Talked about broadband penetration as a key driver. Users now have the tools to create, manipulate and consume video and all sorts of multimedia content. Advances in storage and compute power are changing the dynamics around rich content. In a few years we will be able to store a lifetime of video on a hard drive.
Networks of advertising and content partners are strategic assets for Google. Google has paid over $6.2B to network partners. The company claims to treat advertising content the same as other content to improve hit rates and user experience.
YouTube provides the right toolset for consumer video and Google has the right advertising exertise and technology to turn it into money. Content owners have to think outside of their site and realize that they content has to be where the users are.
Estimates have the global advertising market at $220B and Google today has less than 3% of the total. There are supposed to be 5M TB of data out there to be digitized and we have only scratched the surface of that. At only 1B users today the Internet has a long way to go.
The current generation of kids are digitally aware and have scarce attention. Being fast and accurate will become more and more important.
Investors don’t understand how much investment is needed in building infrastructure. This is an important competitive advantage. Network routers and switch gear are proprietary. Capital expenditure investments will accelerate from here.
Think they need to build the internal infrastructure to support a $100B company.
Nothing new really other than a clear warning sign to watch for higher guidance on infrastructure investments.