David Vise says investors should reward Google for investing in infrastructure, because their ability to deliver instant information is their real competitive advantage. By investing as fast as Google is, they're creating a wide competitive moat that is increasingly difficult for competitors to cross.

Where does Coca-Cola's competitive advantage lie? In its secret formula, most would say. But the real moat around the soft-drinks business is its powerful distribution system. Strangely enough, the same is true of Google.

Sergey Brin and Larry Page have known for years that the most formidable barrier to entry to Google's near-monopoly of internet search is not their unique algorithm. Rather it's the company's global network of thousands of stripped-down PCs that keeps competitors at bay. Investors don't seem to get this. When the search company's costs go up, they mark down its price. Instead they should applaud Google for building a moat around the business. Google secretly assembles PCs and optimizes them for search. The firm's continued hefty investment in capital expenditures is a sign that it has not changed its long-term focus on maintaining this competitive advantage merely to pump up quarterly financial results.

When Microsoft recently disclosed plans to ramp up capital spending by pouring billions of dollars into search, Wall Street thumbed its nose at the company and its stock. What Microsoft understood, but has failed to communicate clearly, is that its best hope of catching Google is to deploy its own network of linked personal computers capable of producing rapid and relevant search results.

Google users expect instant gratification. That reinforces the importance of continued hardware deployment and hefty capital investment, since delivering search results in a fraction of a second requires that data centers be as physically close to users as possible. If one data center has technical problems, queries are routed instantly and seamlessly to the next closest location. Google users never see any of this, but they remain addicted to the search engine because it instantly, and without fail, satisfies their curiosity.

With every dollar that Google spends on its computer network, it raises the barriers to entry to outsiders. Competitors may one day crack the search algorithm, but they'll have a hard time catching up.