Alphabet Inc (GOOGL, GOOG) stock owners are used to seeing the pioneering tech company take a risk here and there. If someone in Silicon Valley is doing something wacky, Alphabet is the odds-on favorite.
Well, someone in Silicon Valley is doing something wacky.
The idea is to beam internet into consumers’ homes directly, rather than physically lay cable lines that deliver internet and cable TV to customers’ homes.
If this sounds like a far-fetched idea, Alphabet Chairman Eric Schmidt wants to assure you that it’s not.
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Of course, initiatives like these, meant to diversify Alphabet’s revenue stream (and, of course, make the world a better place), are part of Alphabet’s “other bets” segment, which is still losing tons of money each quarter. In the fourth quarter, “other bets” pulled in $448 million in revenue — but posted operating losses of $3.6 billion.
Still, Google Fiber — Google’s efforts to bring super-fast fiber-optic internet and cable to a number of U.S. markets — is one of the most promising “moonshot” projects, and currently exists (or is in the works) in 22 U.S. cities.
This internet-beaming initiative will apparently be a part of the Google Fiber project. If it succeeds, I really think this could transform the industry. If GOOG starts beaming gigabyte-speed internet to its customers wirelessly, competitors Verizon Communications Inc. (VZ), Charter Communications Inc (CHTR), DISH Network Corp (DISH), AT&T Inc. (T) and Comcast Corporation (CMCSA) will have a tough time.
Google stock owners should know just how important this futuristic internet delivery vehicle is to Alphabet’s top brass, because they just told us at Alphabet’s annual shareholder meeting yesterday.
Chairman Eric Schmidt answered an analyst question on this matter, and mentioned that it was an important priority for the company, as evidenced by the fact that he, Alphabet CFO Ruth Porat and CEO Larry Page had sat down to discuss beaming internet just a day before.
Will GOOG stock be catalyzed by these new endeavors immediately? No. But Schmidt explains why he thinks it’s worth pursuing:
“…there appears to be wireless solutions that are point-to-point that are inexpensive now because of the improvements in semiconductors; these point-to-point solutions are cheaper than digging up your garden and so forth…”
I think the average cable or internet customer would be thrilled to have wireless gigabyte-speeds in their home, and would happily move over to Google Fiber from their previous provider. That’s an opportunity that could be worth tens, maybe even hundreds of billions of dollars annually.
Before you rush into GOOG stock on that fact alone, remember that these are just discussions right now. Google isn’t actually doing it yet — only mentioning that it’s a strong possibility down the line.
And when it does happen, expect Google stock to be beamed up, too.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
