Case Study On Patterns Of Disruption: Google
G Google, while still producing one of the most used, if not the most used, search engines, now produces a dearth of both software and hardware electronic products (Google 2018, “Our Products). Google is a key player in the technological industry and competes well among other similar companies such as Apple, Microsoft, and Amazon. Within this case study, the term ‘technological industry’ will refer to those companies that produce electronic and/or software products that the average person would use daily, such as computers or Google’s GPS program, Google Maps. Since its start in 1998 as a search engine, the company has expanded its products and services, now reaching billions of people around the world (Google 2018, “From the Garage to the Googleplex”). Under Google’s parent company, Alphabet, Inc. , Google made nearly $32 billion in the last quarter of 2017, primarily through advertising revenues (Alphabet, Inc. 2018, p. 2). A much smaller portion of their revenue stems from their other products, primarily hardware and software programs marketed to the public (D’Onfro 2018). The first section of this case study will provide a more detailed analysis of Google’s relationships with its competitors, both direct and indirect, along with the expected stability of the company in the future. The second section will analyze six potential disruptors to Google and how the company can prepare for and mediate these disruptors. Technological Innovation (Lauren Osmialowski)
For a technology company, technological innovation is the backbone of the company’s revenue. By the time a computer, smartphone, etc. is purchased, it’s almost obsolete as companies continue to create new and improved products, so continued innovation is fundamental. If a company cannot continue to innovate, a company cannot compete. While there are a handful giants of the technological industry (Apple, Google, Microsoft, Amazon, Facebook for social media) with smaller competitors increasingly being incorporated into one of these companies (fully or through acquisition of software or hardware designs), there are cracks in the armor of these giants. According to an article from Investor’s Business Daily, competition from smaller companies, along with competition between sections of the tech giants, has led to failed products and decreased revenues (Murray & Khurana 2018). One example they list specifically relates to Google’s attempt to create a social media platform through Google Plus, which did not compete well against other social media platforms, such as Facebook or Twitter (Murray & Khurana 2018). These results demonstrate that, although these companies are very large, technological innovation has the potential to be a serious disruptor or, at the very least, a source of decreased revenue.
In recent years, Google has expanded from its initial focus on search engines into the hardware electronics game, introducing a variety of products including a smartphone (Google Pixel) and home assistant (Google Home) (Google 2018, “Our Products). The company has also created various new software programs, including Google Assistant (similar to Apple’s Siri and Amazon’s Alexa), Wear OS (a program designed for various types of smartwatches), and the Chromebook, where laptops created by various computer manufacturers run Google’s user interface known as Chrome OS (Casey, 2018; Google 2018, “Our Products”). While the effectiveness of these products has yet to be determined, due to their recent conception, 4th quarter earnings for Google’s parent company, Alphabet, in 2017 place the sales of Google’s hardware products at a 35% increase over the 4th quarter earnings for 2016 (D’Onfro 2018). While this suggests that the new hardware products by Google will perform well in the general sphere, there is no guarantee that this will continue. Competition from other names with dedicated followings, such as Apple, may prevent some customers to switching over to Google’s products. Another possibility may be price. Google’s products are priced competitively–the Google Chromebook starts as low as $170-200, while the Google Pixel 2 starts at $649 for a retail price (Casey, 2018; Google 2018, “Google Pixel 2”).
While the Google Pixel price may seem high, comparisons among smartphone prices at Verizon place this price at the lower of the high end of the range in prices and significantly less than Apple’s latest iPhone X, which starts at $899. 99 for the retail price (Verizon 2018, “All Smartphones”). As most cell phone plans roll these high prices into the monthly cell phone payment in a contract that runs a certain number of years, the high price of the phone is not always a one-time, high expense. Another potential issue related to the smartphone product, while not directly related to technological innovation, is getting cell phone providers and other technological retailers to sell these phones alongside the cell phone plans offered. If the smartphone ends up not selling well due to customer preference, which current revenue data suggests is not the case, these retailers and cell phone plan providers may drop Google’s Pixel, resulting in a decreased revenue stream and loss of investments (D’Onfor 2018). However, the loss of the hardware smartphone would likely not hurt Google in the long run as the company acquired Android, the major smartphone software platform competing strongly with Apple’s iOS, in 2005 (Eadicicco 2015). The Google Home product competes well with Amazon’s Echo with a starting price of $129 for the Google Home compared to $99 for Amazon’s Echo (Google 2018, “Google Home”; Amazon 2018, “Echo (2nd Generation)”).
The disruption in technological innovation could hit Google in a variety of ways, including those outlined above. One way to combat the disruption in their fledgling hardware electronics portion of the company would be to continue pricing their products competitively and increase advertising. The Google Pixel and Google Home, along with new software products such as Google Assistant, are still not well known among the public. Increased marketing would also need to include data comparing the various types of smartphones or electronic assistants with clear reasons for why Google’s products are better than those that are more established to help sway customers that may hold allegiance or strong preferences for one company or another. More investment and brainpower within the hardware electronics side of the company would provide for better innovation and increased potential for product success. Research into customer concerns, needs, and desires will provide Google with a better idea of what works and what doesn’t, along with providing the company with information about where to take their hardware and software products in the future. By taking the time and money to create new products, research customer preferences, increase advertising, and competitively price products, Google should be able to confront the disruptor of technological innovation and stay at the forefront of electronics hardware and software products for years to come.
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