Google has just
acquired satellite firm Skybox, and got plenty of attention for the
acquisition. Two things stood out. The first was the low price – well 500 million
dollars, but this is not expensive for a firm with the capabilities of Skybox. The
second was the potential for new services combining the satellite imagery with
other technologies and services. Skybox has six satellites in space and is
launching 18 more, giving it the majority of satellites in the world that can
take images of very high resolution and sell the images commercially. Sell
commercially, as opposed to deliver the images to the government that owns
them, like spy satellites do. This advantage is likely to continue for a while
because its satellites are currently the cheapest high-resolution satellites in
the business.
What exactly does high
resolution mean? They can take pictures of parking lots that allow counting of
vehicles parked there, a capability that has already been used to predict
revenues of Walmart and iPhone release dates (although Apple is secretive, it
is still necessary to park trucks outside Foxconn factories in order to ship
out iPhones). All it takes to use the capability is to know a location and a
good time to take the picture, because the satellites pass frequently, so you can now
check for cars parked near your house when you are away for the weekend and
have told your teenager not to host a party.
Of course, the main
use of such satellite imagery is corporate intelligence. And, I am using the
word intelligence in the same meaning as its use in naming CIA: spying.
Although some of it will have no particular target and much potential
usefulness, like finding out whether crops are failing in some part of the
world (helps speculators, but also farmers elsewhere) or giving real-time
improvements of maps (the first use of these satellites that Google is planning),
other uses are less benign. Corporations can monitor each other’s facilities
easily, just as Foxconn is now being monitored. Governments that do not have the
resources to launch spy satellites, meaning most governments, can now order
images whenever they want to check something -- like the location of refugees that they would like to remove or imprison.
As I write this, it
strikes me that the examples I am giving are simple, and might not be enough to
justify the price of Skybox. But, that is where the complementarity comes in.
Skybox satellites have good flight paths and optics, but at the end of
the day they are flying cameras with decent software. But add Google to the
equation, and you get flying cameras, excellent software, and immense
databases. These two companies have different capabilities, and when listing
them it looks a lot like they could be combined to make something completely
new. Skybox and Google are complementary, and complementarity is a good start
of innovation. The innovations might involve valuable new products and
services, and they might also involve worrying levels of monitoring and privacy
breaches. We don’t know in advance, except that there will be surprises.
Mims, Christopher.
2014. Amid Stratospheric Valuations, Google Unearths a Deal With Skybox. Wall Street Journal, June 15 2014.
