What will Google Do With $4 Billion?
Google is planning on floating another $4 billion in shares. The question then becomes, with reserves of over $2 billion, what does the company want with the extra cash? This article provides my own speculation and insight and it might surprise you.
Google. Currently trading at close to $300 per share.
The company has an $83 billion market cap making it one of the most valuable companies in North America, almost double the value of Yahoo! And almost 4 times the value of General Motors.
With this kind of valuation, what could Google have up its sleeve? After all they are reported to have over $2 billion in cash reserves alone. You’d think with that kind of cash on hand they could do almost whatever they wanted. So why add an additional $4 billion to that pot?
What could Google be after thats worth more than $6 billion? Well, I have some ideas.
But before I go there, let’s look at some of the things Google is doing now.
The company recently launched Google Talk – their own version of an IM program.
They’ve also been looking into other areas of communication as well, such as hunting out dark fiber. That is, fiber optic cabling that is unused.
They’ve also been active in the areas of social networking and personalization. And we all know about Gmail, Froogle and Google News. These are just some of the areas Google has been moving into. They are, as we in the industry call them, verticals.
But that’s not all that Google is interested in. While they make sense, I think Google is just scratching the surface of their potential.
In order to understand what I’m talking about we must first review Google’s mission statement:
Google’s mission is to organize the world’s information and make it universally accessible and useful.
So, how does Google go about making all the world’s information accessible and useful? Well it’s a good start that they have a hyper active crawler that not only indexes pages, but also images, audio and video files. In addition, Googlebot can index text files, Microsoft documents such as Word and Excel documents, PDF’s and more.
I think they’ve pretty much covered the “organize” part of the mission statement. Sure there are more file types and sources out there, but Google finds more and more of them every day.
Let’s skip to the last point – “useful”. I’ll save “accessible” till later.
In order to make it useful, Google must present it in such a way that the user is exposed to as much of it as possible, yet it has to be relevant to the user. And they have been working on this for quite some time.
Now you may notice you not only see the usual paid and organic results, but in some cases you see definitions, Froogle results and more.
And more recently we are beginning to see other forms of vertical results show up in the “regular” organic results. These are results where Google is suggesting other potential matches to your query.
All in all, I’d say Google has a pretty good handle on presenting useful results. Sure it can get better, and I think it will. In fact Google MUST get better in order to stay ahead of the pack.
So, I’ve covered the “organize” and “useful” now its time to talk about the “accessible” and this is where my speculation starts.
Remember at the beginning of this article I said I wondered what Google needed $6 billion for?
What I’m about to write here may surprise some, but not others.
I think Google wants to move into the next generation of the web – the wireless web. And how they are going to do it is by buying a struggling wireless provider.
The wireless provider I’m thinking of is T-Mobile.
Just let that sink in for a moment. T-Mobile is the company that uses Catherine Zeta-Jones in their TV commercials.
Well, for one, the parent company, Deutsche Telekom is not satisfied with how the company is doing in the US. They have even hinted that they may sell the company.
Google recently signed a deal with T-Mobile to provide web services for the company. Google also recently purchase a company called Android, which makes wireless phone software and who’s founder also developed a device called Hiptop which is sold by T-Mobile. Coincidence? I think not
And a quick evaluation of Deutsche Telekom indicates that the US subsidiary (T-Mobile) is indeed worth about $6 billion.
It has been common knowledge the past few months that Google is investing heavily in wireless technologies. Android is just the latest in a string of purchases centered on wireless and the emerging possibilities it holds.
Even if Google doesn’t buy T-Mobile, they will still be in a position to offer a hybrid wireless/broadband communications system capable of allowing transitions between wired/wireless technologies.
Combining wireless/wi-fi technology into a fiber optic network makes perfect sense for Google. Imagine having a Google cell phone for which the monthly fees are minimal and having the phone be smart enough to switch to a local wi-fi hotspot with fiber connection allowing for national and international calls at a fraction of the cost. Google would crush the competition.
And like I said, the infrastructure for this is either in place (in other words, Google already owns the technology) or will be shortly (in that they are developing and/or purchasing it).
Really, the whole delivery of results is the only place Google is lacking. Without an internet connection and computer you can’t access Google. Therefore Google wants to put Google in the palm of your hand. And what better way to do that than offer a cheap/free cell phone with international calling capabilities?
And all you have to put up with is some unobtrusive advertising.
And think of that – what would an advertiser pay to have a captive audience? No longer would the advertiser have to pay for broad keyword matched advertising. Through geo-targeting and demographic profiling the advertiser would be able to target his ads at the right age group in the right location, carrying a Google cell phone.
Really, I’d put up with a few ads for a free phone with virtually unlimited long distance. I can tune out TV ads now, and I all but ignore PPC ads, so I’m sure I can ignore the cell phone when it beeps indicating a new ad.
Now I’ll grant that this is extremely speculative. Perhaps T-Mobile isn’t the target, but I’m pretty confident that someone in the market is.
In any case, if you have other ideas, or would like to share your speculation, please leave a comment.