December 5, 2011

To: Google Management
Subject: Google Corporate Strategy

Larry, this summarizes our analysis of Google’s current corporate strategy and outlines recommendations to guide future strategic decisions in Google’s incredibly volatile marketplace. Our goal is to help identify where Google’s environment is shifting and how Google can respond proactively to continue the market-beating growth and profitability of past years.

Recommendations:
1. Google should continue with its acquisition strategy, utilizing the 70/20/10 plan, and internal operations with refined real options approach.

2. Use the Motorola Mobility acquisition to stage growth by entering the mobile hardware market. The integration of hardware and software capabilities opens a huge door for the company. While understanding the importance of advertising revenue to Google and the need to sustain it, the timing is right to diversify revenue streams and monetize the Android platform through the manufacture of integrated Google phones. This recommendation is important as a means of protecting Google from experiencing the preverbal paradox of success.

Moving into mobile manufacturing also helps diversify Google’s revenue stream as Google finds itself losing advertising revenue to other websites, such as Facebook, Netflix, and others. Thus, beyond the importance of protecting Google’s right to make the Android operating system through the acquisition of 17,000 patents, a move which ultimately protects and fuels ad revenue, the Motorola acquisition should be utilized as an opportunity 1) to create a new source of revenue, 2) protect against the dependence on licensees, and 3) to lead long-term strategic initiatives by being a more nimble “integrated-gadget” model.

3. Use Google’s Corporate Development Team to consult Larry, Eric, and Sergio on core competency shifts, not solely on