Google optimizing its supply chain

Google has announced it’s intention to provide gigabit connectivity to homes at competitive pricing.

What’s it about? Eric Schmidt appears to be taking his cue from none other than Andrew Carnegie, the 19th century steel tycoon. Carnegie Steel not only operated steel mills, it was its own supplier of the major raw materials used in steelmaking, iron ore, coal, and coke.

What are the biggest threats to Google? Their supply of eyeballs is subject to the behavior of network providers. Google’s been investing lately in ensuring their access to those eyeballs, and focused on increasing the speed of the delivery of their services to end users.

Google Chrome – speed up browsing, make access a non-issue with Gears and offline use
Google Wave – I suspect that this is the technology behind the recently announced Google Buzz
Google Buzz – you’re already using Gmail (aren’t you?) — why have to leave there to do status updates?
Google Public DNS – optimize your requests to their servers, speeding up the experience on Google properties while reducing reliance on CDNs like Akamai, and gather more user data by knowing what they’re looking up
Google’s purchase of On2 – to be reliant on h.264, subject to royalties payable to the MPEG Licensing Association, puts Google at risk of a supply of viable encoding for its huge video property, Youtube. Buying their own codecs including VP6 through VP8 gives them control over an alternative, and substantial bargaining power.
Google’s new gigabit broadband initiative – open the last mile pipe up wide

If their core competency is scaling, then it’s in Google’s interest to promote things that require astronomical scaling, making theirs the preferred platform. Opening up the last mile will drive the innovation required to make life-changing information applications for which Google is the most viable provider. Rather than supply the world, Google wants to enter just enough to change the game. They’re engineers, they love to solve the scaling problems. They’re frustrated to be hostage to the old guard of internet access providers whose entire organizations were founded on closed monopolies, whether telecom or cable television. “We have money. Can’t we do something about this?”

You’ll be able to use a Google device to access Google connectivity to access Google applications to replace the other things you use now, separately. From the data you actively put into their systems to your browsing habits as detected through Google Analytics on the web sites you visit, Google AdSense on the web sites you visit, and Google DNS queries even to sites where neither you nor the site intends to expose data to Google.

I’m not big on conspiracy theories, but I’m suspicious of any aggregation of that much data. Even if they intend to do no evil, mistakes and transgressions will happen.