alphabet's next billion dollar business

Alphabet is using its dominance in the search and advertising spaces and its massive size  to identify the next billion-dollar business. From healthcare to smart cities to banking, using the CBInsights* Report we look at the twelve industries the tech giant is targeting.

Alphabet is edging its way into industries adjacent to the ones where it has already found success and entering new spaces entirely to find opportunities for disruption. Evidence of Alphabet’s efforts is already showing up in several major industries.

In this extract from the CBInsights report, we examine how Alphabet and its subsidiaries are currently working to disrupt twelve major industries, from electronics to healthcare to transportation to banking.

1. Consumer Electronics ...
Alphabet’s consumer electronics strategy is being driven by its work in artificial intelligence. Google is building some of its own hardware under the Made by Google line,  including the Pixel smartphone, the Chromebook, and the Google Home but the company is doing more important work on hardware-agnostic software products like Google Assistant.

Android is the foundation of Google’s work in electronics. It has been the best-selling mobile OS every year since 2011, and today has about a 72% market share in the smartphone market.

Google has consistently invested in developing Wear OS to compete with incumbents such as the Apple Watch. It deepened its presence in the wearables space when it acquired Fitbit in January 2021 for $2.2 billion.

Online TV. Google’s expansion of the Android operating system also included the Android TV. Android TV succeeded the original Google TV, which was discontinued in June 2014.

Google’s growing range of smart-home products has seen considerable investment and remains one of Alphabet’s strongest potential growth opportunities, reflecting heightened consumer interest in smart-home products.

Since acquiring Nest Labs for $3.2B in 2014, Google has developed smart-home products that encompass remote monitoring and climate control via smart thermostats, as well as home security devices like cameras and intruder detection systems.

Google confirmed its plans for a new range of Nest-branded security cameras in January 2021. The company also plans to further integrate its smart-home services with its fitness tracking products by adding sleep tracking functionality to its Nest Hub devices.

Virtual assistants. Since launch, Google Assistant has been rated far more capable and useful than its main competitors, Microsoft’s Cortana and Apple’s Siri.

2. Healthcare ...
Alphabet is focusing on partnerships and leveraging machine learning to tackle a wide range of healthcare issues. Alphabet is partnering with major institutions and working on a wide range of solutions to different health problems. DeepMind, AI, Machine Learning and Robotics feature in the plan.

Alphabet has run several AI-focused healthcare projects through its DeepMind subsidiary since 2016, including tests to better diagnose breast cancer and eye disease. Calico, a life sciences company that became an Alphabet subsidiary in 2015 and remains one of Alphabet’s closest-guarded secrets, is focusing on how AI can help extend the human lifespan and slow down the ageing process.

Through Verily, Alphabet is working on applying technology to a broad array of life sciences issues, with separate projects dedicated to studying diabetes, cancer, wearables, robotic surgery, population health, and pharmaceuticals.

3. Next Gen Computing ...
Alphabet is prioritizing quantum computing technology. Google was one of the first massively successful tech companies built entirely on software, but that hasn’t stopped Alphabet from pursuing hardware interests aligned with its long-term ambitions.

Alphabet’s primary interest in this space revolves around the unique hardware demands of emerging technologies like artificial intelligence and quantum computing. Alphabet isn’t interested in competing with today’s OEMs to own the hardware market, it’s interested in building the hardware platform for these future technologies.

4. Transportation ...
Machine learning and AI are fueling Waymo’s dominance in self-driving tech, though commercialisation is likely still far off. Alphabet’s Waymo has advanced ahead of autonomous driving projects at Apple, Amazon, and Microsoft by a significant margin, and is broadly considered to be the industry leader in autonomous driving technology. Alphabet has leveraged its expertise in machine learning and AI hardware, as well as its massive scale and war chest, to fuel Waymo’s progress.

5. Energy ...
Alphabet subsidiaries are looking to renewables to make the conglomerate more energy efficient and extend solutions to the public. The company has been carbon neutral since 2007.

Alphabet is currently working on solving its intractable energy consumption challenges — largely driven by Google’s data centers — and then taking what it learns to offer household solutions that could disrupt the renewable energy industry in multiple ways.

Alphabet includes a few energy-focused companies under its umbrella, including Dandelion which offers geothermal energy services.

6. Smart Cities ...
Sidewalk Labs aims to achieve dominance in the space by offering a comprehensive smart city package. Sidewalk Labs, began in 2015 with the mandate to come up with new kinds of technologies to improve urban life. In the six years since, Sidewalk Labs has become a kind of one-stop shop vendor for smart city technology.

Sidewalk Labs is positioning itself to be the dominant smart city vendor in two big ways: by leveraging Alphabet’s resources to make it financially feasible for towns and cities to work with the company, and by using other Alphabet companies to make its smart city offering more comprehensive.

7. Travel ...
Google is leveraging its search capabilities in an attempt to disrupt online travel agencies. Some of the most disruptive technology companies of the early 2000s were the online travel agencies (OTAs). Companies like Expedia and Priceline allowed people to bypass traditional travel agents, searching for and booking their own flights, hotels, cruises and rental cars more conveniently and more cheaply than before.

The supremacy of OTAs is largely built on the ability to search for your own travel accommodations; today, that’s being challenged by the company that pioneered internet search.

Alphabet is angling to disrupt OTAs by building a better search experience, asserting its dominance of the search space in general, and getting its results in front of consumers before companies like Expedia and Priceline (now Bookings Holdings) can.

8. Gaming ...
Alphabet wants to change the way people game with Stadia, but the platform hasn’t lived up to its hype thus far. With Stadia, the company is planning one of its biggest entertainment projects yet: leveraging Google’s infrastructural might and its acquisition of YouTube to reinvent the way people game.

From bets on VR and streaming to building its own video game console, few tech companies are as intent on bending the future of entertainment towards its own vision as Alphabet.

Alphabet has been seriously investing in gaming for a while. In 2015, it launched YouTube Gaming, a version of YouTube (and a Twitch competitor) specifically catered to video game content creators and their viewers.

YouTube currently has hundreds of thousands quarterly active gaming streamers. Over the 12 months leading up to September 2018, more than 50B hours of content in total were filmed. Those numbers make YouTube the second-most popular game streaming service behind Twitch.

9. Media ...
YouTube TV is battling with Amazon Prime and Hulu to win over cord-cutters.
Since Google acquired YouTube in 2006, the streaming site has become the most popular destination for online video. Around 5B videos are reportedly watched on the platform every day.

With its live TV and DVR service YouTube TV, Alphabet is trying to leverage YouTube’s dominance in general streaming media and the power of its brand to compete with traditional broadcast TV.

10. Banking ...
Google is working to become the gatekeeper between its users and bank services.
Despite Google’s recent announcement that it would be launching checking accounts in 2020, its goal in banking appears to be less about becoming a bank and more about acting as the mediator between its millions of users and the services offered by traditional banks.

By becoming the conduit through which banks can offer services, Google stands ready to collect a vast amount of valuable data on what services are useful and why. It could then use that data to aggregate demand, similar to the way it approaches hotels and travel searching.

Google’s biggest fintech product so far has been Google Pay, formerly Android Pay, which merged with Google Wallet in January 2018. Google Pay was active in 28 countries by the end of 2018, and processed 1B transactions in its first year. Google Pay is now available in 40 countries.

11. Satellite imaging ...
Alphabet is moving beyond Maps to offer superior imaging of every inch of the planet’s surface. It’s been 20 years since Google first launched Google Earth. Satellite imaging and geographic information system (GIS) technologies have come a long way during the past 2 decades, and today, Alphabet is applying its vast resources to provide clearer images of our world from space.

Alphabet has made significant investments in satellite imaging startups in recent years via its GV investment arm. These investments represent major growth opportunities for Alphabet, particularly as the commercial space travel market matures and barriers to entry become lower.

GV acquired a stake in Orbital Insight in 2016. Founded by former Google Books director James Crawford in 2013, Orbital Insight provides imaging services to private entities and governments. Its technology has been used to identify patterns in everything from the health of corn crops to how busy the back-to-school shopping season is likely to be based on vehicle movements in store parking lots.

12. Defense ...
Alphabet’s sophisticated AI technologies are powerfully attractive to governments and defense agencies worldwide. As one of the world’s largest technology companies, it’s hardly surprising that Google’s work has been of great interest to the national security and defense communities. Although they have been contentious, projects for the Department of Defense and other government agencies around the world have vast commercial potential for Alphabet.

One of Google’s first major moves in the defense space came in 2018 when its AI technology was reportedly used by the Department of Defense to improve the accuracy of unmanned aerial vehicle (UAV) strikes. Specifically, Google’s machine vision technology was used to help analysts make sense of imaging data gathered by the US military’s fleet of more than 1,100 drones.

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* Alphabet’s Next Billion-Dollar Business: 12 Industries To Watch
  CBInsights Research Report June 2021
https://www.cbinsights.com/research/report/industries-disruption-alphabet/