Google Inc (NASDAQ:GOOG) has been busy installing fiber-optic lines aimed to supply gigabit speed to Kansas City, MO internet users. Next up are installations in Austin, Texas, and Provo, Utah.
Google Inc (NASDAQ:GOOG) will deliver 5 mb of service for free, and 1 gigabyte speeds for $70 a month. I have heard many Google shareholders complain that this has little to do with Google’s business plan, that it will take forever to recoup the money invested if they ever do, and that the whole thing seems like a waste of resources.
First off, let’s work on the assumption that Google Inc (NASDAQ:GOOG) loses millions of dollars from this, never recouping the money spent on developing the infrastructure from the revenue generated from supplying Internet service. I still believe the move brilliant, and here’s why.
Once again, I am impressed with the forward thinking of Google Inc (NASDAQ:GOOG)’s management, and that’s why this is truly a stock to own for the long run. Google’s business model is based on ubiquitous Internet service. Google’s gone so far as to send chairman Eric Schmidt to North Korea to convince the Korean government of the power and benefits of the Internet.
It’s why, despite declining average revenue from pay per click (down 4% in the latest quarter), shareholders should be excited about mobile search (despite potential increased competition) as Google Inc (NASDAQ:GOOG) is well positioned here with its Android OS dominating market share in cell phones. Simply put, the search-pie is growing.
Microsoft Corporation (NASDAQ:MSFT) versus Google Inc (NASDAQ:GOOG)
Microsoft Corporation (NASDAQ:MSFT) and Google have made two different bets on the future of computing.
Microsoft has bet that consumers will want to work offline, and thus Windows PC’s still come with large hard drives and fast processors.
Google has bet on a purely cloud-driven system, where almost all files and computing are accessed on large, powerful, remote servers. In fact, Google Inc (NASDAQ:GOOG)’s Chromebook OS is mainly a web-browser that enables you access to files stored on the cloud.
In today’s world, Microsoft Corporation (NASDAQ:MSFT) is the winner. It’s simply impossible to get online any time you want to use your computer, and even if you do, slow connection speeds hinder access to information and make it frustrating. Thus, what Google is doing is trying to speed up change so you can access your files and computing power from the cloud as quickly as you can from a hard drive.