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SWOT Analysis of Google (Alphabet)

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Google is more than a search engine — it’s the owner of Fitbit, the developer of regularly used apps like Maps and Gmail. The company, Google Inc. — also known as Alphabet Inc. — is a massive company that has its fingers dipped in a variety of industries.

As most big corporations do, Google (Alphabet) has strengths, weaknesses, opportunities, and threats — all of which you’ll discover in this SWOT analysis of Google.

A SWOT analysis is only one side of the picture though; to fully understand all the factors and influences Google grapples with, check out our PESTLE Analysis of Google (Alphabet).

Strengths of Google (Alphabet): Popularity leads to billions in ad-revenue each year

The world’s preferred search engine.

Google owns the most popular search engine used worldwide. It’s the source for 70% of the world’s queries and receives over 1 billion monthly hits. Bing and DuckDuckGo aren’t nearly as popular in comparison.

Massive data-collection.

Google has developed a wide range of apps and programs. Android is the operating system used by over half of the world’s smartphones. Gmail (and GSuite) is the standard email choice for home users and business users. Google Drive offers free and paid storage for digital files. Then there’s YouTube, the biggest video sharing platform in the world — Google owns it too. All of these tools collect data, which allows Google to tailor advertisements to each user.

An ad-focused business model.

Ad revenue is the bulk of Google’s profits. The company takes a 30% cut of the profits derived on the Google Play store (found on all Android operating devices). Partnerships with third-party sites bring in ad revenue too. All of these methods have led Google to generate $38.9 billion in ad revenue in 2019, which is a 19% increase compared to last year.

Free upgrades and software.

It’s because the majority of Google’s profits come from advertisements that allow Google to launch free updates and software — something Microsoft, their main competitor, can’t do. Microsoft benefits from primarily paid software purchases and is less likely to upgrade systems for free (hence why you must pay for big Windows updates, like Windows 7, 8, and 10).

Weaknesses of Google (Alphabet): A diminishing reputation among users and secrecy

Users fret over data-harvesting.

The company’s biggest strength also happens to be the biggest weakness to users: the vast harvesting of user data. Between the search engine and the apps constantly running in the background of your phone, users dislike how much access Google has to user information. Unfortunately for them, it’s quite difficult to live a “Google-free life.” You’d have to give up your Gmail, YouTube account, and Android smartphone, just for starters.

Google’s secret ranking algorithm.

Why do certain websites and articles rank higher on Google than others? Being the top result for keywords can be profitable — you’ll have a better chance of receiving ad-revenue if people click on your site. Business owners will pay for links pointing to their company. Search engine optimizers study popular articles and websites, but only Google knows the exact algorithm to rank #1. Since Google isn’t transparent about this process, it has led users and business owners to be wary about the system.

The risky ad revenue model.

Relying primarily on ad revenue is risky. Google cares most about the “cost-per-click” (CPC) measurement. It defines how much advertisers will pay for traffic. If the CPC decreases, Google’s profits decline with it. CPC can decrease for a variety of reasons, including when the advertiser has switched platforms and have opted to use different ads, like Instagram or Facebook ads. These two social media platforms are a big competitor for Google’s ad revenue.

High turnover for top executives and regular employees.

Despite the cushy benefits Google offers employees — extensive medical and health care, travel insurance, and nice vacations — the company has a high turnover rate. To be fair, this is normal for tech companies; Amazon works typically stick around for a year and Apple’s employees two.

Opportunities for Google (Alphabet): Bulldozing into smart industries

Continuous updates to Android OS.

One opportunity is the Android operating system. It has become a major competitor to Samsung and Apple. Users prefer the customization offered by Android phones — something iOS devices lack. Although Samsung phones run Android phones, it takes months for the phones to catch up on system updates — Google phones, however, receive updates immediately.

Add new revenue streams.

Right now, Google profits primarily off advertisements. It’s a volatile market that easily succumbs to competitor ads. Google should dip more into other avenues to generate revenue and even push commercial transactions through the many apps the company owns.

Branching into new AI, ML, and robotic industries.

Google can easily move into artificial intelligence, machine learning, and robotics industries. The company already has its sights on driverless cars, infiltrated the smart home industry with the Google Home speaker, and embracing the health industry after purchasing Fitbit for $2.1 billion.

Google (Alphabet) threats: Facebook, Amazon, and Apple

Facebook pages, groups, and business pages.

Facebook might be Google’s biggest threat. The social media platform has over 1 billion active monthly users. It offers a marketplace, pages for businesses to share content and promotional posts, and advertisements to reach target markets. Facebook is also a source of news — some users turn to the advice of friends and strangers on Facebook groups before going to Google to search for an answer.

Amazon over Google?

Google needs to be wary of Amazon too. More people turn to Amazon for products rather than asking Google for store recommendations. The vast reviews, shops, and sellers hosted on Amazon have led users to turn to choose Amazon first and Google second.

Swerved by Apple.

Apple changed the default search engine for Siri and Spotlight to Bing. It’s also enabled ad-blockers when browsing websites on Safari and even went so far as to block Google Maps from working with CarPlay.

In the news… but not for good reason.

People are openly criticizing Google for data collection. After Google recently purchased Fitbit, people fear Google will be harvesting and selling the information it collects from users. News outlets are writing articles about Google’s data harvesting, problems with the smart speaker which is set to listen for a specific phrase and records everything after you say, “OK, Google.”

Bottom line:

Google isn’t going anywhere any time soon. It’ll continue to harvest user data, custom tailor advertisements, and purchase companies for billions of dollars. For better or worse, it’ll continue to be the most popular search engine and dominate the phone industry, smart home industry, and the advertising industry.

Image by William Iven