What a difference a year makes. This time last year, Google Fiber announced expansion into 3 new cities. Here we are a year later, and Alphabet CEO Larry Page has reportedly begun to scale back the size of Google Fiber, cutting half of its employees. This would leave the division at only about 500 employees, down from around 1,000 today.
This decision comes just as Google Fiber rolls out its gigabit service in Salt Lake City and Atlanta. Even with the new cities, the service is far behind its goal, as far as number of consumers is concerned. At initial launch 5 years ago, Google wanted to have 1 million subscribers today. In reality, however, the service only has around 200,000, which is far below the number expected.
Obviously, missing estimates by this much makes the service a financial disaster. Costs to roll out the service in new cities at the rate they have would have been based on the expected revenue generated by 1 million paid subscribers. Estimates would have put revenue at $840 million for 2016, while the actual revenue will be closer to $168 million. There is little chance that this revenue has paid for this year's rollout costs, let alone previous cities.
Part of this downscale could also be related to their recent acquisition of Webpass, a company that provides the same services without the need to install a fiber network in a city. While this could decrease the cost of implementation, it won't fix the existing bleeding.
Does this cut indicate that Google's idea that gigabit is something consumers want is incorrect, or are people just more weary of Google than the company expected? Let us know your thoughts in the comments.