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Google 'moonshots' increasingly expensive

Sharon Gaudin | April 25, 2016
Starry-eyed projects like driverless cars, wearables and connectivity balloons carry hefty tab.

"The theory was they would keep the faster growing Google core businesses separate from the speculative businesses," said Kagan. "Google is a successful company, but that does not mean everything they touch is successful. They throw ideas against the wall. Whatever sticks they build."

He added that he doubts many of Google's moonshot efforts will end up being profitable and those that are could take years to get there.

Patrick Moorhead, an analyst with Moor Insights & Strategy, said Google is fine spending big on its Other Bets right now, but investors could start complaining.

"I'm not concerned about Alphabet missing expectations," he said. "They had 23% revenue growth in constant currency, something that most tech companies would die for... Alphabet's moonshots would only become a problem if their core business suffers for an extended period of time."

While Moorhead said he's unsure about the future success of Google's Nest investment into smart home devices, as well as medical devices, the company is smart to take a leadership role in technological advances.

"Alphabet isn't a company in crisis and people shouldn't overthink what Wall Street thinks," he added.

 

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