Google Bought a Satellite Startup to Make Maps, Not Internet Connections

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. Tuesday’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 Skybox’s satellites to make better maps with “up-to-date imagery,” the company said in a statement. “Over time, we also hope that Skybox’s team and technology will be able to help improve Internet access and disaster relief—areas Google has long been interested in.”

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 to hardware stores. A demonstration earlier this year showed how Skybox 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. “Freshness really matters in maps,” says James Crawford of Orbital Insight, a data company focused on satellite imagery. ”If you’re looking for a satellite photo and it’s five years old, or even three years old, that’s a liability.”

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. “Skybox will not be a commercial company; it will be a NASA for Google,” says Brock Adam McCarty, who runs image reselling business Apollo Mapping.

Given Google’s traditional focus, the most logical product would be a search engine for Skybox’s images. Users could get real-time information about the number of ships in a harbor or the number of trees in a forest. Having complete control over this information would give Google a major advantage over rival mapping services—and make Android a more attractive smartphone platform than, say, Apple (AAPL)‘s iOS, which continues to struggle with its own mapping software.

This vision of the future relies on Skybox’s ability to get more satellites into orbit. To save money, the company’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 far 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 Google’s and Facebook’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, too—this is how airlines offer in-flight Wi-Fi.

But the Skybox 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. “The acquisition of Skybox doesn’t do a whole lot for providing connectivity,” says Michael Blades, an analyst at Frost Sullivan. “That’s not what they do.”

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