Google Net - All things considered, a cheap means to an end

So they're taking it one step further than I thought and are taking the fiber all the way to the home.

-Makes sense as they'll have zero dependence on any CLEC, RBOC, MSO or local transport layer. They'll own the traffic from the starting point to the end.

-This gives incredible scale and opens tons of opportunity to exploit mindshare to drive more revenue.

-Google building this network is kinda like the equivalent of the inverse of the Comcast purchase of NBC. Instead of NBC paying Comcast fees to carry it's traffic, NBC now has a free ride to the TV sets of Comcast subscribers. Similarly with GNet, Google now has a free ride to GNet users/subscribers/testers and bypasses paying transit and transport fees to telcos, etc.

The big question is how does this fit into their network neutrality stance. Will google let other transit providers (aka ISPs) ride this last mile to the house?

Why should they when they are the ones spending the money to lay the fiber?

My gut tells me that the answer is yes but there will be a cost. That cost could be in the form of monetary compensation from the ISP to google or that cost could be that Google gets visibility into the usage of the ISPs customers. That visibility and the historical data resulting from it is likely far more valuable to Google than the revenue they could generate by selling the last mile to alternative ISPs.

Envisioning this one step further, by connecting their network to all private networks run by telcos, isps, msos, ilecs etc, Google can become the arbitrator/clearing house of peering (traffic exchange) between consumers and traditional network operators. Creating a true, on demand, utility based connectivity model. Like a cloud for network service. Like bringing BGP to the masses by enabling it at the core instead of the edge.

Can they have their cake and eat it too? Time will tell.

Web 3.0 Just Kicked Through the Door

In the playbook for Google's world dominance there is one play still in the developmental stage:

GoogleNet - the one missing link. No pun intended with the missing link part. Link....network... get it?

The posting below is a repost from February of 2007. I'm reposting because I think it is just as applicable today as it was then.

Couple quick thoughts before my paste:



- the amount of data on every persons habits that google will be able to manipulate and exploit is scary. the Chrome OS and Android just gave google 5 times the access they had to me before. Why? Android was built to run on devices and I can't stand windows crashing every hour so i'll gladly switch to a more stable android. not to mention its free. Android will be the OS for my mobile phones, set top boxes, home entertainment systems, appliances (refrigerators, ovens, vehicle management and entertainment systems, home automation devices (remember google's forays into the home automation and electrical smart meter markets?) and probably, in the not too distant future, they'll manage our terlits too. Thats a shit load of visibility they'll have in to the patterns and habits of connected people. Again, no pun intended :)

- will the Feds just sit back and watch as Google take it deeper than Ma Bell ever dreamed possible?






They are giving away everything else, why not connectivity too? Its all about efficiency right? Operational efficiency, risk mitigation efficiency and customer efficiency. Efficiency is the driving force behind Googlenet(gnet). What is GNet? Google's foray into the ISP business. This 'business' for Google is the means to an end. At the end of the day Google sells advertising and they'll use whatever means necessary to do that, be it building an OS and giving it away for free or by providing free connectivity so that free OS stays online 24x7. The more interaction we have with devices the more impressions google has to sell to advertisers.

The gnet hypothesis: Bandwidth costs have fallen to a level that the advertising revenue more than subsidizes the cost of the network. We are in the very early stages of a true 'gloabl village' as Marshall McCluhan called it. The cost structure for a traditional ISP like PacBell DSL..errr AT&T, comcast, etc to supply services to the residence is around $40 per month and trends down as they grow because they get cost scale.... in the network world, the more you buy the less it costs.

goog will be placing a bet, and a very calculated one, that advertising $$ will not only subsidize operational costs of providing free services(isp, voip, office, etc), but will exceed them.

Owning the customer's network routes from end to end(being the ISP) provides Google with private infrastructure platform for delivering customized content and adverting to each and every one of the people using their service. this delivery platform is always on and knows where you go, what you type, where you live, who your friends are, what files you have downloaded, what you look like, and whatever else they add on to their services. So when Johnson & Johnson or GE or Proctor & Gamble or Coca Cola or Pepsi is planning their media buys for the next year do you think they'll purchase advertisements on radio, television, print or the 4th network(Google)? based on the ability to target a specific population that has certain attributes you desire, the choice is clear...you pick google. Why? because you know that your marketing msg is going to a qualified prospect as opposed to the traditional 'shotgun' approach. plus, you can get results in realtime and tweak your msg if its not working in real time. with the other three media you are somewhat ratholed into trusting some third party for ratings that may or may not even reach the people that you want it to. by the time you figure this out a slew of things can happen...some good some bad but why chance it when you don't need to.

At the end of the day, Google is building a traditional media killer and the funny thing is..actually not really funny but kinda, that the writing is on the wall but nobody seems to believe it. I do. @Home Network had this vision but couldn't pull it off because the cable co's couldn't get their heads out of their rear to see the opportunity that was sitting right in front of them.

goog already has deals in place and likely in the works with the producers of original content which will allow their users access to that content. if i'm a content producer where would i want my content to be seen? ex. let's say you are the producer of The Office and goog offers you the ability to place your content on their network so that it can be viewed by anyone, anywhere, anytime and offers a revenue share or some other creative structure around it such that you know your worst case scenario beforehand. simple choice right? sure abc or cbs might offer an upfront fee in the form of $$ per show but the audience is limited, the timeslot is finite and in order for someone to view it, they have to purchase cable tv or satellite or whatever whereas on the google network you content would be globally accessible and the broadband access which replaces the cable or satellite tv service, is free to the masses. additionally you can develop complimentary services that engauge your viewership such that you are able to really develop a community around you content as opposed to content around a community.

What does this have to do with being an ISP? Everything, why do you think there is such a brouhaha over net neutrality? Without connectivity none of this is possible and with the right connectivity, all of it is possible and defendable from the threat of new competition emerging to pose a challenge.

The internet hasn't changed anything when it comes to the bare bones media model. The driving force of media is and always will be advertising. Without it, there would be no televsion, radio, print or internet. It doesn't matter if its old world or new world, it's still dependent upon advertising and gnet is to google what airwaves were to ABC, NBC and CBS, something to exploit in order to sell advertising.

Level3’s smoke and mirrors

Level3 didn't slash pricing for CDN service with their recent 'same price as transit' marketing ploy. If anyone slashed pricing, Amazon did with the introduction of their S3 storage. All Level3 did was imply their baseline CDN service is no better than their transit....heck, at least they admit it. A couple points to note. Baseline CDN service really is transit or no better than transit from Internap or some other route aggregator and Level3 may have lost allot of money over the years so it should come as no surprise that they are at it again. This time with some method to their madness, they baiting customers and will up sell them on value added services or give the baseline product away for free but demand a share of the customer's revenue generated as a result of distributing content. In essence subsidizing the delivery costs of that content.

Questions that come to mind about Level3's shuffling of the product pricing boxes: How much is their storage going to cost? What about those companies who need some DRM functionality for their downloads? How much with that cost? What about custom players or layered advertising? How much with they charge for that and what percentage of the advertising revenue will they require you give them for using their CDN?

I read their new delivery pricing works out to about $11 per Mbps equivalent. Not a bad rate, but certainly not as low as some of the pricing from other players in the space. And definitely not free, yet. It will be free sooner than later because it will be subsidized by advertising dollars.

First it may be helpful to explain the difference between transit of data and distribution of data. Everyone on the internet has transit. It is the ability to send packets from one place to another. Inherently there is some form of intelligence built into transit because it is built into the core backbone routers of the major carriers and isps.

Example: you're sitting at your computer on Sunday morning checking your fantasy football scoring on the Sportsline website. You live in CA and have Comcast as your ISP. Sportsline is hosted in FL at the Terramark datacenter(not sure if this is actually the case and am using as an example only) and connected to the Internet in Terramark via Sprint. When you type in the url and hit return a request gets sent from you computer out your cable modem and onto Comcast's network. Comcast's routers see the IP address of where that packet is supposed to go, looks up in it's routing table what would be the quickest way to get that data off of it's network and onto the Sprint network. Since quickest doesn't always translate into best and in this case only translates into Comcast not wanting to carry the cost of that packet on it's network your experience is subject to all sorts of hiccups along the way. That first packets eventually gets to FL and Sportsline and when it does, the same process, only in the inverse order, happens again. The updated score makes it's way back to you in CA and all is well. In this instance the experience wasn't all that bad but the information you requested was quite small in volume of data required to get you that score. Imagine if, instead of the updated score, you were requesting the infamous Paris Hilton and Rick Soloman video. The file size of that video is exponentially larger than that of the score of the fantasy game and the cost to Comcast and Sprint is also exponentially higher to deliver than the score. Fortunately for you, Rick Soloman was out to make some dough and wanted the user experience to be similar to his own experience so he hired a CDN to help ensure the quality of the experience remained tip top :) Important detail to note, CDN's all buy transit and most buy it from multiple upstream providers. In this made up example, Rick was uhttp://www2.blogger.com/img/gl.link.gifsing ACME CDN who was a new CDN. Unlike Akamai, ACME was built from the ground up to deliver large video files and wasn't too concerned with the last mile. As such, they had a smaller # of nodes placed in carrier neutral data centers on the two coasts and a couple in the South and Midwest. Since ACME isn't a web hosting company, Rick needed to contract with a second vendor to host the rest of his homepage. Rick is a sharp cat and a penny pincher so he used Amazon's S3 file storage service which would itself have been sufficient had the video been of Rick and anyone but Paris. He understood S3's limits and since he was out to make add to the stack of paper he was blowing on Paris, he only relied on Amazon for the non revenue generating files. When you click on the 'watch' button on his site the url where it sends you is not on Amazon's infrastructure but on that of ACME's. Similar to the fantasy scoring example, Comcast's routers determine that the destination address is part of address space supplied to ACME and easily accessible via SBC who happens to be one of Comcasts upstream providers. Comcast dumps this packet onto SBC. Unlike Akamai, ACME's technology doesn't rely upon multiple DNS queries to determine where the originating or destination IP address is physically located. ACME uses anycast protocol/technology which allows it to have the same ASN at all of it's nodes. Another difference with ACME is that they aren't using a cacheing setup but instead are acting as the origin for their customers files. This allows them to guarantee that 100% of their customers files to be distributed will always be on 100% of their nodes. When using a cache, this can't be the case as only the most requested files remain on the node for a matter of time and then they're purged. Its great if you're popular but not so great if you're not popular of are very private data but depend on high performance. When SBC gets that packet it see's the AS it's destined for and dumps it as soon as possible. In this case that hap pend to take place in the same building, Equinix in San Jose. Both ACME and SBC are colocated at Equinix so there was minimal cost to SBC to deliver that packet which makes them happy to deal with ACME. Can't say the same for their dealings with Akamai because Akamai's nodes are out at the edges of SBC's network, in the CO's which would mean SBC has to keep those packets on it's network far longer than their ideal. Amazon's S3 cloud is located in VA and had Rick not used ACME for the origin location of the video, a similar process for delivering the fantasy football score would have occurred with the deliver of the video. Fortunately for you, Rick's decision to use ACME results in your viewing the video almost instantly and not waiting around for the packets to go back and forth from the West coast to the East coast.

So what does this have to do with Level3 pricing or the pricing of the CDN market in general? It highlights how much of a difference adding an origin storage component to a CDN can make in terms of route miles. If Level3 can charge customers more money for using less route miles then all the better, it may even make sense to give transit away if they can make up that $11/Mbps by making customers believe they're being so cutting edge with pricing and product positioning when in reality they're stroking themselves by driving more efficiency on their network.

Ohhhhh, if that were only the case. I guess theory sounds good on paper but reality is what it is.

Google Should buy Salesforce.com

Google is pimping search because it pays the bills. Search won't always pay the bills though, at least for Google. They know this in MtView so don't think I'm off my rocker just yet...hear me out :)

Google's largest investments are not in hiring mathematicians to write new algorithms on search. Their largest investments are in infrastructure and just happen to be funded by the revenue they realize by selling advertising within search. They are investing in infrastructure to support, for lack of a better term(seriously cant think of one), the Google OS. At the end of the day, the Google OS is the combination of the software and hardware that combine to create a 21st century mainframe. In 2006 alone, Google spent $1.6B on datacenter construction. They have forecast at least another $900M in datacenter costs in 2007. Google is probably spending more money building datacenters in these two years than the entire datacenter provider market has spent on datacenter construction in the last five years. They aren't doing this for search, they are doing it because these are the new homes for their 'mainframes'. Google is biggest ally Salesforce could ever want to saddle up with. Why? Because they are placing HUGE bets, maybe even the whole company, on the fact that software will be delivered as a service. I think it will too but that doesn't really matter now....

When software is delivered as a service the architecture is such that applications like Oracle or Siebel or MSWord or Powerpoint or Excel or Financials, etc do not live on computers that their users own, they reside on a many clusters of computers that google, in this example, owns. These clusters are what I'm calling the 21st century mainframe....hmmm, how about the GooFrame or GoogFrame...whatever. The search algorithms and engines Google use today are likely the foundation of the overlay engine that will allow for the distributed end product of $3BB, the datacenters, to function as one big ass computer that can be virtualized dynamically as demand warrants. Pundits will argue that bandwidth will challenge this theory.

Bandwidth is so plentiful that soon companies won't be able to give it away, they may even pay you to use theirs instead of their competition. Google is in the infancy of this movement now via their wifi initiatives and once they buy ATT or TW or Comcast of whoever they'll have even more reasons why giving access away makes sense. They won't have to pay the LEC if they own it. Therefore the marginal value of adding a user onto the network and being able to market to them and control the flow of data from their 'mainframes' to the users device gives them the control they want and need and surely exceeds the nominal cost of that user.

They aren't doing this to kill Microsoft or Intel or the PC industry in general...those companies will adapt. They are doing this because their end product is advertising. Advertising in 2015 won't look anything like it did in 1985, just 30 years earlier. Infact, in 2015 we probably won't even realize we're being marketed to because due to the intelligence of the systems we'll rely upon, each of our individual experiences will be unique and a function of analyzing the history of our electonic usage. This is our email, our office apps like word, xcel, ppt, data, voice, video, gaming, business finacials, www surfing, the old school networks(TV, PRint, Radio) which is EVERYTHING that Google is releasing as new products or services today! And everything they'll 'host' for you on their mainframes.

Back to the Salesforce logic. All these services have nothing to do with what their users core competencies are. The lumber yard that Bob the Builder buys his wood from doesn't have expertise in IT or in an efficient market they wouldn't need to because just as they aren't IT experts, the IT expert for whom Bob the Builder is constructing a home isn't building the house himself because its not efficient for an IT expert to build a home when there are readily available contractors. So the lumberyard doesn't know how to get its inventory online and host its financials and it's pipeline reports and maybe use some niche marketing software to run special programs to certain sets of customers and analyze all this data through one single interface in real time because that scale has never been deliverable to the unFORTUNATE 5,000,000 business on the globe.

Salesforce Apex would provide the interlocking piece that creates the true value for the user because it is a market of markets and a global one at that.. It surely isn't the datacenter building, it's what is inside but it can't go inside of nothing, thats impossible.

On the surface this speculation may seem far fetched to some and the more it seems like far fetched pie in the sky type rhetoric, the closer it probably is to being true. I speculate the market will gravitate in this direction because it allows for efficiency at the micro level, lumber focuses on lumber, IT company focuses on IT, car companies focus on cars, supply chain becomes a service industry focusing on supply chain, etc. Salesforce's Apex allows for the mashup of services that the enterprise may require to run the day to day business elements they must deal with. The combination of the mainframe, control of the communications network from end to end, hosting the business applications that make the market and using the search utilities to deliver to the customer something they never asked for but would be happy to pay for is what the Google OS is all about. Because that something that you'd gladly pay for but never asked for isn't the product of some random direct mailing, its a function of a boat load of history and data on what you and others with similar attributes as you are interested in for work, pleasure, family, etc because while google was pimping out all those services and apps they, by virtue of capturing all that data, built a silver ball which is the holy grail of marketing.


So, Google should buy Saleforce because, of all things, marketing. Google is the 4th Network, the medium of media. Let's not forget, media as an industry, produces marketing. CRM is cheap today at $5B+ relative to what, assuming I'm close to the marc(pun...get it?) CRM will be worth in a year or two years or three years. Google already put their bet on SaaS so it's a no brainer and an catalyst to a true global economy.

Peering at the edge and the role of the P2P

Here are some reasons why I am leaning that way:

1. Ubiquity in access and Choice. Everyone, everwhere on the planet and perhaps elsewhere will eventually have the ability to choose who their isp is and how they connect to their isp. ISP is defined as a company who sells transit. How they connect is defined as the last mile and example are hfc(cable), fiber, copper(DSL), wireless(wifi, wimax, satellite, whatever)

2. Networks are only as good as the networks they connect to. The whole point of p2p was to improve performance and save costs, at least that is my impression of how p2p's position themselves commercially. p2p technology works best when the 'sharing' happens locally, as in the same town, region, neighborhood because the data doesn't have to encounter so many hops along its way from one peer to the next.

3. Last mile service providers don't connect with one another. This is stupid on their part! Example: I'm on comcast and my neighbor uses pacbell dsl. I just downloaded the maverics surfing competition video which i got by seeing it in my koniki client. I watch it and move on but it is still on my computer and kontiki is still running in share mode. My next door neighbor fires up his kontiki client and he too sees the link for the surf comp and clicks it. Does my neighbor get that file that is sitting on my machine or does he get it from some other location on the net? That depends on different factors but chances are it isn't coming from my pc. Stupid because this isn't efficient and when services aren't efficient they will be driven to the ground sooner rather than later. It wouldn't be efficient for my neighbor to get to my pc vs some other node on his isp's upstream provider(for example sake pac bell, sbc and att and all separate companies) even though he can see my pc from his home office window because in order to do so it is going to cost pac bell money, it is going to cost comcast money, and it is going to cost the surfin website company money and its going to take a shit load longer and have no QoS. That little request for the video i just watched, should it have to come from my pc to my neighbors, would have the itinerary below:

neighbors pc to pac bell Central office to pac bell regional hub to upstream provider to some public peering switch to Level3(comcast upstream provider) to Comcast regional datacenter to headend to neighborhood node and finally down to my pc. and then head back(next door to me) in some similar fashion....I think there is another hop between the node and headend too so it's even longer has more potential points of failure.

For this reason, it would make sense to move the peering to the edge and the p2p networks are a potentially more efficient way to peer than what is currently done. This could take place in or at the CO level or Headend level by merely interconnecting the two and running bgp or some other protocol that accomplishes the same thing. In this example, it would save comcast money that they pay to L3 for their upstream connectivity, it would save PacBell money that they pay to uunet for upstream, it would save the peering provider money because the router would consume less power and generate less heat and not be taxed by the demand of the reques. ie, it's more efficient. The old school telco boys with their closed networks and fear of new techonologies and competition are slowly but surely retiring and moving on because they've been at it for 30+ years and they have better things to do like play golf and play golf again. Backfilling for them are leaders from the IP generation and their mindset is more progressive, they understand the layer one is always going to be layer one and that it is a commodity. As such, they aren't as concerned with keeping it closed at the local level as their predecessors once were. They see the value and understand the threat of not opening it up. Its better to get something than go out of business right? They're keenly aware that their incumbant status could be a liability on several fronts including net neutrality supporters stirring up the pot and filing lawsuits, new technologies emerging which are more efficient and have low barriers to market entry and they still owe a shit load of money to pay back the banks for paying for all that fiber so they wise up and collectively develop a plan to have some arbitrator transfer packets amongst themselves. The arbitrator has to be a neutral third party to avoid any conflicts of interest between the networks and has to have deep reach into the networks users hardware and obviously know what they are doing from a technical perspective.

A couple p2p providers, specifically kontiki, are in a great position to jump on this. It's no wonder they were purchased by Verisign!