Facebook and Google Try Self Help

It turns out you need lots and lots of cement when building Internet super-highways. Now web heavyweights like Google and Facebook want to mix their own.

That threatens to eat into the profits of large Internet construction companies such as Intel and Cisco Systems. Smartly, the latter aren't just going to let the market drive off without them. Google and Facebook buy so much tech equipment that it makes sense for them to design their own. This enables them to save money and run their websites more efficiently. Both design their own servers, for instance, of which Google has over a million worldwide, IDC estimates. Besides servers, Facebook designs much of its own storage hardware while Google also designs its own network switches, says IDC. Now both these firms are pursuing projects that could help them sidestep Intel and Cisco, two hardware manufacturers that dominate their respective markets, making gross profit margins of roughly 60% in the process.