UPDATED 06:45 EDT / JUNE 16 2014

Google steps up its bid to connect the world with Skybox Imaging buy

large_7630269434Internet access is taken for granted in the western world, but in parts of Africa, Asia and elsewhere, millions of people remain offline. For companies that make their fortune from people being online, like Google, there’s a massive opportunity for growth if and when these parts of the world get connected.

But Google doesn’t want to twiddle its thumbs and wait for each country to develop its own infrastructure, it wants to do it for them, and to do so its come up with an assortment of airborne schemes. The most famous one is Project Loon, Google’s seemingly madcap idea to use hot air balloons to beam Internet coverage to remote areas, while it’s also considered using drones to do the same thing.

Today though, it was announced Google is paying $500 million for Skybox Imaging, a company that specializes in making small satellites that can shoot high-resolution photos and videos of the Earth below. This follows a related report in the Wall Street Journal states Google is planning to spend between $1 billion and $3 billion to launch a fleet of some 180 small satellites, a scheme that’s far more ambitious in its scope than Project Loon.

Connectivity makes the world go round


So why is Google doing this? It’s not just about making Google Earth better, though Google will surely use the image taking abilities of its satellites to its advantage wherever possible. Rather, it’s about growth. Google wants to grow, and in order to do so it needs more customers. As the WSJ reports, “Internet connectivity significantly improves people’s lives. Yet two thirds of the world have no access at all.”

Google posits that it’s mission is a noble one, but reading between the lines it’s clear that significantly improving people’s lives brings with it a massive opportunity. These untapped markets are vital to Google’s long-term revenue growth, and it’s eying up some four billion potential customers. Google totally dominates search already, and services like Gmail and YouTube don’t do all that badly – so Google knows if it can get more people online, those billions of newcomers will probably use its services too.


Google wants to connect the world’s remotest places

Wireless signals and mobile computing are the key to getting people online. The mobile computing aspect is well on the way to being solved, with the likes of Mozilla promising $25 smartphones in the not-too-distant future, soon almost everyone will be able to afford such a device. The harder problem is providing connectivity, and that’s what Google is looking to tackle.

Telecoms companies already provide such connectivity in developed countries using cellphone towers, but these are limited by line of sight to local areas. So Google is aiming higher, though at first it seemed it was trying to avoid using satellites with drones and balloons. That’s because satellites are notoriously expensive, and history is littered with numerous satellite startup failures. The most famous of these is Teledesic, which proposed Internet connectivity for the entire planet using a constellation of 288 satellites orbiting at 700 kilometers. Teledesic had high-profile backers like Bill Gates, Paul Allen and a Saudi prince, but the technology of the day was not up to the task and the company failed.

This time round things are different. Companies like SpaceX now offer an affordable way to launch private satellites, while satellites themselves are becoming cheaper to build. According to Tim Farrar, head of satellite consulting firm TMF Associates, Google’s 180 small satellites could cost as little as just $600 million to launch.

If and when it connects the world’s remoter areas, Google could provide a service similar to its Google Fiber project, where it offers average connection speeds free for seven years, or gigabit speeds for a premium. Perhaps Google will subsidize the cost to maximize its user base, offering a speedier connection for those willing to cough up for it.

In any case, providing Internet connectivity is just a means to an end, and makes an awful lot of sense for Google. Consider – it’s $500 million to $3 billion investment amounts to just 3-18 percent of its quarterly revenues. If that’s the price of securing another 3-4 billion customers, it’s a price well that’s well worth paying.

photo credits: NASA Goddard Photo and Video via photopin cc; eriktorner via photopin cc

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