Google is reportedly continuing its retreat from the connectivity segments via talks to sell its Skybox Imaging satellite business.
Sources close to the deal have commented to Bloomberg that execs at holding company Alphabet are currently in discussion with Planet, a satellite imaging start-up, to take Skybox off its books in an equity transaction. Alphabet acquired Skybox is a deal believed to worth in the region of $500 million three years ago, though the equity deal will see its finger remain in the connectivity pie, though exposure would be reduced.
The initial purchase of Skybox was to provide more detailed imagery to the Google Maps platform to improve accuracy, though the team did also highlight the network would be used to provide connectivity. It is believed that as part of the deal some of the Skybox staff will be moved over to Planet, though others would be reallocated around the Alphabet business.
The ambitious move into the world of connectivity was not only fuelled by the acquisition of Skybox but also notable investments in the Google Fiber business unit, which was put on the shelf during the latter stages of 2016. The move to compete with traditional ISPs was certainly a bold one, though if there was a company with the cash, credibility and cajones to pull it off, it’s Google.
The deal has not been confirmed by Alphabet, though it would not come as a huge surprise as there have been signs of this cooling off in recent months. Aside from the Google Fiber shelfing, the team put the brakes on its rollout in California, telling Palo Alto and Mountain View, to explore cheaper alternatives. Wireless broadband is seemingly of particular interest, especially since the acquisition of Webpass, as a substantially cheaper connectivity alternative than laying a fibre network.
While this could be viewed as an ominous sign for the Google connectivity ambitions, it might not be the end of the world. Yes, the business is retreating from the idea, but it might simply be a case of now not being the right time. If the development of wireless broadband technology is on track for the Google team, it might well be the case of prioritizing cash outlays for the right time.
Irrelevant as to whether this is a case of putting plans on ice or completely retreating from the idea, the whole saga is evidence of why Google is a successful company, and how the fail-fast business model can be a triumph. Google has invested money and time aggressively in the plan but this time it didn’t work out.
The fact it hasn’t worked out is not a bad thing, as Google found out quickly. Now the plan can sit on the shelf and wait for the technology to catch up, or the Google team can chalk this one up to a learning experience and prioritize cash else-where. In any case, I wouldn’t read too deeply into the situation; Google is still in a very good place, and it only needs a couple of these ventures to work out to discover a couple of extra billion dollars in revenues.