Market Size for software (Google)

•Identify/profile the customer you cater to.
•Calculate the TAM (top down), SAM (bottoms up) and SOM.

To determine the market size for software, specifically for Google, we need to analyze the customer base that Google caters to and then calculate the TAM (Total Addressable Market), SAM (Serviceable Available Market), and SOM (Serviceable Obtainable Market).

1. Identify/Profile the customer base:
Google caters to a wide range of customers across various sectors. Its software offerings include search engines, email services, cloud computing, productivity tools, operating systems, and advertising platforms, among others. Google's customers include individuals, businesses (small, medium, and large enterprises), institutions, and government organizations worldwide.

2. Calculate the TAM (Top Down):
To calculate the TAM, we need to estimate the total market potential for Google's software offerings. This involves considering the global population, the number of internet users, and the percentage of users who are potential customers for Google's software. We also need to determine the average revenue per user (ARPU) or average spending per customer on Google's software. Multiplying the estimated total addressable customer base by the ARPU provides an approximation of the TAM.

For example:
- Estimate the global population: Let's assume 7.9 billion people.
- Estimate the percentage of internet users: Let's assume 60% (4.74 billion).
- Determine the percentage of users who are potential customers for Google's software: Let's assume 30% (1.42 billion).
- Determine the ARPU for Google's software: Let's assume $50 per year.
- Calculate the TAM: TAM = Potential Customers * ARPU
TAM = 1.42 billion * $50 = $71 billion

3. Calculate the SAM (Bottoms Up):
To calculate the SAM, we need to estimate the serviceable available market for a specific segment or target market that Google caters to. This involves identifying the relevant customer segments and determining the number of potential customers in each segment. We then multiply the estimated customer base by the ARPU to get the SAM.

For example, if we consider Google's cloud computing services for businesses:
- Identify the relevant customer segment: Small and medium-sized businesses (SMBs).
- Estimate the number of potential customers in the SMB segment: Let's assume 50 million.
- Determine the ARPU for Google's cloud computing services: Let's assume $600 per year per customer.
- Calculate the SAM: SAM = Potential Customers * ARPU
SAM = 50 million * $600 = $30 billion

4. Calculate the SOM:
The SOM (Serviceable Obtainable Market) represents the portion of the SAM that a company can realistically capture or obtain. This depends on various factors such as market share, competition, company resources, and marketing strategies. To calculate the SOM, we need to estimate the percentage of the SAM that Google can realistically capture.

For example, if Google already has a strong presence in the cloud computing market for SMBs and has captured 20% of the market:
- Determine the market share: Let's assume Google has 20% market share.
- Calculate the SOM: SOM = SAM * Market Share
SOM = $30 billion * 0.2 = $6 billion

Please note that the above calculations are simplified examples and the actual market sizes may vary based on several factors. It's essential to consider accurate data, market research, and specific industry insights to determine the precise market size for software, including Google's offerings.