Google Is Reportedly Mulling Expansion In Outer Space

| About: Alphabet Inc. (GOOG)


Google is reportedly working to acquire Skybox Imaging as it continues to find ways to diversify its revenue base.

Skybox builds microsatellites that capture high resolution images and high definition videos.

Through this acquisition, Google could enhance its product offerings in Google Maps.

Google (NASDAQ:GOOG) (NASDAQ:GOOGL) has made some big moves over the last few months. The company sold Motorola to Lenovo for $2.9 billion in a cash and stock deal and acquired the smart thermostat maker nest for $3.2 billion. The technology behemoth is reportedly getting close to another massive acquisition that could take it to outer space.

According to a recent report by TechCrunch, Google could acquire Skybox Imaging, a startup that provides high resolution satellite images and full motion videos in a deal valued at over $1 billion.

According to industry insiders, as reported by TechCrunch, Google has shown interest in acquiring either Skybox or Planet Labs in the satellite imaging market. The tech giant has now reportedly made up its mind to go after Skybox. The former has been valued at between $500 million and $700 million in 2012.

On its website, Skybox says, "We build satellites, we write code, and we deploy data centers." The company is headed by Tom Ingersoll, who has worked in the space and communication industries for nearly two decades. Tom was also the co-founder and former CEO of Universal Space Network, which is one of the main providers of mission-critical ground station services to NASA and the U.S. Department of Defense.

Skybox was born from a course project at Stanford University and began its operations in 2009 after receiving funding from the famed billionaire Vinod Khosla's Khosla Financial. Four years later, the company has finished design, manufacture, and test of first two satellites: SkySat-1 and SkySat-2.

Besides Khosla Ventures, Skybox is now backed by five other venture capitalist firms that focus on investing in technology startups.

Following the launch of SkySat-1, Skybox shared color pictures and HD videos taken from its SkySat-1 satellites (picture, video on YouTube).

SkySat-1 is what is called a microsatellite, nearly 20 times smaller than a conventional satellite that could weigh thousands of kilograms. The company's chief engineer Jonny Dyer has claimed that "SkySat-1 is arguably the highest performance micro-satellite ever built."

(If you want to know more about these Microsatellites, I would recommend reading the two articles titled "Building the World's Most Capable Microsatellites" by Jonny Dyer. Part-1, Part-2)

The company has planned to launch a constellation of 24 microsatellites to create a constellation of satellites that capture high definition, high resolution images and videos.

Last year, Skybox announced that it has entered into its first major strategic partnership with a subsidiary of Mitsubishi Corp., called Japan Space Imaging through which the Japanese company will use Skybox's microsatellites to receive images and videos for the Japanese market.

Skybox's board includes, among others, Scott Smith, the COO of Iridium Communications (NASDAQ:IRDM) and Kenneth Goldman, CFO of Yahoo! (NASDAQ:YHOO).

Skybox currently relies on just one satellite and is planning to launch another Satellite by the end of the first half of 2014. On the other hand, Planet Labs already has a network of 28 "doves", a constellation of small imaging satellites, up and running. That is a big achievement for a company with just around 40 employees. Skybox has around 100 employees.

Planet Labs's satellites are significantly smaller than those developed by Skybox Imaging.

Clearly, the Skybox acquisition could enhance Google's ability to provide consumer mapping services.

The company could also significantly enhance the performance of Google Earth and Maps. Google currently relies on a variety of different sources for the images on Google Maps but following the acquisition, the company can directly source the images from Skybox's satellites. Consequently, the company can improve Google Earth Enterprise, Google B2B offering which uses Google Earth and Maps.

The Skybox acquisition would come after Google acquired the solar powered drone maker Titan Aerospace to provide high-speed internet as well as to bolster Google Maps.

Bottom line

Google, which gets most of its revenues from advertising, has spent billions on in an effort to diversify its revenue base to other non-advertising areas.

By investing in Skybox, Google will acquire a promising young developer of high resolution satellite images and high definition videos. As a vote of confidence, six venture capitalist firms have given more than $85 million to Skybox Imaging while Japan Space Imaging is utilizing its services. Through this acquisition, Google can enhance its maps offerings, particularly in the B2B space.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.