September 20, 2004

The word Google can be pronounced in a variety of ways overseas, reflecting its international popularity.

In Japan, Google is pronounced "GooGEL", while in France, the search engine is GooGEL.

Whatever the nation, the goal for the company is largely the same: to build the best search engine around. While that effort has won a large following in some countries, other locations have been tougher to crack.

Analysts say that Google must succeed internationally to ensure its future health. But the young company will have to play catch-up in some key nations, particularly in Asia, precisely where the potential for future growth is the greatest.

Already, Google's international business accounts for nearly 30 percent of its revenue. That total is expected to increase as the company matures.

"International has become increasingly important for everyone in the Internet because that's where the growth of users and usage is," said Scott Kessler, an analyst for Standard & Poor's. "Google is, in the grand scheme of things, a relatively young company and it's already done pretty well internationally."

Google got a big boost in its overseas ambitions thanks to its recent initial public offering. With a big wad of cash, and highly valued shares, the Mountain View company can more easily afford to increase its international presence, add features and make acquisitions.

Internal Google documents obtained by The Chronicle paint an even more detailed picture of the firm's business abroad. They include project updates, contract specifications and a company study.

They show that Google's business, though global, is concentrated in just 10 countries. They also reflect the company's frustration over its billing system, which couldn't accept some popular payment methods from advertisers in some major countries. The system, scheduled for replacement earlier this year, was blamed for lost revenue.

In addition, the documents reveal that Google has considered outsourcing customer service jobs overseas, a controversial but common practice in Silicon Valley. However, the firm has so far decided against it and is instead adding employees, not contractors, in Ireland and India for the tax savings and lower wages.

Google's international business started soon after the company was founded in 1998 by two Stanford University doctoral students, Larry Page and Sergey Brin. Through word of mouth, legions of overseas users visited the Web site.

Quickly, Google began capitalizing on its global appeal. Today, Google is available in 104 languages, from Arabic to Korean to Zulu, and has offices in 13 nations.

"People use 'Googling' as a verb here, just like in the United States," said Philip Carnelley, a research director in the London office of Ovum, a technology consulting firm.

In Europe, Google is the clear search leader. It was the top search engine in France, Germany, United Kingdom and Italy in July, according to Nielsen/NetRatings.

However, Asia is an entirely different story. The company was No. 3 in Hong Kong and only No. 10 in Japan, a major Internet powerhouse, according to Nielsen/NetRatings.

Adam Freed, director of Google's international products, said that he doesn't pay attention to rankings. Rather, he emphasized that the company focuses on creating a good user experience.

"What we are focused on is providing the best service to users," Freed said. "It's not important where in the world people are accessing us."

Freed said Google's success in Europe was helped by the similarities on both sides of the Atlantic in terms of alphabet and user behavior. Asia, on the other hand, requires extra engineering because of the different language characters.

Jim Barnett, a former chief executive for AltaVista and former president of Overture's search division, said that while Google will do well internationally, Asia could be difficult. The market there has many established competitors, he pointed out, particularly Yahoo and its partner in Japan, Softbank.

"The big two (Yahoo and Google) deliver very comparable results, so it's hard in the short term to differentiate your results," Barnett said. "Therefore, it will be harder in the short term to take significant market share in a country like Japan."

China is also considered to be particularly tough. Many Chinese companies already dominate the search market there.

In June, Google invested a reported $10 million in one of them, Baidu. Barnett said that Google could ultimately make an acquisition in China, or anywhere else now that it has stock to use as currency after its initial public offering.

No matter what country Google is in, it usually competes against a big field. In addition to Yahoo, there's Microsoft's MSN, a handful of local search engines and at least one Internet service provider.

In regulatory filings, Google said expansion into international markets is important to its long-term success. But the company also noted that it could fail because of its inexperience.

Google's international operations account for an increasingly big chunk of revenue. In the first six months of 2004, the company took in $422.9 million abroad, or 31 percent of all revenue, compared with $155.3 million, or 28 percent of all revenue in the same period a year earlier.

As in the United States, Google's overseas business largely depends on advertising, which appears on its own Web sites and those of its partners.

Despite Google's global reach, the company's business is geographically concentrated, according to internal documents. About 90 percent of its advertisers are in just 10 countries, led by the United States, Britain, Germany, Japan and Canada.

Kessler, the Standard & Poor's analyst, said the fact that Google depends so much on these nations is to be expected given that they are the same places where most Internet users and advertisers are located.

Google is using its international reach to save money. One strategy is to expand its customer service staff outside the United States because salaries and taxes would be lower.

A recent project to add such workers in Ireland was estimated to save up to $5 million in taxes per month, according to internal documents. A similar initiative is under way in India, where customer service workers typically earn a couple of dollars per hour, far less than the $17 average starting hourly wage for the same job at Google's headquarters.

Freed said that the jobs were created overseas primarily to take advantage of "a great pool of talent," not for financial reasons.

Google has considered a more controversial practice of awarding its customer service to an overseas contractor, according to a detailed in-house study of the topic conducted in 2002. The report analyzed foreign accents, the affinity of workers in various nations for the United States and the level of wages Google would probably pay. However, Freed said that his company has so far decided against what is popularly known as outsourcing customer service.

One area that has bedeviled some of Google's international aspirations is its billing system, described in internal presentations last year as "fragile" and "glued together." The company worried that it might not be able to accept payments from advertisers in some foreign currencies as well as through bank transfer and direct debit in certain locations.

A new billing system built by an outside company is intended to fix some of the shortcomings. The company wouldn't disclose whether it is already operational. But Freed said that he was pleased with the kinds of transactions that Google can now process, adding, "I have a hard time imagining a company that is able to reach out to its customers in so many ways."

Wherever Google has offices, it faces a variety of laws. In some cases, that includes filtering Web sites for illegal content.

Google has blocked more than 100 such Web sites in France and Germany, according to a study by the Berkman Center for Internet & Society at Harvard University. Google insists that it is merely complying with the law and that the filtering does not affect search results elsewhere in the world.

Andrew Schroepfer, founder and president of Tier 1 Research, an investment advisory firm, believes that Google's international business could ultimately account for half the company's revenue. But he still expects the search engine's business to grow in the United States, despite worries that the market is maturing.

"Google has so many different ways to make money off of new products and greater Internet use, no matter where it is," Schroepfer said.

Source: SF Gate

        

Read Serge Thibodeau's daily blogs on search engines at Serge Thibodeau Live. We strongly suggest you bookmark our web site by clicking here.

Get your business or company listed in the Global Business Listing directory and increase your business. It takes less then 24 hours to get a premium listing in the most powerful business search engine there is. Click here to find out all about it.

Rank for $ales strongly recommends the use of WordTracker to effectively identify all your right industry keywords. Accurate identification of the right keywords and key phrases used in your industry is the first basic step in any serious search engine optimization program. Click here to start your keyword and key phrase research.

You can link to the Rank for Sales web site as much as you like. Read our section on how your company can participate in our reciprocal link exchange program and increase your rankings in all the major search engines such as Google, AltaVista, Yahoo and all the others.

Call Rank for Sales toll free from anywhere in the US or Canada:   1-800-631-3221
email:   info@rankforsales.com

| Home | SEO Tips | SEO Myths | FAQ | SEO News | Articles | Sitemap | Contact |

---

Copyright © Rank for Sales 2003    Terms of use    Privacy agreement    Legal disclaimer

       Ce site est disponible en Français