Google's Page Dreams of a Bigger Internet of Things

NEW YORK (TheStreet) -- A decade ago I began writing about what is now called the Internet of Things.

I foresaw single-chip motes adding intelligence to lawn sprinklers and home security systems. I saw radio based identification, or RFID, chips and wireless networking telling whether the yogurt had gone bad, making a shopping list for you. I even foresaw heart and blood monitors quietly anticipating your heart attack, a real "killer app" that could get the paramedics to you before the pain started.

I dreamed too small.

What turns a technology executive into a legend is the size and shape of hisor her dreams. Google ( GOOG) CEO Larry Page has some massive ones, as he told Fortune this week.

"There's a tendency for people to think about the things that exist," he told Miguel Helft. "Our job is to think of the thing you haven't thought of yet that you really need."

Here's an example. Google's "driverless car" program, described at Wikipedia only starts with cars. Page is working on the implications.

If wireless networks are ubiquitous, if you have the right software, then self-driving cars can be ordered for you at will, and you could get just enough car for the job -- a small electric for commuting, a larger one for shopping. Everything becomes a Zipcar. Moving people and things becomes an efficient business for the network, the vehicles themselves just clients on that network.

Then consider that cars are just one type of machine humans spend their days fighting to control. With software under network control, all machines can be automated, as the production of things is being automated with 3-D printing. The way we live and work, the jobs we do or have done for us, are about to be transformed in ways we can barely imagine.

I've written before that Google's network is its secret sauce, that in the last 15 years it has become the cheapest way, by far, to do any Internet thing -- move a file, store it, or process a program. Finding profitable work for that network, beyond just feeding ads next to my stories, is Page's job now.

It comes down to one word: software. What can ubiquitous, chip-based intelligence do, under the control of networked software? We tend to think of software in terms of the programs we use each day. Google makes that sort of software. Apps, Chrome, Android, Cloud, and, of course, Google itself. Google is waiting for you to tell it what to do.

But what if Google isn't just waiting for you? What if it's in the machines all around you? What if it's anticipating your needs? What if Google can drive the ambulance to you, and tell the paramedics just what they need to do?

This is why Google is trading at nearly $700/share, with a PE ratio almost double that of Apple ( AAPL). Software is where the margins are, not hardware.

With its ongoing global network expansion paid-for out of cash -- the company has $45 billion in cash and short-term investments on its books -- incremental income all comes down to the bottom line. The recent fall in its margins is all down to the risks of being in the hardware business, and over time the company has made clear it wants to exit that, as much as possible.

Google has become what Microsoft ( MSFT)was in 1995, when Bill Gates wrote his ill-fated book "The Road Ahead," described here at Wikipedia. It was, in retrospect, a rather strange treatise that showed just how limited his vision had become, the original version barely mentioning the Internet.

Page is now the same age Gates was then, but it's clear his dreams are bigger, his vision for networked software and the Internet more ubiquitous than Gates' vision could reach.

I'm reminded of Mark Twain's unfinished masterpiece, The Mysterious Stranger, which you can read free at Classic Reader, in which a devil character reveals that all our lives are just imagination, and products of imagination. "Dream other dreams, and better," he concludes.

This is what CEOs of successful companies have to do every day. Dream other dreams, then find ways to make those dreams come true with the tools at hand. Google has the world's biggest Internet network, and the world's biggest cloud computer, and its CEO has very big dreams indeed.

At the time of publication, the author was long GOOG, AAPL and MSFT.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

More from Opinion

It's Just Not Smart For Investors to Ignore the Threat of a Trade War

It's Just Not Smart For Investors to Ignore the Threat of a Trade War

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

Flashback Friday in Politics: Trade Wars, Manafort, Immigration Dominate Minds

Flashback Friday in Politics: Trade Wars, Manafort, Immigration Dominate Minds

Microsoft and Sony's Rumored Game Console Plans Bode Well for AMD

Microsoft and Sony's Rumored Game Console Plans Bode Well for AMD

Apple Supplier Jabil Is Tumbling, But Its Sales Momentum Remains Strong

Apple Supplier Jabil Is Tumbling, But Its Sales Momentum Remains Strong