Tuesday, November 21, 2006

Long Live Google

Unless you've been living under a rock, you'll know that the mighty Google hit the $500 mark today. Not only have the plethora of Internet media, blog and finance websites felt compelled to make this their top story, but this event has also hit the mainstream media. The Google brand name is now so popular that even my mother has heard of Google, and she's only been online twice this year.

In surpassing $500, the Big G has defied what almost every analyst and armchair analyst said would be impossible to achieve. To say that Google is overvalued is akin to uttering nonsensical words that are devoid of meaning, substance, and relevance. That is because it is already common, and public knowledge that Google is overvalued, and has been almost since its IPO. Google stock may come back down to earth one day; however it becomes meaningless to try and predict when that day will come. Certainly today is not that day.

I also read about how there are no barriers to entry to compete with Google. The fatal flaw with using this as the basis of an overvaluation argument is that building a better search engine than Google does not translate to better monetary success than Google. Sure, anyone can get into the same game as Google, I'll give you that much. A big whoopdeedoo. But to focus on the low barriers to entry is completely missing the point. Once you've entered the game, you need to figure out a way to win at the game. YHOO and MSFT haven't figured out yet how to win at this game. In fact, no one else has figured out how to win at this game. Only Google is winning not just the battle, but also the war.

Anyways, to commemorate this historic event of surpassing the $500 mark, I have uncovered some mildly interesting facts about Google:

- Google has in the past 8 years, grown its market cap to a level that took HPQ 67 years to achieve.

- There are only 7 other publicly traded companies (not BB, Pink's, or preferred's) that have a share price higher than $500:
BRK.A, BRK.B, SEB, WPO, WTM, NVR, CME. Out of this elite group, only the Berkshire stocks have a dollar volume that is greater than the Big G.

- By surpassing the $500 mark, the Big G is now worth more than the likes of IBM, Chevron, and Intel. Goog only needs to hit $540 to surpass Cisco in mktCap. Anyone care to wager that this will not happen within the next few months ?

- I recently discovered that Google Desktop Search v4 requires at least 1.5 Gb hard disk space to index about 160K files/webpages/emails/chats. As of Dec 2004, Google has indexed over 9Billion items. So if this ratio holds true for Google's own search engine, then that means a storage space of at least 90,000 Gb was required back in Dec/04. If this number seems a bit low, keep in mind that this does not account for the Google apps that have been introduced since then, such as Google Base, Google Earth, Google Page Creator, Google SpreadSheets, and Writely, and also storage space on redundant servers distributed across many data centres.

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