Loon carved out of Alphabet’s X subsidiary
Alphabet’s (GOOGL) global Internet connectivity initiative, Project Loon, appears to be ready to contribute to the company’s top line. In July, Loon was spun off from Alphabet’s X subsidiary to become an independent company under Alphabet, at the same level as Waymo and Google.
When Alphabet carves out a business to create an independent subsidiary like this, it signals that the business is taking a turn toward commercialization. Loon has recently made moves suggesting that it’s ready to start generating revenues for Alphabet.
Loon in Africa deployment
Loon uses specialized balloons to provide Internet connectivity to remote regions. In 2o17, the company showcased its technology in South America, delivering Internet connectivity to regions of Peru that had been devastated by flooding.
In July, Loon partnered with Telkom Kenya to deliver 4G Internet access to parts of Kenya. Telkom is a state-backed corporation and one of Kenya’s largest wireless providers. The deal with Telkom is set to see Loon make its first commercial deployment in Africa. Loon also recently struck a deal to launch its service in Uganda.
Expanding Alphabet’s opportunity in Africa
As millions of Africans are still without Internet service, which creates the potential of digitalization to boost the African economy by about $300.0 billion in the next few years. Loon’s connectivity technology could strike a chord with many pragmatic governments in Africa, which could open up Alphabet to enormous revenue opportunities on the African continent.
Loon sibling Google sells smartphones and offers online search and cloud services—all of which could benefit from a more connected Africa. Google exited the June quarter holding just a 6.0% share of the global cloud market.
According to Synergy Research, IBM’s (IBM) share of this market was 8.0%, Microsoft’s (MSFT) share was 14.0%, and Amazon’s (AMZN) share was 34.0%. Alibaba (BABA) held roughly 5.0% of the global cloud market at the end of the June quarter.