Why Did Google Buy Skybox Imaging for $500 Million? - Stocks In The News

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Merger and Acquisition activity has certainly picked up this year, and this has been especially true in the technology world. In particular, search giant Google ( GOOGL ) ( GOOG ) has been expanding its reach into a number of different areas that go well beyond internet searches.

A primary focus of the company has been on intelligence, but also firms in the robotics and aerial vehicle segments. A great example of this push towards space was in the purchase of Titan Aerospace, a company that specializes in high altitude UAVs, though it appears as if Google as a few more picks left in this broader space.

The latest such purchase from Google is of satellite firm Skybox Imaging, a firm that Google has purchased for about $500 million. While this is a relatively small sum for the behemoth that is Google, it does extend Google's push into the high altitude market and suggest that this will be a focus of the company in the near future.

Skybox in Focus

Skybox Imaging, which ironically is also in Mountain View, CA (the home of Google), provides users with access to high-resolution images that, according to their website ,  allows for the capture up to 90 seconds worth of video or the ability to zero in on very specific items across the globe such as cars, ships, or cropland.

The company also provides analytics for these videos and images, allowing users to obtain a great level of detail and data from their satellite. For example (once again according to their website ), they have the ability to tell from their images how full a parking lot is, when airplanes are taking off, or activity at petroleum tanks, just to name a few capabilities.

Google's Use of Skybox Imaging

Google will probably use this service in order to improve their Google Map service and to offer better and clearer pictures of regions around the world. This will be especially important for the few areas where Google might need better images due to geographic regions or where technology on the ground isn't quite there yet.

Google may also use this company as part of its Titan Purchase in order to get the Internet to more people around the globe. Or, the imaging technology might pair well with the Titan drones if Google wants to go more in the analytics route.

I believe this analytics potential is where the real promise of this purchase lies, especially given the detail with which Skybox claims it can deliver. With these kinds of analytics, Google could pinpoint trends in a number of areas around the globe and provide users with untold amounts of interesting data and even help to proactively anticipate search trends (monitoring malls to anticipate retail searches, oil tanker trips to get a lead on oil prices ).

Some also seem to believe that Google is doing this to better compete with Amazon ( AMZN ) and their cloud business. From the Atlantic's Robinson Meyer , "Amazon's cloud services make billions of dollars every year. Skybox's goal was to agglomerate all that historical data it had and make one of these-a cloud computing service-that specifically dealt in data about the Earth." The article continued, "If Google follows Skybox's lead and creates its own cloud service for data about the Earth, then it might have a vanguard product: an industry-leading cloud service of its own."

Bottom Line

Any of these possibilities are exciting for Google, though the actual full implementation of this technology is probably a few years out. Either way though, it looks as if Google is thinking big-or at least thinking differently-on how the company can grow its core businesses or better compete in rapidly growing ones like cloud computing.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: GOOGL , AMZN , GOOG

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