Friday, June 03, 2005

Making money from Google

Not by buying the stock.

I scanned through GOOG's financial to find out how much they actually spent on those Linux boxes - there are thousands of them, each lasting 2-3 years - and was surprised to find these:

For year 2004:
- cost of revenue is $1.4 billion;
- 84% of the cost, or more than $1.2 billion, is spent on "Traffic Acquisition". These are money paid to "Google Network members", people who put those Adsense links on their web sites and got paid by Google.

$1.2 billion is a lot of money, going out of Google. That''s roughly $1 for each person in China.

Comparing to this, their cost in running the data centers, including the Linux boxes is only about$ 229 million, and expecting it to be $500 million this year.

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