Alphabet Google and Its Losing Bets
August 19, 2016
I read “A Year after Google Transformed into Alphabet, the Only Thing Clear Is How Much Its Bets Are Losing.” (Now that is a title.) The write up explains that even for the Alphabet Google thing creating sustainable revenue streams is not as easy as solving trivial problems like death. Whoops. Death is not yet cracked. However, Google has cracked the Loon balloon as a wireless component.
I learned from the write up:
Google is still growing—its revenue last quarter was $21.3 billion, up 21% from a year earlier—but similar signs of life have not been seen in Other Bets. In the last four quarters, it’s lost over $3.7 billion, and only generated roughly $500 million in revenue, which works out to less than 1% of Alphabet’s quarterly sales.
In the grand scheme of online ad revenue, what’s the big deal?
This passage caught my attention:
Alphabet’s Other Bets includes things like Google Fiber, the company’s initiative to bring high-speed fiber-optic broadband to the US; Boston Dynamics, a research firm working on humanoid and dog-shaped robots for the military; and Nest, the internet-of-things company Google bought in 2014 that makes smart thermostats and other as-of-yet unnecessary gadgets. In the last year, Nest’s CEO Tony Fadell has left Alphabet amid claims that he was creating a “toxic” work atmosphere, and Boston Dynamics is apparently being shopped around for a buyer as Alphabet struggles to monetize its work.
My hunch is that the article is designed to suggest that the Alphabet Google thing has a problem. I am not sure its “bets” are the challenge. My thoughts flow to Amazon. Mr. Bezos’ outfit has generated additional lines of revenue and seems to be creating new services which complement the core business and open new revenue streams. There’s package delivery, subscriptions, and the cloud business. Even the space initiative and the dead tree newspaper are showing signs of life.
Perhaps the issue is what Google pursues versus what Amazon is doing? Which company is more likely to take a wild and crazy idea and make money from that notion? Some say Amazon; some say Google. Are these company names synonyms for innovation or concentrated market control? Time to go fishing with my Android tablet and a lure from Amazon.
Stephen E Arnold, August 19, 2016
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