$7.5M For 666,624 IPv4 Addresses

I’ve mentioned the pending IPv4 shortage before. The latest news is Nortel Networks IPv4 block being sold:

Nortel Networks Corp. is doing its bit to alleviate the Internet space crunch, selling 666,624 IP addresses to Microsoft Corp. for $7.5 million.

So cost per IP address is:

$7.5 M / 666,624 = $11.25

$7.5 M sounds higher than it really is. To put this in perspective, a typical web host leases dedicated IP’s for customers who want an IP rather than name based hosting. This is necessary for things like SSL certificates. They will typically charge $1-2/month per IP address meaning they make anywhere from $12-$24/yearly revenue per IP. When you look at it that way, $11.25 really doesn’t seem that outrageous. It’s a decent investment considering an IPv4 address will be normal for at least another 2-4 years (likely more).

Microsoft has played in the business services role in many respects from webmail to hosting (I think that’s now part of Office Live). As they ramp up their cloud offering they will need to offer IPv4 compatible SSL services on customer domains. I think this will pay off pretty quickly.

However, I don’t think we’ll see to many IPv4 purchases like this, the market is still somewhat limited in my opinion.