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Google Energy ? Commendable Foresight Or Crazy Diversification

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You have to give it to Google. It never ceases to surprise the world with its seemingly unorthodox style of operations. Be it their oh-so-cool work atmosphere, strategic marketing tactics generating tons of hype even before the product launch, the fascination with Beta launches, and last but not the least their acquisitions and business deals.

Google manages to pull out rabbits out its hat with such uncanny frequency that most of the times, the rest of the marketplace cannot predict what is going to come next. However, what is more interesting is that even after so many products and acquisitions, Advertising revenue continues to remain the Bread and Butter for Google.

However, with the dynamics of the marketplace changing, Google off late has gotten into a little diversification. The diversification though till now has been more from a “Seeing Beyond Internet Search” per say than monetization models. Android (OS) and now its own phone Google Nexus bear testimony to the fact that Google is indeed diversifying itself in tune with the market.

But, then a OS and a phone still may not be termed as unthinkable products from someone who has ruled the Internet like very few have. But, how about a Technology company getting a license to BUY and SELL energy.

Google Energy, a wholly owned subsidiary of Google has received federal approval Google Energy to buy and sell energy on the open market

It is interesting to note that Google had applied for authorization from regulatory body to allow Google Energy to “act as a power marketer, purchasing electricity and reselling it to wholesale customers”.

Now , Google made it clear that they ventured into the energy domain to be able to have more options for the way it powers its data centers. Google needs quite an amountful of energy to operate its resource hungry data centres. With Google Energy, Google will have more control in terms of energy supplies for its operations. Google already uses innovative ways to cool its data centres without electricity.

However, with a license that allows them to both buy and sell electricity on the open market, will Google shy away from making Selling Energy a part of its product portfolio. Well, there has been no indication as of now of Google launching a new business model but then with Google I would not be surprised.

From the looks of it, Energy costs and supply pressures are already a burden for businesses and more so for someone in the domain Google operates in. The future only promises to make energy even more costly and limited, so Google might have put its money where it should have. A classic case of foresight to optimize the costs and control energy supply pressures.

But, should Google Energy be used as a Business entity, would it mean Diversification gone too far. A technology company diversifying as an Electricity marketer sounds even more weird than the crazy Satyam – Matyas acquisition which made headlines last year.

What do you think ? Is Google Energy going to serves Google’ Interest of managing its own energy needs and a push to fulfil its commitement of being “Carbon Neutral” or will Google turn it into a new business altogether.

  1. textilesinfomediarydotcom says

    Basically Google have two product Adword and power meter. All other product purchases are there to power and retain its market share.

  2. DK says

    Google is now coming out with ultra high speed broadband. This is going to change the software world completely.

    DK

  3. Madhav Shivpuri says

    If big G just wants to manage its power needs they can just use energy futures and options, but beyond that I don’t think the intent behind this move is obvious just yet.

    Big G’s offline initiatives could be ahead of times at the same time a little scary, and I am referring to their telecom intiative. Just imagine they transport all the data on those networks and they can sniff and get a good peek into their customer’s actions, websites, data – privacy would be a serious concern. They would need to abide by data protection laws like other telecoms in US.

    Like Goldman Sachs is described in regards to the financial industry, I don’t think the day will be far when it happens on the internet and the squid this time could be Google. From the post “The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

    Not that I think of Goldman Sachs or Google in that way, just that they both are so big and we over-depend on it, that we may possible endanger ourselves.

  4. Casey Verdant says

    Excellent decision by the FERC! Let’s hope Google does for energy what it’s done for search, e-mail, chat, and phones. Google will start by buying its own renewable energy, but hopefully move into consumer power as well.

    Researching how to make your company, product, or next project more Green? Go to greencollareconomy.com for sustainability white papers and the largest b2b green directory on the web.

  5. Viral says

    Dear Ankit,

    Nice informative article about Google and its inherent need for energy. Reading this post of yours reminds me of Indian Cement major ‘ACC’. ACC had ventured in a small way into ‘in-house’ Wind Energy business to fulfil its internal need of power in business operations related to Cement. Gradually their energy unit slowly became bigger, and could be much bigger in years to come to be decoupled from their core Cement division.

    So, sometimes inherent needs of one’s own business, which could have lead to innovative ways for self-fulfilment, may lead to emergence of new business opportunities in future.

  6. Pavan says

    oflate,whenever I hear about google diversification,I am getting more scared it might turn out like Umbrella corporation in Resident Evil…:)

    1. Ankit says

      Great Analogy Pavan :P However, the past acquisitions have broadly been in the internet/technology space.But, this came as a surprise to me.However, it might as well be merely an attempt by Google to control its energy costs.Only time will tell, what they have in mind

      1. Pavan says

        True .In US,they are getting into Highspeed broadband service for selective regions (which I think is mainly to get formal access(read like telecoms) to guide Govt in future policy matters).
        Heck I even heard some news about getting into real estate business,although for good reason.

        Also there is Public DNS/gmail/analytics Service , which again I again think is privacy apocalypse from community point of view.

        My point in even their tech/web diversifications is a potential threat when all things add up. I think if they have to make a good guess what you will have for your next meal,they would be mostly right :)

        Don’t get me wrong.I am a great fan of the company,I use about 20 products by them.

        1. Ankit says

          Well, they seem to pull everything off with some panache.More so, as you mentioned, Evil or not, they have that stickiness factor which has users like u and me hooked.

          Infact, i sometimes detest folks who keep lambasting Google for their disregard to privacy.hell, Google neva forced anyone to use its products and most of them are free.So why the F do people complain yet continue to use it.

          On the acquisition part, yes a little too much can get worrisome but the folks at google have a heady talent pool and they have the firepower to justify the acquisitions though i am not sure about the non-core diversifications.I personally never liked companies overdoing it

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