There are two curves that drive everything at Google.

For the first curve, plot two (added) factors - advertising rates (super bowl ads, TV prime time ads, even click thru ads have not dropped in 5 years - thats right, internet eyeballs are worth MORE per now than years past...)  TIMES  the number of users on the internet, which is rising by something on the order of 4million people a month.  And has plenty of headroom to go, something like 3/4 of the planet has never (much less than daily) been online.
This first curve is the sum of two growing factors - both growing at above linear organic rates.

For the second curve, plot the two factors of - the cost of computing and the cost of bandwidth.  Bandwidth is amazingly cheap, I am paying $30 a month for DSL, which is a lot more bandwidth that the 1200BAUD i used to pay the same amount for.

Now the fun part.  Overlay the curves.  Anyway you want.  Even if you use different timescales, not sure when all those people get on the internet, etc, not sure the cost of writing internet software applications -

it becomes very clear, once you look at those diverging curves, that you can make a boatload of money eventually, and still make a lot of mistakes on the way. 

Microsoft is trying a whole different, how many can we lock in, approach.

Get on the curves and you win.  Volume wins.  Check out Jonathan Schwartz BLOG on volume wins. (or the value in volume)

Thats what google is up to.  Thats why they can provide lots of stuff free - computing and bandwidth dropping live crazy in price, revenue shooting up like crazy, and the cost to develop software scales across billions of users very easily with thier infrastructure.  You might say thier amortized cost to develop software per user is cheaper the microsofts - becuase it is, by a large factor.

Now read the rumors about what google is doing, and it all makes sense....