Why Facebook Is Going After Drones

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Facebook (FB) has been incredibly adamant about its Internet.org initiative, as it intends to reach the next 5 billion people on Earth, by giving them Internet. To get there, the company is likely to start using drones.

First reported by TechCrunch, Facebook is in advanced talks to buy Titan Aerospace, which makes solar-powered drones that can stay in the air for up to five years at a time, providing Internet access to the world's population that is without it. Given Facebook's ambitious plans for getting the rest of the world's users connected online, this endeavor likely won't come fast, nor cheap.

Facebook and Titan Aerospace could not be immediately reached for comment.

If Facebook is successful in buying Titan Aerospace, it would essentially be in competition with Google's (GOOG) Project Loon, which Google is using for the same purpose. According to Project Loon's website, the initiative is described as, "Project Loon is a network of balloons traveling on the edge of space, designed to connect people in rural and remote areas, help fill coverage gaps, and bring people back online after disasters."

On Google's third-quarter earnings call, CEO Larry Page said that Loon was still small, but he was "amazed by the positive reaction" from around the world surrounding the project. "I think I found something important in trying to improve rural Internet access, which is something that if you're one of the significant number of people in a rural area or a place that doesn't have great Internet access now, it is something that really matters to your quality of life. So we're excited about that."

The reported purchase price for Titan is $60 million, according to TechCrunch.

Facebook CEO Mark Zuckerberg and other members of the Internet.org initiative, including Nokia (NOK), Qualcomm (QCOM), Samsung, Ericsson (ERIC) and MediaTek, are not doing this out of the goodness of their heart. By connecting the world's remaining 5 billion people (Zuckerberg has said in the past only about 2.7 billion people in the world are connected), it's a huge driver of revenue for all the aforementioned companies, especially Facebook.

During the fourth-quarter, Facebook generated $2.59 billion in revenue, with much of that coming from advertising. Facebook had over 1.2 billion monthly active users (MAUs), with more than 757 million daily active users. By adding the next 5 billion people on Earth and getting them connected to the Internet, not only does it increase the chances they become Facebook users, but may wind up doing so from a mobile device.

Facebook is now a mobile-first company, with mobile ad revenue accounting for 53% of advertising revenue. By bringing in Titan's drones, which can fly up to 65,000 feet in the air, they essentially are seen as satellites delivering Internet service in exchange for the potential for additional billions of dollars in advertising revenue.

"Even though projections show most people will get smartphones in the next decade, most people still won't have data access because the cost of data remains much more expensive than the price of a smartphone," Zuckerberg wrote on a blog post, announcing the Internet.org initiative.

With Titan Aerospace under its umbrella, Facebook's goal is to not only bring the Internet to everyone on Earth, but fill its coffers with advertising revenue. One drone at a time. Below is a video of Titan Aerospace's Solara 10 drone, and how it actually works.



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: News Headlines , Technology , Business , Travel and Lifestyle

Referenced Stocks: FB , GOOG , NOK , QCOM , ERIC

Chris Ciaccia

Chris Ciaccia

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