Recent Google moves have left quite a few analysts wondering "What are they doing." The four billion dollar secondary offering, buying up unused dark fiber on metropolitian markets to a recent job opening that you will provide leadership on product vision and execution of projects that enable using Google's search and advertising technologies to enhance users’ Television viewing experience. Analysts have pondered these moves and concluded that "they need the fiber to roll out a WIFI network for their search", to stave off competition from a "hard charging" Yahoo. I see these moves and I see the end game for Microsoft. I must hand it to the guys at Google. They run at tight ship (it's still a small company really) filled with really bright people. They are all about the far right side of the Bell Curve.
The enormity of what Google is attempting so far exceeds the vision of the analysts that cover them that they simply cannot do justice to what they are doing. Many analysts think Google is in the search business. They are not. They are in the knowledge business. I alluded to this in a previous post comparing MSN search and Google search. If you take a close look at all of Google acquisitions, it's alway about a knowledge based company such as Blogger, Keyhole etc. Even their support of Wikipedia can be seen through this lens.
Another important thing to remember about Google is something that many people often miss. Google's most important assets are its people and the world's largest computing platform in the world that they have built. When I say the largest, I mean so large that no one really knows how large. Many people have speculated about the number of servers that Google runs. Most people guess 100,000. Most people are wrong. Google runs the world's largest single server at the Googleplex. As far as the number of machines, that's largely irrelevant as the computer system that Google has built can instantly be scaled simply by adding more machines. I would guess at this point they are adding machines all the time and 400,000 - 1,000,000 machines might be closer to the mark. How do I know this?
I don't but here's the reason why I think so. Gmail is Google's consumer mail application. When it started, it initially offered one gigabyte of storage. This was revolutionary at the time. Eventually Yahoo mail caught up and then Google upped the ante to 2.5 gigabytes. Now however when you visit Gmail you notice that the amount of storage that they allow is always changing. It's always increasing! This make competing with Google for storage next to impossible. Yahoo and Hotmail must use traditional provisioning methods to increase the amount of storage. Increasing the amount of storage a customer has requires purchase of equipment, planning and when the day come to announce your new HUGE storage capability, Google has beaten you because their system allow them to seamlessly add machines. Their cluster at this point is so tuned, they actually can tell you how much your storage will be increased to every second.
For a little more explanation, lets look the way most web applications are designed to be scaled up. Most applications usually have a load balancer, a set of hypertext servers and database servers. Scaling these requires adding machines and effectively tuning the engine as it were. You can add multiple load balancers etc. You get the picture. Google's derivative of the Linux operating system and the Google File System are structured from the ground up to seamless allow new machines to be added to the cluster without the huge startup time and rollout. This is may not look it, but it's a very very hard thing to do. When MS purchased Hotmail, they attempted to migrate to the system to Windows. This took several attempts and had several severe outages. Since MS is pretty much wedded to running the Windows operating system, I imagine their server rollout is pretty much what I described. Why? Because every MS announced web project I have seen such as the MSN Virtual Earth has crashed when posted to slashdot.org. I have never seen any Google service crash under any load. That's because their application runs on a platform that can seamlessly add machines to scale it.
This is a huge advantage structurally & culturally for Google. Let's take a look how Microsoft (and actually almost all companies who are not google are doing this). You develop the great new MS Earth. You send a PO over to procurement for 150 machines to support it. They approve it and you or someone will install it at the MS data center. Presumably MS has a group dedicated to maintaining these boxes up at Redmond. But see the difference? Your machines are your machines. To get more of them if your service is successful you will need to request another 200 of them from procurement with a reminder that you are exceeding your budget. If the service is really successful, you might need more but you have blown your budget out, and now you need to go upstream to order more. Microsoft is relatively flat still so this is possible. But you see the problem right, every project with it's own cluster, doesn't match the economies of scale that Google has built into their application. In fact each division instead is fighting for resources. There is some indication that the recent Windows re-org will attempt to address this problem. Initial indications are that Microsoft is attempting to blend the software and services to drive demand for the software. Once again they are failing to grasp the paradigm shift. That's another blog post.
Since Google has approached their system differently, each division gets to take advantage of the economies of scale in the platform. Adding additional machines adds makes everyone's application more robust. This means everyone enjoys a fundamentally robust platform to develop Google applications.
So what does this mean for Google's recent moves? Well let's imagine a Google set top box that has DVR functionality. Additionally this box operates as an additional node in the Google Network. All the dark fiber Google is purchasing allows them to delivery VOD (video on demand), telephony and HDTV with the greatest of ease. With the Google cluster of machines they can easily scale the VOD services without the tremendous expense that VOD start ups have typically have. In one fell swoop Google scales it's network, enters the home, and becomes the convergence of the typical internet and home entertainment. The killer feature driving adaption by the consumer of this brand new cable network? All on movies ever made on demand supported by the Google cluster. Google doesn't have own the end consumer either. They can partner with cable companies to provide them the platform. Google set top box is coming. Why else hire someone with set top box experience? Why hire if you aren't going into the home? VOD is solid match with Google's platform, namely the largest most powerful machine in the world. Most VOD business plans read like this. Buy 30 Million dollars worth of machines, sell services to the cable companies, hope burn rate doesn't kill us. Google is already in the wholesale business, namely wholesale search. They could easily roll out a VOD service as a wholesale service with "Powered by Google" as the slogan. Every new customer sold on the service would make Google computing platform that much more powerful (remember the economies of scale above). No single cable company could afford to build the computing platform that Google has built. It makes perfect sense for them to resell the platform.
Sounds too huge? Sounds too impossible? Remember Google has a history of nearly impossible things. When they announced 1GB of free email on April 1st, everyone thought it was a joke because it was a huge amount of space. Right now they offer nearly 3 GBs of free email space. That's more than 3 times the space in less 18 month. Only Yahoo has been able to respond with a half way competitive offering. Hotmail is still offering just 250 megs of email. Remarkably just two years ago 350 megs was unheard of in the free email space. Now it's just not competitive. Of course after the innovation it seems easily but some papers like the NY Times thought that much space would have an adverse effect on the search engine. Notice any Google outages lately?
Google is has built the world's largest computing platform. By extending that platform into the home through a set top box, they can offer features and killer applications that companies like Microsoft aren't even thinking about. By changing the paradigm, Google can not only rule the web, but also the digital home.
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