Techpreneurship: Google Strategy – Hardware, Social Media, and Now Fiber??

Jeff Amerine

Techpreneurship, with Jeff Amerine

(Jeff Amerine is an IA advisor, entrepreneurship educator, and officer with the University of Arkansas Technology Licensing Office. Each Thursday, his Techpreneurship blog will appear in INOV8. Drop him a line in comments.)

Techpreneurs, we have an interesting case study in strategy before us.  Within the past few months, Google has announced major intiatives that seem far from its core competencies.  I guess when your company mantra/mission is “Do No Evil,” a wide path appears…

Here’s a quick summary of major strategic thrusts in the past six months:

• Release of Android mobile operating system
• Release of a Google-branded mobile smartphone – Nexus One (built by HTC)
• Announcement of Google Buzz – social media chaos reducer via Gmail - check out the link: http://news.cnet.com/8301-30684_3-10449662-265.html?tag=nl.e43KeyIt
• Announcement of Google super high-speed fiber pilot deployment to selected areas - infrastructure play?? Check out the link: http://www.google.com/appserve/fiberrfi

I understand Android and even a Google-branded smartphone.  Not playing in the mobile app arena wouldn’t have made any sense.  The move set the stage for a war of titans between Apple and Google, but that should make both companies better.  Ultimately consumers, enterprises, and Techpreneur app developers will win.

I get Google Buzz as well.  If they truly achieve the ability to integrate various social media feeds into a single coherent user view,  I am all for that.  It will no doubt drive more ties to Google’s core business.  Seems to make sense, although they appear to be a little vague about how Facebook fits into that picture, i.e. competitor, friend, frienemy??  Hard to tell.

The last one is the one that frankly blows my mind.  Google is jumping to the fiber infrastructure game.  The stated purpose is to deploy fiber to the home or enterprise at unprecedented speeds.  The theory is that this will enable all sorts of new applications and capabilities.  This is a classic example of vertical integration.  These guys are smart, maybe it will work for them.

Here’s what I don’t get.  Network infrastructure is amazingly capital intensive.  Bandwidth/capacity can hardly be sold for more than the cost of transport operations, and oh by the way, as a common carrier you are compelled to give your competitors access to your network.  They can then compete for the same customers.  All of this equals a low margin, commodity business, with the steady march of price erosion.  I lived through the worldwide broadband capacity glut in the 90s.  Bandwidth prices slid at an unbelievable rate — not fun.

Several folks who are smarter than me believe Google has changed the cost curve on new fiber technology.  This could give them an edge for a while.  Others believe their main play will be in the Northeast U.S. where fiber capacity and real estate for telecom infrastructure in general are constrained.  The jury is still out, but it will be fun to watch.

Google appears to be in a scenario similar to Buffett’s Berkshire-Hathaway.  In order to move the growth needle, they need to make really big moves.  I suspect stockholders hope they pay attention to all the dead and dying bodies in the network infrastructure arena as they creep in to yet another new space..

The question to Techpreneurs’ everywhere should be, “What opportunities do Google’s moves open for me?”

Well, what do you think?

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