Google Car Essay

4172 Words Dec 9th, 2011 17 Pages
Executive Summary
Google AdWords, Google Chrome, Google Books, Google+, Google Earth, 88 successful acquisitions (including Youtube and Motorola), Android and now Google self-driving cars. This list is far not exhaustive and seems to be endless. Although Google AdWords accounts for 97% of the company’s revenues, whose market capitalization now tops $192 billion, the company is investing heavily in new innovative projects to diversify itself and enter new markets. One of the more recent ones is Google’s development of self-driving cars and even though CEO Larry Page tried to play down the company’s new project in Google’s Q2 earnings call in July, the team enjoys a staffing of 50 people. By way of comparison, the Android team had about 100
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This strategy enabled Android to gain market share with tremendous speed across the US and Western Europe, quickly breaking up the market which was formerly dominated by established players like Apple. The open source business model additionally shifted the commercial value away from the actual product to ancillary services like systems integration, licensing, support or upgrades. This up-selling opportunity could also be used to integrate other Google products like AdWords or Google maps.
It is important to note that this strategy did not mean that the new product had to stay open source permanently. Google held the right to unilaterally re-license the core assets, once brand awareness was created and market fit could be observed. The open source strategy additionally cut down essential research and development costs and thereby limited related risks.
Based on the Android case, we would argue to design the self-driving car product in the following way: Google should start with an intensive partnership with one of the established car manufacturers to prove the concept and afterwards exercise its right to license the software. Subsequently, it can focus on selling the operating system and updates.
In doing so, Google avoids two major risks: First, it is able to share the risk of failure with its strategic partner. Second, by selling upgrades it is less subject to

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