I am a trader-hurray!!!!!

ok finally i made it ..i am a trader now and i luv the job..i made it abt sometime back but thought of telling it only now...well its an exciting job.i will trading mostly on futures ..cool....and i look forward to exciting world of it....will update more on the trading routines soon...now got to go....
mean while read this article on google its nice...


Understanding Google
IF THE ultimate measure of impact is to have one's name become a new verb in the world's main languages, Google has reason to be proud. Born as a research project, Google today carries out around 200 million searches everyday. One out of every three searches on the web is powered by Google. All told, more than 50% of the referrals to websites originates from Google’s algorithms.

If all this makes Google appear invincible to you, then only a little probing on the dynamics of the industry and competition would reveal a completely different picture. Google operates in a radically different world, a world where being an incumbent has little value, where existing ways of doing business are turned on their head everyday, where radical innovation is the norm rather than the exception. This is the land of visionary companies. This is also the land where visionary companies seldom survive beyond their first strategy. The land of fertile ideas and easy capital that is Silicon Valley is also the largest graveryard of innovators who have eventually failed. Five years ago, Google was an innovator. Today, it is an entrenched incumbent, under constant threat from new and established players.

The evolution of the Internet has seen a series of business concepts being tested out. First to appear on the scene were portals, which acted as “gateways” to the Internet. The primary business logic behind portals was to keep users indulged and pampered by providing them with (links to) all the information that they needed in a single place, and then bombard them with advertisements for selling products and additional services that they hopefully find useful. The first generation of portals essentially had content that was the same to all the users. Everyone saw the same links, and the same advertisements. Then someone came up with an idea of segmenting users based on their interests, preferences, browsing habits, age, gender and so on. This led to personalized portals and the advent of single sign on. At this point, portals became a “one stop shop” for users browsing the web. Users were happy because they saw only content that they wanted to see; advertisers were happy because they were able to direct their communication in a more targeted manner.

There were other hugely successful business concept innovations too. eBay, Priceline.com, Amazon.com and expedia.com are some of them.

Meanwhile, two students from Stanford University, Larry Page and Sergey Brin pioneered a radically new way of searching web pages. The key part of their technology is a database that indexes, classifies and orders web pages by not only examining the words on web pages, but also looking at how and where those words were being used and at the number of other websites linked to that page. This led to the birth of a powerful search engine which returned highly relevant results to the users. They combined this power with a simple user interface that made it enormously popular in a very short period. Currently, Google attracts about 30 million unique users every month.

Eric Schmidt, the CEO of Google, helped the firm commercialized this technology by leveraging the power of “contextual advertising”, a concept pioneered by another Silicon Valley firm, Overture, which was subsequently acquired by Yahoo. In what is known as “AdWords”, Google places, along with search results, highly relevant sponsored advertisement links, that are related to search terms entered by the user, in an unobtrusive manner, without sacrificing the integrity of the search results. For example, if you search Google using the words “Motorola Mobile phones”, you see a set of sponsored links which are clearly separated from the ordinary search results. The sponsored links are associated with a search term (like “Motorola Mobile Phones”), and advertisers pay for these links everytime a user clicks on them. The rate for the click is pre-determined through an auction system. For each search term, Google uses an automated bidding process using a version of Vickery’s second price auction to determine the price the sponsors pay for each clikc on each link. The actual slot of the sponsored link depends not only on the payment, but also on the relevance of the link. Thus, if a majority of users find the second sponsored link more relevant than the first, it might eventually move up to occupy the top slot.

This provided great value for companies that sponsor these links: they pay only if users reach their websites through the sponsored links. In the Vickery’s second price auction scheme followed by Google, the winners pay one cent more than the second highest bidders, for each click generated from the sponsored link.

An example would clarify things here. When a user searches for “Motorola Mobile Phones” using Google, he sees some search results. He also sees links that are sponsored by some companies. So if I as the highest bidder for the search term, bid US$1 for each click generated from the top sponsored link for this search results page associated with “Motorola Mobile Phones”, and you as the second highest bidder bid 50 cents for the same, I will end up paying 51 cents for each click generated from the top sponsored link. Because of this scheme, companies bid close to what they think is the true value of the keywords, since they are guaranteed to pay less.
Moreover, they can track the eventual behavior of consumers on their website, after they reach them through these links. Search engine users had reasons to rejoice, too. Apart from appreciating the relevance of the links, users did not encounter annoying popup ads that were ubiquitous in portals. All these factors enabled contextual advertising to become the fastest growing part of online advertising. Meta Group, a consultancy, reckons that the market for paid search and other contextual advertising will grow to $5 billion by 2006.

The logical next step after putting these links on the pages of search engine results is to put them on small business websites, weblogs, news media sites and virtually any site that contains content useful for others. If I have a hobby of collecting porcelain, and I have a web page where I display content related to porcelain, I can simply allow Google to crawl my web page and place ads from porcelain dealers. This way, I can share “click-thru” revenues with Google, and make my web pages pay for themselves. That’s the power of contextual advertising!

Apart from these innovations, Google has also added new forms of searchable content to its repertoire. Google enables users to search web pages, pictures, discussion group archives, news, mail-order catalogs, and Froogle, a comparison shopping service.

All these might mean nothing in the long run. One threat for Google is the move towards becoming a public company. The VCs who orignially funded Google hope to cash out through the IPO. In the short term, an IPO is a tremendous distraction. In the long term, it might mean lack of control, although Google has vowed not to be concerned by the distraction of quarterly reporting and Wall Street gimmicks. But this is easier said than done.

To be valued like other internet stars such as eBay, Google’s business model needs to be more robust than what it is currently. Consider eBay. If I’m in the US and I want to sell my (real or fake) Tiffany’s jewellery through an auction, I don’t go and list it in MSN.com auctions, but do so in eBay. This is simply because there are more buyers in eBay precisely looking for such an item, than in MSN, and hence a greater chance of me getting a better price. This is due to Metcalfe’s law (Network effect), which states that the utility of the network is proportional to the square of the number of users. As eBay becomes more and more popular, it becomes more and more powerful.

Without such network effects operating, all that it takes for users to migrate away from Google is a different technology that gives better search results. Google has to provide value added services to attract and keep users (and advertisers), since it’s impossible for it to remain permanently ahead of its rivals in search technology. Google the brand is currently built on Google the search engine. As long as the search engine is powerful, the brand pull will exist.

As a step towards personalization and garnering new means of advertising revenues, Google announced (but did not offer for public) a free email service that provides 1 GB storage, which further leverages its search technology. Inspite of the advertising involved, free email service is a highly unprofitable business. The stakes are high, since the service binds users to a particular provider, and contributes to the network effect of other services. Google hopes to change all that. By scanning the content of the users’ emails, Google plans to serve up sponsored links relevant to the content, and make free email highly profitable.
To be successful, Google has to generate some churn from other service providers like Yahoo and Microsoft’s Hotmail. Whether this would actually happen remains to be seen, given that Google’s announcement of huge storage space had the effect of commoditizing the storage in the industry. But it also raised costs steeply for the incumbents. Yahoo and Hotmail also provide single sign-on to other services, like messenger, calendar, address book, online shopping, and portals. This provides enormous convenience to users, and not everyone will be willing to shift to Google, especially when it doesn’t provide comparable services. There are also natural barriers to changing your email address: you have to communicate your new address to all those that you mail. But given that gmail is way ahead of its peers in terms of usability, speed and convenience, this may be less of a barrier than it actually seems.
Microsoft and Yahoo pose other threats to Google, especially to its fundamental business model. So far, Google has been ahead of Microsoft in terms of search technology as such as well as in integrating the search technology into the desktop. But Microsoft has expressed its intent to dominate search, and is making great efforts towards improving its search engine and integrating deeply into the desktop.

In the short term, Yahoo poses the greatest threat to Google. Yahoo’s search technology, powered by Inktomi, Altavista and Overture, contains all the elements which made Google a success in the first place. Yahoo also offers value added services like portals, messenger, integration of address book with the desktop, calendar, etc. Moreover, Yahoo has a history of innovation; after all, it was founded by two graduates from Stanford, just like Google. Given Google’s low margins and its deep relationships with advertisers, Yahoo might find it difficult to snatch business.

In the end, its difficult to predict what can pose the greatest challenge to Google, or any other technology company. Sometimes, terribly incisive strategic thinking can fall prey to
pure dumb luck.