If one were to assess the core benefits provided by Google, we could list four things – fast search, growing content base, personalized results, and continuous innovation. It is very interesting to analyze the capabilities that let them provide those core benefits.

Let us start with fast search. This is enabled by their PageRank algorithm and their 250,000 servers that run on Linux. As the number of users and document base increases, they are able to manage the complexity by adding processing power using standard Intel-based machines. The second customer benefit is the growing content base. Google recently announced that their index was three times the size of its nearest competitor. This core benefit is achieved using their scalable infrastructure. In fact, it is estimated that as they keep adding machines (nodes) to their network, their cost per CPU cycle keeps going down. The third benefit – personalized results – is enabled by their ability to manage large volumes of customer data and integrate that with their content base. The last core benefit is their ability to innovate continuously. Not a week goes by without Google making a product announcement. We can attribute many reasons for this. First and foremost is their 70/20/10 principle. This keeps them exploring new avenues for their technology. The other reason is their support for network-based innovation. Using their open APIs third parties can launch products that are able to utilize products that Google makes and integrate them seamlessly into their own product lines. This allows third parties to innovate on Google’s platform without explicit support from Google.

Once we bring in network effects to the equation, it poses a major hurdle for competitors to catch up to Google. Another interesting point to note is that Google has made contributions to all layers of the software stack. In fact, each core benefit describe above is supporting a particular layer of the stack – hardware, OS, data and applications.