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Thoughts on Google's Wireless Ambitions

The blogs and dailies have spent all day churning through possible motives for Google to get into the wireless software business. But it's not all that complicated: Google is just trying to get more people to use the Internet. Why? The more people use the Internet, the more eyeballs see Google's ads, and the more money Google makes. Right now the wireless Internet experience stinks. Thereis no common software platform like Windows or OSX for software development and except for the iPhone, there is no full featured browser. But there are 3 billion phones in use. That's a lot of eyeballs. The iPhone has already proven that if you give consumers a good wireless Internet experience they will surf the Internet all day long. AT&T says its data usage is up 4 times since the iPhone was released.

So ... if one platform existed for most wireless phones, and if they all ran the same browser, it's natural that more mobile phone software and more web applications would be written. Why will the carriers play along? Ultimately their business is about getting consumers to use their networks. And deep down in their soul they know that Google's phone software will generate more network usage than their software will. After all, Google already has $225 billion in software development marketcap to prove it.

Is the FCC going to go after the WSJ-News Corp deal?

I just read this story in Broadcasting and Cable and damn near dropped my teeth. This FCC commissioner wants to block News Corp from buying the Wall Street Journal because of antiquated ownership concentration rules. It's not clear that the FCC even has any jurisdiction here. But I ask a more fundamental question: Mr. Copps, have you ever heard of the Internet?

More Facebook Money

Betsy Corcoran at Forbes is reporting that two hedge funds have agreed to invest an additional $500 million into Facebook. The buzz online says it's at the same $15 billion valuation as yesterday's Microsoft deal. So, just for fun let's look at what a $15 billion valuation implies were Facebook a public company.

For starters, let's be generous and assume that its stock trades at a PE of 56 times 2008 earnings. That's what Google was trading at shortly after it's IPO. What kind of earnings does that assume? The math says $270 million. I think social networking will change the way the world uses the Internet, and Facebook certainly has an early lead in that race. All that said, for a company with current REVENUES of only about $150 million, virtually no profits and plans to double its staff to 700 in ayear, $15 billion seems a little ... er .. frothy, no?

Why Microsoft Really Valued Facebook at $15 billion

You'll read a lot in the coming days about Microsoft's big Facebook investment, about the importance of it finally beating Google in a head to head competition, and about the great boost it gives Microsoft's grand but as -yet unfulfilled online advertising ambitions. You'll also no doubt see the justification for Microsoft valuing Facebook at $15 billion put this way "$250 million is walkingaround money for Bill Gates & Co. For that money they would have valued Facebook at $100 billion to get the deal."

That's all true, but it's iincomplete. Probably the biggest reason Microsoft pushed so hard to win an investment in Facebook is that Bill Gates and Steve Ballmer have been obsessed with the power of online identity for more than a decade. They've been trying for seven years to make that idea work with Microsoft Passport Facebook, meanwhile, has taken that dream and has made it reality in less than four.My Facebook profile increasingly is who I am online, and I like it because I, not some faceless corporation, created it. Facebook profiles aren't perfect, mind you; but they are the closest any company has come to solving that very difficult problem. I know from talking to folks at Microsoft that getting a piece of an asset like that - even at a $15 billion valuation - is to them one of the best investments of all time.

iPhone thoughts

Did anyone else notice that iPhone users at the Web 2.0 conference in San Francisco were still using their Blackberry's and Treo's to send email? These are the true power users and Appleaholics of the universe. Why haven't they completely converted? It's because Apple went a little too gaga with its very cool multi touch technology. Turns out that you have to flick through emails and contacts to find what you are looking for. That's very cool a few times. Afterthat, every fiber of your being cries out for a simple search function. Fix that Steve Jobs, and I'll buy one tomorrow.