Many of the world's biggest companies are sitting on millions -- sometimes hundreds of millions -- of dollars in unused or inefficiently deployed real estate assets. And they may not even realize it.
The real estate in question isn't physical. It's digital. But just like land, nobody is making more of it.
These assets are internet protocol, or IP, addresses -- specifically the several billion IPv4 addresses. They play a fundamental role in connecting devices to the internet, identifying each one uniquely, and enabling them to communicate with one another.
When they were developed in 1981, the supply of IPv4 addresses was thought to be inexhaustible. As a result, governments, higher education institutions, and U.S. private and public companies secured massive stores of them, often at no cost -- and then let many of them sit idle for decades.
In other cases, IP address holders used them inefficiently to overbuild their networks with more addresses than necessary. They did this simply because they had them in vast quantities.
Selling these underused and surplus resources could yield a windfall for their owners. When IP addresses are sold off, they frequently go to hyperscalers, who need them to grow their businesses. Since 2011, when internet policy changes enabled a market for IPv4, around 400 million have been sold and transferred worldwide.
The price of a single address has ranged from $4 when the market opened for business 14 years ago to over $60 at the peak in 2023. Since then, prices have eased by about half and have stabilized. Prices will head lower, eventually landing near zero, but nobody knows when.
Despite the appreciated value of their IPs from $0 at assignment to $20 to $30 per address today, many companies have been reluctant to capitalize. There are still plenty of businesses that have not made a single sale and possess more IPs than they could ever possibly require. Boeing's inventory of 2 million IPs is worth over $50 million, and Citigroup's stockpile of 4 million addresses is worth twice as much.
At companies that don't depend on owning IP addresses for growth and survival, chief information officers or their network teams frequently say they need all their IP addresses. But that assumption doesn't always hold up to scrutiny.
Consider the wide gulf in the number of IPs that some similarly situated companies possess. Automaker GM has over 1 million of them -- more than 50 times as many as Tesla's 17,000. If Tesla doesn't need more to run their uber-technical business, perhaps GM could do well with a similar number and sell the difference.
Merck and Eli Lilly wisely began monetizing their IPv4 portfolios early and selling continuously as prices rose. But prior to that, they each owned about 16.7 million IPs. They smartly recognized that their peers were making do with far fewer -- and capitalized on that fact. Novartis has 4% as many as Merck and Eli Lilly started with -- a still significant and likely excessive 720,000. AstraZeneca now has 80,000 addresses after selling about half of its stock.
It's financial malpractice for companies to let this low-hanging digital fruit go unpicked. Consider that businesses such as hyperscalers that need IPv4 the most are increasingly achieving a critical mass of addresses; adoption of IPv4's successor, IPv6, will accelerate in the years ahead, and more firms with surplus IPs are beginning to realize they have more than they will ever need. Taken together, these factors will boost the market's supply, and IPv4 address value will continue to fall from its 2023 peak.
In short, it's better to sell early since prices are more likely to decline than appreciate in the future.
IP transactions aren't without some risk of missteps. The market for these assets is opaque. An under-informed seller may undervalue their assets -- and thus lose out on a significant amount of potential income. Unlike more efficient marketplaces like the stock market, where up-to-the-second share prices are widely available, there is no comprehensive public information about IPv4 prices. Transaction terms are closely held by the parties. A prospective seller may need to seek guidance from an insider on valuation and how to handle the intricacies of these deals to maximize returns and lock in the best terms.
Some companies can't afford to part with their IP addresses. But most can't afford not to. The sooner they embrace that reality, the more they stand to gain.
