The battle for the sky continues. Google (GOOG) has spent $500 million to buy Skybox Imaging, a company that uses small satellites to transmit high-resolution images from space. Tuesdayâ€™s announcement comes only two months after Google acquired Titan Aerospace, which beams Internet signals from high-altitude drones. In March, meanwhile, Facebook (FB)spent $20 million on Ascenta, another drone maker.
Google plans to use Skyboxâ€™s satellites to make better maps with â€œup-to-date imagery,â€ the company said in a statement. â€œOver time, we also hope that Skyboxâ€™s team and technology will be able to help improve Internet access and disaster reliefâ€”areas Google has long been interested in.â€
Skybox has only a single satellite in orbit right now but plans to fly a fleet of them to cover the entire globe at all times. Constantly updated satellite images would be of interest to everyone from agricultural companies and hedge funds toÂ hardware stores. A demonstration earlier this year showed how SkyboxÂ satellites could be used to monitor oil reserves from space.
At the moment, Google has to buy these sorts of services from satellite companies, and supply in the $12 billion satellite-imagery market is limited. The biggest players, DigitalGlobe (DGI) and Airbus Defence Space, have only a handful of satellites and spend most of their energy providing services to data-hungry governments. DigitalGlobe earns 87 percent of its revenue from governments that want to do things such as monitor their borders.
Google has already filled in the gaps by flying planes to gather images for Google Earth, but the tech giant has been pining for better images updated more frequently. â€œFreshness really matters in maps,â€Â says James Crawford of Orbital Insight, a data company focused on satellite imagery.Â â€If youâ€™re looking for a satellite photo and itâ€™s five years old, or even three years old, thatâ€™s a liability.â€
Buying Skybox transforms Google from a buyer into a supplier. But it may decide that it wants to serve only a single client in Mountain View, Calif. â€œSkybox will not be a commercial company; it will be a NASA for Google,â€ says Brock Adam McCarty, who runs image reselling business ApolloÂ Mapping.
Given Googleâ€™s traditional focus, the most logical product would be a search engine for Skyboxâ€™s images. Users could get real-time information about the number of ships in a harborÂ or the number of trees in a forest. Having complete control over this information would give Google a major advantage over rival mapping servicesâ€”and make Android a more attractive smartphone platform than, say, Apple (AAPL)â€˜s iOS, which continues to struggle with its own mapping software.
This vision of the future relies on Skyboxâ€™s ability to get more satellites into orbit. To save money, the companyâ€™s satellites tag along on rockets launched for other reasons; the cost runs between $300,000 and $4 million. The five-year-old company has raised $91 million and so farÂ put a single satellite in orbit. Last spring it said it would have another one up within months and 15 by the end of 2016, but the launch effort has fallen behind schedule.
Much of the attention around Googleâ€™s and Facebookâ€™s out-of-this-world ambitions have focused on Internet connectivity. In addition to Titan, Google has a home-grown project called Loon, which would use balloons to transmit Internet to hard-to-reach places. It is possible to use satellites for this purpose, tooâ€”this is how airlines offer in-flight Wi-Fi.
But the SkyboxÂ purchase is unlikely to play into that plan anytime soon. People in space-related industries say Skybox would largely have to start from scratch to make communications satellites. â€œThe acquisition of Skybox doesnâ€™t do a whole lot for providing connectivity,â€ says Michael Blades, an analyst at Frost Sullivan. â€œThatâ€™s not what they do.â€
Article source: http://www.businessweek.com/articles/2014-06-10/googles-bought-a-satellite-startup-to-make-maps-not-internet-connections