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Alphabet’s experimental X lab has spun off two of its best-known “moonshot” projects into freestanding business units — a sign that their days as technology prototypes are over, even if they may be a long way from proving themselves as sustainable businesses.
Loon, whose balloons deliver internet service from the stratosphere, and Wing, a drone delivery service, will take their place alongside three previous spinouts from X, none of which is producing significant revenues yet.
The new Loon and Wing businesses take the number of what Alphabet calls its “other bets” — its operations beyond the core Google unit — to 10. These accounted for only $150m of revenue in the latest quarter, or 0.5 per cent of Alphabet’s total. Almost all of that came from a US internet access and TV service that has been through severe retrenchment as Alphabet searches for a new technology and business approach. The tech holding company this year stopped disclosing losses from these businesses, which had been running at about $3.5bn annually.
Loon’s emergence as a freestanding business comes only a week after Facebook shuttered its own experiments to deliver internet service from high above earth. The social networking company had been testing a service using solar-powered drones with very large wingspans that were capable of staying aloft under their own power for long periods of time. One of the drones suffered serious damage on landing after a test flight, raising questions about whether the lightweight structures could ever be made strong enough.
Loon, one of the first projects started at X after it was created in 2010, has been through its own technology rethink in recent years. It was originally designed to create a “belt” of balloons endlessly drifting around the earth on the jet stream, so that a balloon was always over any given place that needed connectivity. Google later refined the technology, moving balloons up and down in the air currents to keep a group of them in place.
Loon proved itself after Hurricane Maria in Puerto Rico last year, when the company said its balloons were used to deliver internet access to 100,000 people until service on the ground could be restored.
Wing, which began in 2012, operates a test service delivering food and non-prescription medicines to homes in a suburban area outside Canberra in Australia. Its drones fly up to 80 miles an hour, then hover in place while packages are winched down to landing spots said to be the size of a doorstep. It is also developing a drone traffic management system.
The X lab projects are carved out once they have overcome their main technical challenges and are thought ready for the next stage of market development. But not all remain freestanding, and in the three years since tech holding company Alphabet was formed out of internet company Google, it has constantly reshuffled its long-range tech bets as it searches for the best way to develop them.
Glass, the augmented reality glasses, “graduated” from X — the company’s preferred term — in 2015, but a version of the technology is now back inside the experimental lab. Alphabet’s robotics efforts, meanwhile, began with a series of acquisitions and operated as a separate unit before being absorbed into X.