Google’s rising costs could limit broadband ventures

Google reported a good jump in earnings for the quarter but missed analyst estimates on earnings largely because of the stronger dollar versus the Euro; Google gets about 40% of its revenue from Eurozone activities.

The real problem with the report has nothing to do with overall techonomics; it’s the rising cost line, and that tells a lot about Google’s future. Google has picked most if not all of the low-hanging fruit, and now it’s facing a higher cost of revenue.

What that means is that the company will never be able to throw dollars at low-return projects like 1 Gbps broadband or compete head-to-head with the telcos. In fact, we think Google is now going to be looking much harder at a lot of its technology excursions to insure there’s strong revenue at the end of the tunnel.