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The IP Address Panic of 2015

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What if the U.S. telephone companies suddenly ran out of phone numbers? What kind of panic, if any, would it cause?

Though nowhere near as dramatic, that was somewhat the situation facing many North American companies in the summer of 2015...mostly large technical companies that rely on the Internet and networks to survive.

But it wasn't telephone numbers that had some people worried. The numbers we're talking about are known as IP addresses ("IP" for "Internet Protocol"). And for decades they were readily available and handed out in bulk (allocated) to big companies (business, government and technology) that needed them for their networks...or for their customers.

Your Internet Service Provider (ISP) was one of those organizations. They let you borrow one of their IP addresses so you could connect to the Internet. You and everyone else in the world.

There seemed to be plenty of IP addresses for everyone. Nobody expected that the world would some day run out of them.

How did that happen?

The IPv4 address format that was supposed to last forever didn't make it past 2015 (a typical address looks like this: 66.171.248.172. IPv4 was the IP addressing protocol that virtually every Internet-connected device used to connect to the Internet: desktops, laptops, smartphones, printers, scanners, iPads, tablets, gaming devices and more.

And that was the problem. All the addresses were gobbled up—all four billion of them. According to The Wall Street Journal, Asia ran out of IP addresses a few years ago. Europe was right behind them by a year. North America (the U.S., Canada, Mexico) was next.

A lot of the CEOs and boards of directors have been asking their IT departments, "What happened?" This is big news for big companies, especially technology companies with large numbers of business customers and others with consumer-customers. Although IPv4 networks are the backbone of the Internet today, any company that is hoping to grow, increase its services, increase its customer base or expand its horizons is in trouble if:

  1. They will be requiring more IP addresses to assign to devices they own
  2. They haven't been planning ahead for this

The number of IP addresses that companies may need isn't in the tens or hundreds range...it's in the high thousands—large numbers because the companies needing them are big and they realize this is the end of getting available IPv4 addresses.

Get 'em while they last.

Here's how a couple of those large companies took care of their IP address requirements as the IP drought approached:

  • Salesforce.com has an aggressive goal to expand its business. They realized they would need more IP addresses for their new data centers that deliver its ever-growing suite of Internet-based business-to-business applications. In November of 2014, Salesforce.com acquired slightly more than 250 million IP addresses...although even the WSJ didn't report on how they did it or where the IP addresses came from.
  • In 2011, Microsoft spent $7.5 million on almost 670,000 IP addresses, which had been previously allocated to a networking company (Nortel) that had gone bankrupt. The math works out to a little more than $11 per IP address.

About Facebook.

There were plenty of companies that had been looking ahead and had taken measures to be ready for the IP shortage. Facebook was one of them.

According to the WSJ, Facebook transitioned the majority of its networking to IPv6, which offers a virtually unending number of new IP addresses. As one of Facebook's IT executives said, if they had not been prepared, "We would not have been able to build new data centers." Business translation? They would have been in a bad position in terms of business growth, unable to strive for their goals, due to the IP address shortage.

The truth of the matter comes down to this: Sooner or later the Microsofts of the world—the large technical companies who aren't fully ready for IPv6—will have to face the music, and the high costs, of fitting the transition to IPv6 into their IT budgets.

And that will be the price to pay for waiting until the last minute.

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