Google prepares for tech's next phase...remaking itself as Alphabet

August 14, 2015 6:43 pm

Google: Letters of intent

Richard Waters in San Francisco

Some of Google's recent innovations: a contact lens that monitors health; a self-driving car; Makani's wind-generating kites; and Nest

No, there is no limit to Google’s ambition. Any lingering doubts should have been swept away by this week’s news that it is remaking itself as Alphabet, a holding company for some of mankind’s grandest technology challenges.

Even running the world’s most successful internet company, with a valuation of around $460bn, is no longer enough to contain the ambition of founders Larry Page and Sergey Brin. The boundaries will be set only by the limits of Google’s cash flow (which is finite) and their imaginations (which are not).

“Larry and Sergey are brilliant visionaries interested in attacking billion-person problems,” says Peter Diamandis, a space entrepreneur whose own most outrageous venture — mining asteroids — has attracted investment from Mr Page. Their ambition, he says, will “reinvent industries: it’s global communications, it’s opening up space, it’s expanding the human lifespan, it’s reinventing transportation. It’s asking, constantly: ‘Why not?’”

Reorganising into Alphabet will give its many initiatives the freedom to find their feet and is the best chance Google has of striking it big in such a wide array of businesses, says Rita McGrath, a management professor at Columbia Business School. But that does not mean it is guaranteed a higher hit rate from what are essentially highly risky bets.

“They’ve tried a lot of things already and a number of them have failed,” says Ms McGrath. Top of the list is Glass, the eyewear that proved too geeky even for the nerd set, but many others, launched with a flourish and a press release, have also fizzled. “The list goes on and on and on,” says Ms McGrath.

Distinguishing the truly visionary ideas from the purely wacky will be a large part of the challenge.

Astro Teller, head of the Google X experimental lab, has said his job is like running “the chocolate factory”, a reference to the weird world of Willy Wonka, where the normal rules do not apply. For Alphabet, it is now all about harnessing the weirdness.

Outlined here are the main aspirations that have emerged from Google’s bewildering range of side projects in recent years. But with Alphabet, now nothing is off limits.

A cure for cancer? Forget it: Larry Page has something bigger in mind. Two years ago, unveiling its own biotech division, known as Calico, the Google chief executive said that ending cancer would only add three years to average life expectancy. How much better to tackle the diseases of ageing, which seriously erode the human lifespan.

Making a meaningful difference to health is one of Google’s biggest ambitions, and is an idea that permeates many of its investments. This has sent ripples of unease through the pharmaceuticals and healthcare industries, where Google has already forged partnerships, but is also seen as a long-term rival.

With Calico — short for the California Life Company — Google has reassembled some of the top talent from pioneering biotech company Genentech, including former chief executive Art Levinson. It has promised to put up to $750m into a joint venture of Calico and AbbVie.

A separate life sciences division has also been set up to draw on the computing and “big data” technologies that are the foundation of Google’s fortune. Its initiatives include “smart” contact lenses that monitor blood sugar levels for diabetics (a partnership with Novartis) and robotic surgery equipment (with Johnson & Johnson).

Health is also at the heart of Google’s venture capital arm, which has become one of Silicon Valley’s most active start-up investors. More than a third of Google Ventures’ investments were in healthcare and life sciences companies last year, the biggest single category.

What use are Google’s internet services if you cannot access them? Building networks that reach around and beyond those of established companies has been a goal for the past decade as Google tries to blanket the world with low-cost internet coverage.

Project Loon has become the emblem of this push. It has a characteristically quixotic goal: to beam the internet down to remote corners of the planet from a fleet of balloons drifting in the stratosphere. But the idea is coming close to reality. After successful trials in New Zealand, Sri Lanka recently became the first country to sign up in principle for the service, though the details of how and when it will be launched have yet to be hashed out.

On the ground, Google has spurred a high-speed data race by ploughing its own money into building citywide networks.

Unhappy that telecoms and cable companies were not investing enough in broadband technologies, it threw down a challenge in 2011 with plans to dig up streets in Austin, Texas for a gigabit-speed network.

It has extended the plan to eight other US cities and provoked other companies to announce their own high-speed networks.

This year brought a new front, with the trial of a mobile communications service in the US that draws on both WiFi and cell networks.

Called Project Fi, it has started out in a low-key way: it only works with the latest Google Android handsets and is by invitation only.

But as with Google’s other moves into networking, it could pose a challenge to an entire industry.

The inanimate world is waking up. Google’s universe already includes thermostats that warm the house when they know you are coming home, smoke alarms you can turn off from a phone and security cameras that send alerts when they see something suspicious.

These are products sold by Nest, its “smart home” division. Putting silicon “brains” into a much wider range of objects is the next goal.

This year, Google announced Sidewalk, a “smart cities” division that is looking for ways to make urban environments work better with digital intelligence.

Risking hubris in typical Google fashion, Mr Page said that the aim was to improve the lives of everyone who lives in a city. These so-called “internet of things” ventures are examples of what Google hopes to do more of: attract ambitious chief executives with the promise of being able to build independent businesses under the Alphabet umbrella.

Nest is headed by Tony Fadell, who once ran Apple’s iPod business, while Sidewalk’s Dan Doctoroff was a deputy New York City mayor.

Not all the smart objects have turned out well. Glass, the “smart” eyeglass frame, has been Google’s most high-profile flop. It was taken back to the drawing board after its face-mounted camera provoked a backlash over privacy.

And sometimes, giving inanimate objects minds of their own may not be such a good idea. Nest had to halt sales of its smoke detectors last year when it found that waving at them could accidentally deactivate the devices when a real fire breaks out.

When the robots finally take over, many of them will come from Google. Automation looms large in the company’s plans, combining the advanced artificial intelligence that is one of its main skills with new mechanical capabilities.

The first products of Google’s robot labs are already driving, flying and running across the landscape. Driverless cars have become the most striking symbol of its grand ambitions beyond internet search. First shown off driving on highways five years ago, the autonomous vehicles have now covered nearly 2m miles. Their 14 accidents in that time were all caused by other drivers, Google says.

But it has yet to find a carmaker that wants to take up its technology, and issues like insurance and legal liability are unresolved. Pushing ahead on its own, it has started testing prototypes of a more limited, Toy Town-like car designed to putter around neighbourhoods with a top speed of 25mph.

Google is also dabbling in drones, with a project called Wing, and it caused a stir in the robotics sector two years ago when it bought up a handful of promising start-ups, including companies that make machines for warehouses and loading docks.

Among its acquisitions was a robot called BigDog, a headless, four-legged mechanical beast. Even some Google insiders admit that the sight of the 240lb brute advancing over rough ground at a rapid walking pace will leave many people feeling uneasy about the robot future.

Two years ago, Google got into the wind power business: with the acquisition of California-based Makani Power, it bought a company whose gyrating kites fly up to 1,000ft in the air to drive a wind turbine.

The purchase was part of a range of investments that have turned Google into a significant backer of solar and wind power projects on three continents, with nearly $2bn committed. Much of this has been prompted by the huge energy demands of its data centres: the company says it uses renewable energy to meet 35 per cent of its power needs. But its interest in energy generation and distribution extends much further.

It this year pumped $300m into an investment vehicle run by solar power company SolarCity to help fund installations by homeowners in the US.

And it has invested in a number of “smart grid” companies whose technology is aimed at making electricity distribution more efficient, although a software tool that it hoped people would use to monitor their own electricity use, called PowerMeter, failed to catch on.

Google has also used its own operations as a laboratory for environmentally friendly technologies.

The glass-shrouded domes it is planning for its campus in Silicon Valley are unlike any corporate headquarters built before.

The radical designs bear out Mr Page’s personal interests in new materials and structures, and their potential to reduce both building costs and the environmental impact.

Copyright The Financial Times Limited 2015. You may share using our article tools.


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