Take a SWOT at This Tech Leader

Margie is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Google (NASDAQ: GOOG) is one of my favorite public companies, which I follow very very closely. I thought it would be useful to other investors to do a precise and to the point analysis on the company in the form of a SWOT.

Strengths

  • Google is synonymous with search and continues to gain market share.
  • One of the most valuable brand names in the world.
  • Extremely talented base of engineers who love working for the company and want it to succeed, which we as shareholders should give great thanks for.
  • Really trying to change the world for the better (opening China, fighting to keep net neutrality, giving the millions of small voices volume) Enhances brand and positive association.
  • Google Maps is the leading map service worldwide, and embarrassing the recently released Apple (NASDAQ: AAPL) Maps.
  • Owning the Android operating system positions the company well in mobile.

Weaknesses

  • Over 90% of its profits come from search. 
  • Despite massive amounts of resources being put into Google Plus foray, the company remains far behind Facebook in social media, and is not gaining much traction.
  • Scaling problems for the massive amounts of data continually gleaned.
  • Unfriendly governments- often trying to deem Google a monopoly and suing. China regulators playing a game of chicken with Big G.
  • As consumers migrate to mobile devices the price per click average is dropping. Cell phones don’t offer the same level as security which might inhibit sales via this platform near term.
  • Recent lay-offs, though not unexpected, at the Motorola division don’t bode well.

Opportunties

  • Mobile is both a potential weakness, and major opportunity. Google is putting vast resources into mobile advertising, location services, and might crack the code for serious monetization.
  • Google Glass has the potential to be a big hit.
  • If they wanted, they could start selling advertising on sex and gambling related searches, which could bring in substantial amounts of high margin revenues.
  • Will be introducing the $199 lap-top soon, run on Chrome, which if it catches on could be a big blow to Microsoft (NASDAQ: MSFT) and Windows.

Threats

  • Government intervention. What you might not know was the Chinese hackers who hacked into activist email accounts were able to do so in part because of a backdoor the US Government required the company to keep open to monitor terrorist emails etc. (an engineering friend explained this to me.)
  • One word Facebook- (NASDAQ: FB) Facebook for all practical purposes has announced my biggest fear as a shareholder, a search engine. They will have TONS of data to create a differentiated engine using peoples’ likes, preferences, and known relationships. This could pull a substantial amount of traffic from Google search as people are already on the site.
  • Lawsuits: To defend itself from lawsuits by Microsoft and Apple, Google was backed into a corner and almost forced to buy Motorola’s patent portfolio.  
  • Steve Jobs, before his death, wanted to drop a nuclear bomb on Android as he felt Eric Schmidt, a former Apple board member, betrayed him as he saw the iPhone developing before others and positioned Google to compete. So far, Tim Cook hasn’t really shied away from the nuclear option. It must not be fun to be in the perpetual crosshairs of a company with as much resources as Apple.

 Have any additional thoughts? Leave a comment below.


margiecfl has long positions in Google, Facebook, Apple, and Microsoft. The Motley Fool owns shares of Apple, Facebook, Google, and Microsoft and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Apple, Facebook, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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