Not too long ago, Google introduced its new parent company Alphabet, which was set up as a means for keeping separate its core business from riskier project likes self-driving cars. This would allow Google to more easily use new technologies to tackle major problems in the world, and make money along the way.
Well, that line of separation is about to become a bit skewed, as the company announced it will ramp up spending on what it views as long-term “bets” on potentially breakthrough technologies.
Per Ruth Porat, Alphabet’s chief financial officer, the company will increase spending most significantly on technologies related to energy and Internet access. This includes the Google Fiber project, which offers high-speed broadband at a cost competitive with well-established broadband companies like Comcast and Time Warner Cable.
In terms of transparency, Porat explained that Alphabet will report revenues, profitability, and capital expenditures for both Google and a category called “other bets” that combines the company’s other businesses.
Alphabet was set up just a few weeks ago, and so it has not yet been publicly detailed all of the subsidiaries that fall underneath it. What Porat did suggest though, is that the company’s “other bets” will in all likelihood include home devices company Nest, Google’s X lab (the part of the company researching the aforementioned self-driving cars), a life sciences group (which just saw its patent for electronic lenses get published online), and Google’s investment arms.
Worth pointing out is a unit called “Access and Energy” that Porat spoke about, which is believed to be a reference to a portfolio of properties overseen by senior vice president Craig Barratt, the same fellow who has led the Google Fiber project to date. Porat warned investors that the company’s capital expenditures by these “other bets” would be steadily increased over the next year or so, with spending in “Access and Energy” increasing the most.
Specific to this unit, Porat explained it will be receiving the greatest investment to support the “other efforts” it will be taking on, outside of the Fiber project, though it was not detailed what this might be. A relevant project that might fall under its umbrella is Project Loon, which uses balloons launched to the stratosphere to deliver cellular Internet service in rural areas of the world. It is worth noting, though, that this project has always operated inside Google X, which is now known formally as Alphabet’s X Labs, so there would have to be some reworking of which projects fall under what division, before funds are allocated.
Another project that might fall under the “Access and Energy” unit is solar-powered drones to provide wireless access.
“What we want with Alphabet is to be the best magnet for entrepreneurs,” Porat said while explaining that the number of projects and divisions designated as “other bets” in the Alphabet hierarchy could expand. “To be the environment where they can continue to thrive and create businesses that can generate tremendous returns and solve really big problems.”
Via MIT
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