query using Google’s search engine to be completed within a one second time-frame.
`Started in Larry Page’s dormitory room, the information technology at Google has transformed
`into a full-blown large cluster PC network that functions similar to a computing grid.iv Even
`though information technology infrastructure has changed dramatically over the years, the model
`of IT use at Google has stayed the same. This model follows the original principles adopted by
`the co-founders of building a prototype system that uses commodity hardware and intelligent
`software. The shift of computer industry with PCs becoming commodity electronic hardware
`over the years has worked in favor of Google’s IT strategy in getting the best cost performance
`ratio (Patterson & Hennessy, 2004). Thus, instead of purchasing the latest microprocessors,
`Google IT performs calculations to look for the best value of