Hi, Jim.

>But no matter how I slice it I see a company that PRODUCES nothing tangible yet priced at ~$500.

What do you mean with producing nothing? Are you plainly obliterating the value of services as a whole?

Just for the recors, in my head, Google produces the more wide and relevant search over the Internet pages, images, Books (this one is for me an incrdible value), Academic papers, maps, and many more things. It also produces value with Gmail, Calendars, Docs & Spreadsheets and other applications by providing tools for people to do its work faster and more colaboratively.

Following your criteria I should say that Microsoft produces nothing (does boxed software count differently than online software?). And what can we say of the Universal Thread?

Advertising itself -something that I'm not very fond of, either- is an activity that produces economic development, by letting people searching for a product get to know some sellers. Now, in that sense, what we tipically hate about advertising is that it constantly bombard you with information you have no use for.

Then comes Google and finds a way to present you with ads that are 1) very relevant to the subject of your interest (whether you are searching or looking a web page with adSense) and 2) have the least possible disruptive presentation: plain text in a narrow column.

The result so far was that the success rate of Google ads is highly effective, so advertisers have a best return in its investment, and consumers are less annoyed with the ads, as proven by the huge proliferation of adSense all over the Web.

This is just the most basic part of the Google "model", and it really makes sense for me, and for the most part of this (granted) hysterical beast called "the market".

Regards,