Google is getting its tentacles into everything, as it buys up seemingly unrelated companies at an ever-increasing rate to own the future, and the customer of the future.
This week, it added Songza - its bid to play a bigger role in the fast-growing online music business - to its long list of acquisitions. Songza joins the likes of a mobile alarm clock developer, a company that makes robots, a group that turns out smoke alarms, and Internet and cloud computing companies on its list of 160 takeovers in the past 13 years.
Its spending spree, which it can well afford, is accelerating as it deepens its ability into tools that will enable a connected world, and applications that will plug into that future. In total, since 2001, Google has bought 160 companies, with 57 of these buys coming in the last three-and-a-half years, at a rate of one purchase a week, according to Wikipedia.
This year alone, the company has bought 20 entities, more than double what it acquired during the first half of the past two years.
Total control
Liron Segev, CEO of Swift Consulting, says Google is "buying the future", noting it has enough cash ($14.5 billion on hand) to purchase anything it wants at a fraction of what those companies will be worth in years to come.
Google senior VP Sundar Pichai has already said the group will expand its focus beyond its traditional Internet business, and its latest purchases show it is trending towards a connected world, and everything that plugs into that, says Segev.
Segev says Google is hedging its bets and "getting into absolutely everything" .He notes the best way to predict the future is to invent it, and if Google buys the future now, it will control it. "Google has got the money; it can afford to pull ahead in the race. Any small player that comes in as a threat can be bought off."
Revenue streams
World Wide Worx MD Arthur Goldstuck notes its bids are also an effort to boost traffic to bolster revenue growth, which is where music streaming fits in. He adds its moves towards buying tools that will be needed in a totally connected, Internet of things world will also generate much more traffic.
However, says Goldstuck, the challenge for Google will be monetising its purchases. "But you can't play the game if you're not in the game."
Vestact analyst Sasha Naryshkine notes 90% of Google's revenue comes from just one business: advertising, which is still profitable and growing. He adds the "visionary" company is diversifying, and shareholders are paying somewhat for this vision as the share is trading on a multiple of 30, which makes it rather costly.
Shooting ahead
Competitors like Apple and Facebook have also been acquiring companies that fall outside their normal ambit, but not at the same rate as Google, says Segev. Facebook is buying LiveRail to make video ads a bigger part of its business, while Apple recently spent $3 billion to catch up in fast-growing music streaming, Reuters reported.
However, Google's spending spree surpasses its rivals, as it has bought more - in less time - than the likes of Microsoft, which has acquired 163 companies since 1987, or Apple, with 59 buys in the past 26 years, or Facebook's 48 purchases since 2005.
Segev says Google wants to "own the customer" so that people will use it for any and all services. He adds there is no question it will branch into other areas such as banking, transactions, and hardware. "It's a Google planet."
Google's purchases this year
Date | Company | Sector | Cost |
4 January | Bitspin | Timely alarm clock | Not disclosed |
13 January | Nest Labs | Home automation company | $3.4bn |
15 January | Imperium | Internet security | Not disclosed |
26 January | Deepmind | Artificial intelligence | $650m |
16 February | Slicklogin | Internet security | Not disclosed |
21 February | spider.io | Anti-ad fraud | Not disclosed |
12 March | Green Throttle | Gadgets | Not disclosed |
14 April | Titan Areospace | Drones | Not disclosed |
02 May | Ragenspan | E-commerce | Not disclosed |
06 May | Adometry | Online advertising | Not disclosed |
07 May | Appetas | Web site creator | Not disclosed |
07 May | Stackdriver | Cloud computing | Not disclosed |
07 May | MyEnergy | Online utility use monitor | Not disclosed |
16 May | Quest Visual | Augmented reality | Not disclosed |
19 May | Divide | Device manager | Not disclosed |
10 June | Skybox Imaging | Satellite | $500m |
19 June | mDialog | Online advertising | Not disclosed |
19 June | Alpental Technologies | Wireless technology | Not disclosed |
20 June | Dropcam | Home monitoring | $555m |
25 June | Appurify | Mobile device cloud testing | Not disclosed |
1 July | Songza | Music streaming | Not disclosed |
Main source: Wikipedia
(Additional reporting by Lwavela Jongilanga.)
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