Is It A Bird? Is It A Plane? No, its Google’s Supercomputer!

November 13th, 2007 by Click Consult

As you may have noticed, Google is rapidly expanding and moving into other areas. Pending an ongoing antitrust inquiry, it will buy DoubleClick, a company that specialises in the other big internet advertising market: branded display or banner ads (whereby each view, rather than each click, is charged for). In addition, Google now brokers ads on traditional forms of advertising, such as radio stations, television channels and newspapers.

Critics say that Google should maximise their profit margins and not share them with others. If a web browser clicks on a text ad placed by Google on a third-party blog, for example, Google must share the revenue with the blogger. If Google places ads in newspapers or on radio stations, it must share the revenues with the publisher or broadcaster.

So why does Google do it? Well, its costs are mostly fixed, so any incremental revenue is profit. It makes good sense for Google to push into television and other markets, even if Google gets only one cent for each viewer (compared with an average of 50 cents for each click on the web). $0.01 carries no variable cost for Google and is thus pure profit.

The machinery that represents Google’s very fixed costs is their secret sauce. Google has built, in effect, the world's largest supercomputer. It consists of vast clusters of servers, spread out in enormous data centres around the world. The details are Google's best-guarded secret. But the result, explains Bill Coughran, a top engineer at Google, is to provide a “cloud” of computing power that is flexible enough “automatically to move load around between data centres” (The Economist, 30/08/2007). If, for instance, there is unexpected demand for Gmail, Google's e-mail service, the system instantly allocates more processors and storage to it, without the need for human intervention.

This infrastructure means that Google can launch any new service at negligible cost or risk. If it fails, fine; if it succeeds, the cloud makes room for it. Thus Google can redefine its goals almost on a whim. Its official strategy recently became “search, ads and apps” (apps being software applications). Sure enough, after a string of acquisitions, Google now offers a complete alternative to Microsoft's entrenched Office suite of programs, all accessible through any web browser. A new technology, called Google Gears, will make these applications usable even when there is no internet connection. And Google is hawking these applications not only to consumers but also to companies. With superpowers like these, Microsoft’s world domination (AKA it’s Monopoly) is clearly under threat!

This entry was posted on Tuesday, November 13th, 2007 at 5:40 pm . You can follow any responses to this entry through the RSS feed.

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