This Time, it's Different
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I’ve been holding Google (NASDAQ: GOOG) stock since – oh, geez, I’ve lost count of the years.
A quick check of my trading records shows me that I’ve held on since spring 2008. Four and a half years. I could have started and finished a Ph.D. program in the time that I’ve been holding Google stock. And I can promise you, the stock has done nothing remarkable in that time.
Which is why I’m raising an incredulous eyebrow at its current near-52-week high. With the exclusion of some low points in late 2008/early 2009 (which was an exceptional time), I’m in the habit of watching Google hover in the mid-500’s. It’s old faithful. The stock price will blip up or down once in awhile, but I’ve never seen a stock “revert to the mean” as consistently as Google has for the past few years.
Which leaves me feeling uneasy about its new high. What’s causing this peak? Is this a temporary blip, or has something changed?
Call me an optimist, but I think “this time, it’s different.” Why? Two words: Google Fiber.
Google has launched a lot of harebrained schemes in its day: Knol, Orkut, Google Buzz.
None of these have been disruptive technologies. Google+ may have 90 million sign-ups, but it stands no chance of usurping or supplanting Facebook. Google's photo-sharing album, Picasa, will never be a substitute for Yahoo’s Flickr. And Google Offers doesn’t carry the panache of Groupon (NASDAQ: GRPN) (although I wouldn’t touch Groupon stock with a 10-foot pole, based on its its nonexistent moat and its declining first-mover advantage).
But Google Fiber may be a truly disruptive technology. Google is beta-testing a fiber-to-the-home (FTTH) network that promises to deliver bundled internet and cable TV at symmetrical speeds (uploading AND downloading) of one gigabyte per second.
How fast is that? One gigabyte equals 1,000 megabits. If that means nothing to you, consider this: Verizon’s (NYSE: VZ) well-regarded FiOS network, which costs $70 per month, downloads at speeds of 15 megabits per second. (Yes, 15. One-Five. I didn’t misplace the decimal point.)
Compare that to Google’s network, which downloads at 1,000 megabits per second – that’s an astonishing 66 times faster. Oh yeah, and did I mention the cost of Google’s network? Also $70 per month.
Google is testing this new service by deploying its FTTH networks in 31 densely-populated “Fiberhoods” (fiber neighborhoods) across Kansas City. Google demands that a minimum number of homes and businesses pre-register for the service before Google will establish that area as a “Fiberhood.” It won’t provide service to an area unless the minimum number of pre-registrations is met.
This is a shrewd business model: by creating “Fiberhoods,” Google ensures that it will enjoy enough customer density to keep its FTTH project economically feasible.
And this isn’t a marketing turnoff. Google is having no trouble attracting customers who are willing to preregister. Enthusiasm for the Fiberhoods is so high that Topeka, Kansas informally re-named itself “Google, Kansas” in an effort to lure the company’s attention, according to USA Today.
A New Page
The successful rollout of Google Fiber could mark a new high for the company, which has been suffering from a “lack” of homeruns since it unveiled the Android operating system in 2007.
That was one year before I bought Google stock. The company hasn’t rolled out anything shocking in the past four years. It’s simply given us rehashed versions of the things we already have: Google+, Google Offers, Google Wallet.
This time, though …. This time, it’s different.
PaulaPant owns shares of Google. The Motley Fool owns shares of Google. Motley Fool newsletter services recommend 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.If you have questions about this post or the Fool’s blog network, click here for information.