Is Google Keeping Turbo-Charged Internet a Secret?
byFeb 8th 2013 7:09PM
While Google co-founder Sergey Brin has been cruising the NYC subway with his Google Glasses, his company has been honing an impressive, readily-available new technology -- but only if you live in Kansas City. The almighty search engine has forayed into the world of cable connections -- on the cheap and super-fast -- with the advent of Google Fiber. So, why isn't this a bigger deal, and is the rest of the cable industry losing its cool? And perhaps, most importantly, is this a development worth a shareholder investment?
Defining the fiber
According to its website, Google Fiber users can connect to the Internet at speeds nearly 100 times faster than standard broadband technology. Fiber also offers more DVR space -- users can record eight programs at a time -- as well as 2000 "crystal clear" HD channels and a full terabyte of cloud storage. If Google can successfully establish a cable service that's unprecedentedly fast, cheap, and free of customer service woes, the company could have a shot at reshaping this industry.
Super Bowl traction
Google Fiber might not be high profile now, but the company is certainly working on it. The first step in grabbing "mind share" over Fiber was in having a spiffy ad grace the elite Super Bowl commercial breaks this year. However, the ad only aired in Kansas City, and featured well-known local celebrities .
While Silicon Valley is considered the reigning home of tech wizardry, it may seem odd that Google has picked the comparatively off-the-radar Kansas City to be the testing site for its cable prototype. However, the city is actually a goldmine for cable start-ups, as it offers potential speeds of a gigabyte per second , which dwarfs the average Internet speed of a household using a cable modem. Compared to the Valley, Kansas City is also a fresh slate for Google to work on and attract start-ups that want to take advantage of its lightning-quick Internet facilities.
While some non-Kansas-City-centric cable users are begging for Google Fiber to make its way to their city soon, cable industry giants like Comcast and Time Warner Cable seem nonplussed by the potential of a new opponent. The reason? Their revenues are more than fine -- Comcast's annual sales have jumped 56% since 2010 , Time Warner's by 10% -- and so are their margins. Time Warner and Comcast had net profit margins of 8% and 7%, respectively.
It has also been difficult for Fiber to shake rumors that it's anything more than an experiment . Having a presence in only two cities doesn't help, and Google has made no promises of expanding the service anytime in the near future. For now, it continues to sit pretty in Kansas City, while the rest of the country pines away for it.
Worth an investment?
While Google is being fickle about Fiber, it bears repeating that this company is, well, Google. Regardless of its reputation as a cable company, Google doesn't just dominate search -- it's synonymous with the concept. Expanding its already recognizable brand into the world of cable would be an expansion into new territory, but even if the company doesn't follow through with it, its 71% increase in revenue since 2010, and 21% net profit, prove it is still a solid staple for a stock portfolio.
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The article Is Google Keeping Turbo-Charged Internet a Secret? originally appeared on Fool.com.Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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