How Much Are IP Addresses Worth? A Lot! Just ask Microsoft

Microsoft (s msft) paid $7.5 million for a block of IP addresses at the bankruptcy of telecommunications company Nortel Networks according to Domain Incite. Nortel’s assets included the block of 666,624 addresses, one of a limited supply of IPv4 addresses available since Internet Corporation for Assigned Names and Numbers (ICANN) said in February it was out of available addresses and the rest were in private hands. Microsoft’s bid amounts to $11.25 per address and sets the value for other addresses in this emerging secondary market.

ICANN hands out IP addresses to ISPs, companies and other organizations, but thanks to the way the Internet addressing system was created in 1981, IPv4 only contained about 4 billion IP addresses. IP addresses are a set of numbers that identify where routers send the packets of data that comprise emails, websites and other digital assets. Theoretically, every device with a connection has such an address. As more and more devices connect to the web, governments, companies and ISPs must move to the new addressing system IPv6, which has 340,282,366,920,938,463,463,374,607,431,768,211,456 addresses. However, as I explained in a previous post, the two systems are not backward compatible without workarounds, and there have been huge delays in implementing the new addresses. Until the kinks get worked out with IPv6 addresses, demand for IPv4 is likely to be strong.

Now that ICANN is out of the IPv4 game, those addresses that are in private hands have acquired a value in the secondary market, and Microsoft’s bid has seemingly set that value. According to DomainCite, four other companies also bid on the IP addresses, but Microsoft’s $7.5 million bid was the highest. Microsoft appears to me making a small (for it) bet that IPv 4 isn’t going away anytime soon. For networking folks everywhere, that’s probably bad news.