Business 2.0 - Magazine Article - Printable Version - Free Wi-Fi? Get Ready for GoogleNet.

Business 2.0 - Magazine Article - Printable Version - Free Wi-Fi? Get Ready for GoogleNet.

GOOGLE-GOOGLE-GOOGLE
DO THE GOOGLE GULP! BUY SHARES EVEN IF YOU DO HAVE TO SWALLOW HARD. THE POTENTIAL IS REAL!

Would you enjoy telling your cable company where they can stick their $100 bill? What if you were able to get free broadband service from Google? What if the service included free VoIP telephone service? What if it included free video on demand services?

GOOGLE has been buying up "dark" fibre networks. These networks are considered "dark" because after the over-construction during the bubble, these fibre-optic cables have not been used. Google is buying on the cheap. It is also buying high speed internet connection gear. In other words, Google is building its own network.

According to Business 2.0, Google currently pays about $60 per megabit per second per month in IP transit fees. Google can cut out these fees by carrying its own traffic and by getting credits for carrying other big networks traffic.

In the event that WiFi service should become ubiquitous, folks will reduce their use of cell phones if Google offers free phone service. It sounds too good to be true but remember that Google offers most services without charging a direct fee. GMail, Blogging, Desktop Search, Maps, etc.

Top quality products for free!

When the Google IPO was just out, an analyst from Switzerland made fun of me as an "American Cowboy" willing to risk an $85 stock. I hope he is reading this because I am now willing to risk a $285 stock.

The really good news for Google buyers is that few financial writers, stock analysts, or other professionals "get it". They only look at the numbers that show Google sells for high current multiples. They cannot believe that Google can grow earnings at a rapid rate from here. They do not understand that most folks will routinely carry pocket computers that serve all the functions of a phone, TV, radio, TIVO, map, dictionary, GPS, etc, etc, etc.

Competitors such as Time Warner (TWX) are creating neat toys but they are not even in the same ball park in regard to innovation. For example, TWX offers a neat trick in regard to VoIP calls. When a subscriber is watching TV and a call comes, the caller ID info appears on the bottom corner of the TV screen. The subscriber can use his remote to handle the call. If he takes the call the TV is automatically muted and he can talk over a speaker phone or over a regular phone. Neat trick, but no where near the value of free service.

The reality is that Google helps individuals find the service or product they want. Google dramatically increases the ratio of interest in the advertising that is provided. The total amount of advertising can be reduced to sell the same amount of products; we all win.

Dramatic changes are coming. Google has a huge head start on the competition and Google is widening its lead! Yahoo may spend a billion to purchase Skype and Vonage may come public for almost as much but can these guys meet Google on price? Skype has been a free service computer to computer and is 2 cents per minute to "Skype-Out". Yahoo is a formidable competitor. It has deals with the biggest of the phone companies; VZ and SBC. These players may not be able to adjust to "free" easily. VZ and SBC have lost land-line subscribers for years but they keep charging high rates. The exodus will pick up steam rapidly now that millions of Google GMail participants are inviting 100s of millions of others to sign up for free, open source Google Talk.

BUY THE BULL! THE OIL MARKET PROBLEMS ARE TEMPORARY. IF ANYTHING THE PRICE OF OIL WILL ACCELERATE THE ADOPTION OF SERVICES SUCH AS GOOGLE TALK! MY ASSISTANT WILL WORK FROM HOME MORE OFTEN AND COMMUNICATE WITH GOOGLE TALK! BUY THE BULL! DO THE GOOGLE GULP! CAUTION: GOOGLE HAS TO GROW DRAMATICALLY TO JUSTIFY ITS CURRENT PRICE, ONE SHOULD ALWAYS DIVERSIFY ONES HOLDINGS. GOOGLE IS CHANGING THE WORLD BUT A LARGE PORTION OF THE GROWTH OVER THE NEXT 5 YEARS WILL BE CONSUMED BY A REDUCTION IN THE PRICE TO EARNINGS RATIO. REMEMBER THAT A COMPANY CAN DOUBLE ITS EARNINGS BUT IF THE MARKET PAYS 50 TIMES THE OLD EARNINGS AND 25 TIMES THE NEW EARNINGS THE PRICE OF THE STOCK STAYS THE SAME.