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Google (NASDAQ: GOOG) Unveils Project Loon

Written By Jason Stutman

Posted June 17, 2013

It’s no secret that the Internet is a major driver of economic development. This is true at both micro and macro levels – being connected benefits individuals, businesses, and entire economies.

project loon

Small businesses that use the Internet perform significantly better than their competitors. And over the past five years, the Internet has accounted for an estimated 20 percent of economic growth world-wide.

On average, the Internet accounts for 3.4 percent of GDP in developed counties. And while that might seem like a small number, it’s actually bigger than the contributions provided by utilities or agriculture.

Yet the benefits of Internet access are only experienced directly by about one third of the world’s population – approximately 5 billion people remain unconnected.

If you’re reading this, that means you are fortunate enough to be part of the privileged minority. You benefit from an infrastructure that doesn’t exist in most of the world, however connected you may feel.

But one ambitious company is looking to change all of that with what seems like a crazy idea.

Faster, Easier, Cheaper

Google Inc.’s (NASDAQ: GOOG) Google X just might be the single most innovative technological facility on earth.

This is the lab that has developed the wearable computer Google Glass and the driver-less cars that have already clocked hundreds of thousands of miles on California roads.

And now, Google X is attempting to bring Internet access to the entire world through a network of high altitude hot-air balloons. That’s right, hot-air balloons.

Poking fun at the seemingly zany nature the endeavor, Google has dubbed the undertaking Project Loon.  But the idea isn’t as crazy as it might sound – it is actually quite practical.  

Project Loon involves the deployment of hot-air balloons to altitudes of 20 thousand kilometers – right at the edge of space. The balloons are solar powered and travel throughout layers of steady wind currents in the stratosphere.

By directing the balloons up and down into different currents, Google will be able to control where they go and, consequently, which areas gain Internet access.

When balloons are within close enough proximity to each other, they are able to communicate, sending and receiving data across the sky.

Balloons close to Internet service providers on the ground receive and relay signals to the network of balloons in the sky, which then sends the data to small antennae on the ground. These antennae are connected to buildings, just like a satellite dish would be.

Google has already successfully tested the idea by providing connection speeds on par with 3G networks to a sheep farmer in a small New Zealand town. The company will continue a pilot program in the immediate area.

Each balloon can provide Internet access to an area of about 13 thousand square kilometers – twice the size of New York City.

In terms of providing a worldwide infrastructure for on-line access, Project Loon just might be the fastest, easiest, and cheapest method available.


High and Mighty

Of course, Google isn’t just doing this so you and I can sing “Kumbaya” with a New Zealand sheep farmer via Skype. The benefits of world-wide connectivity are absolutely massive for the Internet giant.

The fact is, Google isn’t an Internet service provider (at least not yet). Google is an Internet advertisement company that makes money for every click.

Advertising revenues account for as much as 90 percent of Google’s income. Google’s paid clicks increased by 20 percent in the past year, and that number is expected to rise.

Google has absolutely dominated the mobile ad industry. The company collected $4.6 billion in mobile ad revenue in 2012, accounting for more than half of the total market.

If Google is able to get Project Loon off the ground (no pun intended), it stands to increase its revenue stream greatly by expanding its customer base by up to 200 percent. Simply put, the more clickers, the more paid clicks. Project Loon could mean massive growth opportunity for Google as well any other companies based in Internet ad revenue.

Assuming it sees continued positive test results in New Zealand, Google plans to spread Project Loon to additional interested countries. And though the endeavor is in its infancy, results have been very promising so far.

Turning progress to profits,

  JS Sig

Jason Stutman

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