Monday, January 22, 2007

Google Takes Over the World

I, Cringely has a fascinating column this week about Google.

Google is renting huge amounts of bandwidth, and they're also building a large number of gigantic data centers. Cringely believes that they're, in essence, trying to control as much bandwidth as possible.

Google's strategy (as suggested by Cringely) is based on the belief that the major ISP's have grossly underestimated future bandwidth demand.
It is becoming very obvious what will happen over the next two to three years. More and more of us will be downloading movies and television shows over the net and with that our usage patterns will change. Instead of using 1-3 gigabytes per month, as most broadband Internet users have in recent years, we'll go to 1-3 gigabytes per DAY -- a 30X increase that will place a huge backbone burden on ISPs. Those ISPs will be faced with the option of increasing their backbone connections by 30X, which would kill all profits, OR they could accept a peering arrangement with the local Google data center.

Seeing Google as their only alternative to bankruptcy, the ISPs will all sign on, and in doing so will transfer most of their subscriber value to Google, which will act as a huge proxy server for the Internet. We won't know if we're accessing the Internet or Google and for all practical purposes it won't matter. Google will become our phone company, our cable company, our stereo system and our digital video recorder. Soon we won't be able to live without Google, which will have marginalized the ISPs and assumed most of the market capitalization of all the service providers it has undermined -- about $1 trillion in all -- which places today's $500 Google share price about eight times too low.

It's not the Hunt Brothers and the silver market, but it's an interesting play.

If you get a chance, the full article is well-worth reading.

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