At $2.7 billion, not the $25B people have been speculating it's worth. That makes more sense. Google does have a lot of eyeballs at this point, and there is a chance that it can convert many of those users into a situation where they are totally dependent on Google for their email or other services. Services like email are sticky in the sense that if a user has his entire email history ensconced in Google's servers, it will be hard for even Microsoft to get that user back as an email customer. If Google is successful in converting huge numbers of users into that kind of sticky situation, rather than the current situation where they'll defect as soon as a better or more convenient search engine comes along, then it could conceivably be worth $25B.
There's probably about a 10% chance of that happening, where the main risk is the fact that Microsoft is fully capable of creating a search engine of equal quality that is more conveniently accessible within the Windows GUI. And doing so before Google has converted many users.
Gmail has opened my eyes to the possibility that Google could be successful in "stickfying" large numbers of users; that's why I'd give it a 10% chance rather than a 1% chance. I didn't think their blogging software was enough, or their social software (Orkut). But Gmail has a chance.
So a 10% * $25B IPO doesn't sound absurd to me at this point. That's not far from $2.7B.
If a lot of suckers pay enough on IPO day to bring the first-day valuation to much more than that, some smarter people are going to make a lot of money by selling on the second day, I believe. ;)
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