Businesses have pretty much always worked this way. If you accept that efficiencies of scale are a thing, that network effects are real, and that capital breeds capital, then you pretty much arrive at the conclusion that capitalist systems will tend to grow towards consolidation and concentration of power. Disruption is always a thing - corporations are still run by humans and still subject to some weaknesses of human judgement, but concentration of capital and power will tend to feedback on itself.
For example, take a look at the list of brands owned by P&G and Johnson&Johnson.
Calculation problems are a thing too, though. A huge corporation is still central planning, which isn't very efficient. That's why disruption happens, at a large scale there's a lot more room for error. That is, if they really are subject to market forces, which is always a good thing to question.
Well, it's possible that they recognize that market capitalizations of tech companies are a little saturated right now given their sources of revenue and growth plans. So while your stock is overvalued, one of the best ways you can take advantage of it is making stock-heavy acquisitions (even if the deal is 50/50 cash-stock, it helps when your stock is valued at $550 a share). How else could they take advantage of high stock valuations in the short term?
Good point. It kills me,however, when people quote a stock price when they really should talk about market cap. Stock prices are basically arbitrary unless you consider shares outstanding.
Once you're a front runner in a given market sector, it's often more efficient to buy up smaller companies to gain valuable intellectual property and future revenue streams than it is to rely solely on inhouse R&D. These types of acquisition sprees are extremely common, especially with companies like Google that are flush with cash.
A future open technology sounds nice doesn't it? The only issue here then is making sure resources are distributed, managed and organized in a kind way.
So what's the grand vision with the huge shift Google is making towards drones, robotics and automation? Does it provide them with a set of data about the movement of goods and individuals unavailable through other avenues? Most Google products tie back into some input useful for advertising. Is this the same, or is it some grand branch towards expanding into something new?
We bought Titan Aerospace to help us solve some problems such as : giving more people access to Internet, monitoring environmental damage like deforestation, helping during disaster relief, etc.
Disclosure: I work for Google. The above is all what employees are allowed to share, and all I know (I don't even work within or with robotics groups).
All these large tech advertising companies like Google and Facebook talk about huge untapped emerging markets, about moving internationally. Yet these emerging markets lack a very critical component: infrastructure. Yeah, great you want to expand the reach of your ads to new countries but most of those developing countries(3 billion people) still use feature phones and mostly with voice/text.
So why would they wait for the infrastructure to be built?
Google can fly a fleet of autonomous, artificially intelligent, solar powered mesh-connected internet drones across a wide geographic area(wider than what traditional telecoms can offer) offering faster(albeit likely slower compared to developed markets) and cheap internet. It'll practically run itself. They then can turn around and license these drones to the governments of those same developing markets where internet maybe slow or nonexistent or too costly to build in traditional ways(laying pipe, etc).
It's brilliant and potentially a huge money maker due to their, again, first-mover advantage. Facebook had it but blew their cash on da Rift.
I suspect there are two parts: some of these (drones, fiber) are intended to provide a more seamless Internet experience to more people. By extension, it means more advertising.
Others are investigations of revenue streams beyond advertising but able to leverage Google's in-house strengths in machine learning, computer vision, distributed systems, AI, and other related topics. This is not strange given Google has had subscription based services for some time now: e.g., Apps and Cloud Platform.
That's just stupid. If Google wants to replace Verizon/ATT it will have fuck all to do with advertising. It will be for the revenue from users handing them a handful of cash every month.
Companies typically want to diversify how they make money, and this is very obviously something Google desperately wants given that pretty much all their new businesses are around NEW revenue streams and not advertising.
I see your point and would like to agree to it, but no. Really, I wish Google was really interested in actually doing good. But their track record with this 'no-hire-from Apple' thing alone says otherwise. Yeah, the X guys may mean well, and yeah it might be really cool stuff, but I am super hesitant to think it's not just to track people better.
For example, look at glass. Yeah, it's got a marketing problem now, but the tech is right out of 'Snow Crash'. Its amazing! But that damn camera on it. I have a real suspicion they are just tracking where you look to get abetter idea of what ads attract people in real life. Its only a matter of time before they have a feature that tracks your eye movement and focus to help take pictures or whatever. And then what? They know what you are looking at in real time. So what? Well, I just don't get the 'don't be evil' vibe from that kind of data.
Now this is why I come to HN, for comments like this. Thank you for the info, I just assumed that the battery was comparable to a cell-phone's, hours of life. This does change my opinion for the time. Once the battery comes up to the hours and days mark, then I'll worry again.
It's not too hard to imagine that people who make the cultural leap to wearing Google Glass would be averse to adding the geeky pager-sized battery pack that will give them days of operation. I reckon your relief will be short-lived.
Even if the battery were comparable to a phone, the battery life would be measured in minutes if you left the camera on and recording all the time. The camera is the single largest consumer of battery on your phone (when in use).
If you don't want to believe the impracticality of it, than just look at the pointlessness of it. Why waste pointless amounts of battery, network bandwidth, and heat dissipation, when the data gathered won't actually help increase ad revenue over and above using GPS, search, email, and other activities as a proxy for your interests.
The idea that they need to know what you're looking at to serve ads just doesn't make much sense.
In addition to the short battery life, glass also get very hot when recording. It gets to the point that it hurts to wear after only a couple of seconds.
They didn't hire from Apple because Steve Jobs told them to. Is it theoretically impossible to "do good without hiring from Apple"?
Also, 'more data = evil'. I don't see that very justified. And of course, they are not sending all that you are looking at to their servers. That is practically impossible right now.
To the first: No, of course not. But it does imply that they are (surprise) more focused on the bottom line and willing to adjust moral values for an extended time.
To the second: Its not that more data=evil, it's that 'evil' has broader access to you, your habits and potentially your kids and their habits, etc. I do not trust google all that much (I say this with a gmail account I use for work). It's not that I don't trust them, its that the data is powerful and can easily be used for unsavory activities. Also, practically impossible was an iPhone in 2003, but a mere 4 years later there it was. That Moore's law is really something.
I think it's naive to assume that Google's investments are always a couple of steps away from making money via ad impressions. Listening to Larry Page speak never leaves me with that impression, it usually leaves me inspired and of the opinion that Google truly wants to improve the human race, and the world, through technology.
I suspect that like Elon Musk, they believe they can succeed with hardware in areas that interest them just as they did with software, even if it's all about making money.
Sure, self-driving cars and satellites can be used to cut the cost of making maps to sell ad impressions against, but that's like buying an oil refinery as a fuel hedging strategy[1]. Plus unlike many of the web properties Google buy, Titan could probably turn a profit even operated entirely independently, and diversification helps. On the other side of the equation, Lockheed Martin has been buying up software companies focused on the logistics of running passenger airports.
All else being equal, demand for a product increases when the prices of its complements decrease.
Internet access complements all of Google's other products. It is in their interest to commoditize it even further and make it cheaper. If I were Verizon and Comcast I'd be worried.
The behavior of public technology companies that throw off lots of cash is entirely predictable. They are utterly shitty allocators of capital, esp when run by "visionaries." Some easy predictions:
-This acquisition will have zero to negative return on investment, just like Motorola.
-Oculus acquisition for 2B will have zero to negative return on capital
-WhatsApp will have zero to negative return on capital
The abuse of shareholder cash at cash-rich tech companies like Apple, Facebook, and Google is quite breathtaking to observe.
Google has a pretty good track record with acquisitions (YouTube, Android, DoubleClick, Picasa... lots of smaller tuck-in acquisitions around their big products). The Motorola is an extremely poor example, because it was defensive against the Nortel patents/Rockstar consortium. Numerous analyses have shown it was very cost effective on a per-patent basis after taking into account Motorola's cash on hand, NOL credits, and the various parts of it they sold.
Edit: I couldn't find the terms of this deal, but the rumor was FB was offering $60M USD, so it's probably on that order of magnitude. I don't think it would be hard to make a business case for integrating this technology with Maps, making satellite view closer to real-time while reducing their bill for actual satellite imagery.
These bets are easy because it's hard to figure out if you've won or lost. Among the challenges is that acquisitions like WhatsApp and Motorola can be more about stopping threats. WhatsApp had been adding ~1 million people a day, and if FB's mission is to connect people in the world, then WhatsApp could have become a serious competitor in a few years. The Motorola patent portfolio has been discussed, but there's a lot of potential for simple expertise in consumer goods that was acquired as well. Us outsiders will never really really know.
Since we're talking about tech companies and not airlines, the value of an acq is a lot more difficult than discounted future revenue. YouTube was much derided as a terrible acquisition for YouTube in 2006 -- a bandwidth money pit and a copyright nightmare. But it looks like it was a smart move.
What you describe does happen, though. Microsoft paid $6B to acquire aQuantive in 2007 and then wrote if all off in 2012.
I think this type of initiative might also be used to provide more accurate location data for mobile users. accessing GPS satellites is sometimes challenging in cities (where most mobile users are) and a fleet of drones above each city could prove helpful.
Slightly unrelated but I think that Facebook should setup a parent company that has a different name.
Whenever I see the phrase, "Facebook has acquired X" I can't help but think that the acquired company is both no longer trusted and not worth investing in or using. That might not be rational but they're just not the type of company that I think improves the value of their acquisitions.
Comcast tried by rebranding much of itself as Xfinity a few years ago. As far as I know, it didn't do much to sway public few once people realized they were still the same thing.
See their internet.org initiative for the feel good side. Or, on the business side, they want to capture their future customers where the internet is hard to access.
This along with the anti-headhunting collusion, sprawling campuses puts me in mind of a Gibsonian future ruled by a handful corporate arcologies [0].
Has business always operated this way and I'm only now noticing because it's happening closer to home?
0: http://en.wikipedia.org/wiki/Arcology