Alphabet is About To Get a Revenue And Profit Boost
Loon ripe for primetime
Alphabet’s (GOOGL) Project Loon is about to step out of the labs into the real commercial world. Project Loon involves the use of high-altitude, solar-powered large balloons to provide Internet access in underserved pockets of the world. Through Loon, Alphabet hopes to help bring more than 4.0 billion people in the world today without access to the Internet online.
Project Loon, a component of Alphabet’s discreet research arm, Google X, has run several experiments and the team now feels it has a commercially viable project. Earlier this year, Loon deployed dozens of balloons to provide Internet connection access to parts of Peru devastated by flooding. In partnership with phone carrier Telefonica, Loon was able to provide network coverage to an area the size of Switzerland, boosting confidence in the project.
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A large and profitable business
In an interview with Mobile World Live, Loon CEO Alastair Westgarth said that it was on track to go commercial in the next couple years. Loon is not just looking to operate in a commercial context in the next few years, but also to be a large and profitable business.
Project Loon going commercial and generating profits is a development that Alphabet investors should welcome. During the years of its development, Loon has lived off Google profits. If it can generate substantial revenue, even without profits, Google should see some relief and a boost to Alphabet’s bottom line.
Boost to revenue diversification
Furthermore, Loon going commercial fits with Alphabet’s revenue diversification efforts. Although Google is a titan in the online advertising industry, Alphabet’s future may see a challenge due to its reliance on advertising sales from Google at a time of escalating competition from Facebook (FB), Twitter (TWTR), Snap (SNAP), and Yelp (YELP) for online advertising funds.