Google Inc (NASDAQ:GOOG) has many ventures in which it seems to not be bothered about making a profit. The company’s Internet advertising business performs the bulk of the money-making duty. That service gets a lot of well needed investment, but Google has other products up its sleeve that almost seem inane at first. Google Fiber is one of those, but it is a meaningful part of the company’s business.
Profit isn’t all that much of a motivation with Google Fiber. Raymond James has a new report on the product. They call the indirect growth in Google Inc (NASDAQ:GOOG) business the “Google Effect.” It’s more reasonable, however, to call it the “Ford Effect.”
Google And Fordian Thought
Google Inc (NASDAQ:GOOG) is trying to force Internet carriers in the United States to offer lightning fast connections so that its customers have access to instant video streaming and other interactions with the cloud. In January 1914, Henry Ford began to offer $5-a-day wages. The move spurred growth in wages across the United States, and helped to create the country’s middle class.
Google Inc (NASDAQ:GOOG) is doing the same, and it’s dealing with the same tricky environment. Fifteen years ago it would be alright to compare electricity companies to telecommunications firms. Both offered utilities with low levels of technological improvement. Telecommunications investment is still not up to scratch in the United States, and Google is playing the Henry Ford card in order to change the industry.
Google Fiber outlook
The Raymond James report takes a look at the benefits of Google Fiber to Google Inc (NASDAQ:GOOG) the business, rather than the company’s bottom line. The analysts note that Google is secretive about the true cost of the product, but the effect on the bottom line is not what’s important at Mountain View.
Google Inc (NASDAQ:GOOG) is getting a range of benefits from the Fiber project. The company is helping to spur an Internet revolution in the United States while at the same time training itself in consumer delivery and relations on a local level. Google will gain more from this venture than it spends.
If the company is successful in increasing the average speed of Internet access across the United States, as well as increasing penetration, it will have won this battle. Google Inc (NASDAQ:GOOG) is playing Henry Ford, and by all accounts it has taken to the role perfectly thus far.