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| Google's prospects from a Google user and independent investor |
Google market cap: $80 billion - 6/01/2005 07:27:00 PM
$80 billion. Up 340% since the IPO.
Bigger than General Motors, Ford, New York Times, Hilton, Starbucks, and Mattel combined. Bigger than Amazon times five. 50% bigger than Yahoo. 20% bigger than Oracle. But still just one-fourth the size of Microsoft and one-fifth the size of GE. Remember when Barron's said Google could be "Better than $50 Billion," and everyone said they were crazy?
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Google TV, Microsoft IPTV, and the big constraint - 6/01/2005 12:21:00 PM
Om Malik asks, "Is Microsoft IPTV’s Weak Link?" While Microsoft is trying to lock up the TV market by dominating the hardware in the home (MCE and Xbox), it seems that the big constraint is the middle layer between the content creator and the consumer. Microsoft can't field enough servers to handle even a pilot project, so their the rollout in Switzerland is being delayed:
The problems stem from the fact that at present the servers cannot support more than 500 households and even then it can only offer only one television channel.This infrastructure is where Google excels. I've speculated numerous times that Google is readying a push into TV, which has an advertising market 20 times bigger than Web advertising. And Google wouldn't just provide ads. Larry Page said, "What we've done for the Web, Google will do for television." That's a revolutionary change in the media and entertainment business from controlling content in a one-way medium to enabling many-to-many conversations. Google is investing big time in that middle layer of infrastructure. When you're serving petabytes of data to thin clients like TVs and mobile devices, you've got to cache that data close to the user. Cringely says only Google can do this, and they've got a huge head start. The Google Web Accelerator is a Big Deal because it's one more component of the Google Grid that is making this middle layer a reality. This news from Switzerland shows that the server infrastucture is a big challenge even for Microsoft, and even for a small rollout. To do this at scale is Google's competitive advantage when they enter the TV space. Now what about that in-home device? TiVo? Akimbo? Mini? Does Google even need a device if it solves the content-serving puzzle? |
When everyone's a believer, is it time to bail? - 6/01/2005 06:29:00 AM
Google's share price is ripping past analyst estimates again, trading at $283.10 on pre-open Instinet this morning.
Safa Rashtchy (Piper Jaffray) raised his price target to $300 yesterday, John Tinker (ThinkEquity) is at $330, and CSFB is now at $350. CSFB says, While there will certainly be plenty of volatility in the stock price ... we believe shares have further to go given the momentum in the company's core advertising business, the growing impact of new business like Gmail, Froogle, and Local, and a valuation that, relative to the company's growth rate, is far from stretched.Forbes says, "Google to Outgrow Yahoo, eBay." Business Week has a perspective titled, Google at $300? Hold That Cringe: While its stock price has rocketed 226%, to $277, several analysts and investors think it has plenty of upside left. On May 31, Piper Jaffray became the latest investment bank to slap a $300 price target on the search kingpin. That would put Google's market capitalization at a staggering $83 billion, dwarfing corporate titans from Boeing to Ford to McDonald's.The article quotes Tinker to make my point, that Google looks expensive but when you consider the growth rate and their margins, there isn't another company I know of that can generate this much cold, hard cash: In absolute terms, yes, Google is very expensive," says John Tinker, an analyst at ThinkEquity Partners, which has a $330 target for Google. "But when you factor in the growth rate, it's actually quite cheap.It's no secret that buygoogle has been an unabashed Google booster, even while Wall Street was trash-talking the stock. I see big potential beyond Web search and I don't know of another company that can generate this much cold, hard cash. But I'm a lot more comfortable being a contrary voice while the rest of the world doesn't get it. When mass-market Business Week and Forbes start getting the Google religion, I wonder if it's time to bail. |
Google for every device - 5/30/2005 07:09:00 PM
Who hasn't read the breathless predictions of Google building an Internet operating system that will make old-fashioned PCs and Microsoft's desktop software irrelevant? I have no idea whether Google's cooking up their own browser or operating system, but it does seem that the desktop-centric world is becoming increasingly less relevant. And Google is well positioned to play a big part in delivering content on next-gen devices.
PCs have never "just worked," and they likely never will. They're big, bloated, expensive, noisy, fragile, slow and insecure. Their performance degrades over time. And most of the world can't afford them. Telephones, televisions, DVD players and TiVo just work. Right out of the box. Plug them in, and turn them on. No need to load software, reboot, kill viruses, search and destroy spyware, or delete temporary files. Clean, simple, fast, and cheap. It's a big world beyond the affluent technophiles who can afford these balky and expensive PCs. To connect to the rest of the world, the issues of cost, complexity and reliability must be solved. And once these problems are solved for the rest of the world, who in Microsoft's current markets will continue to pay so much for so little? We're beginning to see devices that accomplish what most people need, simply, and at a fraction of the cost. And there's no Microsoft software or royalties on these devices, either. They're ideal platforms for Google's simple, free, network-based, ad-supported services. As long-term investors, we search for the sea changes or inflection points that signal shifts in the assumptions underlying the status quo. I have no idea if Google today is worth $70 billion. But I am convinced that we're witnessing a dramatic change in how information will be stored, managed and delivered on many fronts, and the desktop PC will no longer be at the center of the information universe. As an investor, I'm placing my bets on companies best positioned to enable and exploit the new world, and reducing my bets on the companies still beholden to the old world. |
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