Just six months after adding Chronicle to Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) growing stable of subsidiaries, two more are ready to become independent businesses. Loon and Wing will be joining the holding company's Other Bets segment, according to Alphabet's captain of moonshots (yes, that's his real job title), Astro Teller (yes, that's his real name).
Loon was originally thought up by Google as a way to deliver internet to rural areas using balloons. Wing is developing an innovative new autonomous drone delivery system to transport goods.
Not so loony anymore
While Project Loon initially sounded rather loony, the company is clearly onto something. Loon essentially raises cellular antennas that are typically mounted on cell towers, expanding their range. The balloons are roughly the size of a tennis court and are designed to withstand extreme atmospheric conditions.
After Puerto Rico was hit by Hurricane Maria last year, Loon partnered with wireless carriers to help provide internet connectivity, assisting in the recovery efforts. Following a flood in Peru a few months before Hurricane Maria, Loon similarly stepped up to help provide connectivity.
Just a week ago, the country of Kenya said it was in discussions with Loon to deploy internet balloons in order to connect those in rural areas, according to Reuters. Kenya's information, communication, and technology minister, Joe Mucheru, said, "The Loon team are still working out contracts and hopefully once that is done, we can be able to see almost every part of the country covered."
Loon has a very real opportunity to essentially supplement and/or compete with the existing cell tower industry.
Many companies have been exploring the idea of autonomous drone delivery in recent years, most notably including Amazon.com. Unlike internet balloons, autonomous drone delivery is not a far-fetched idea that seems taken out of science fiction, but rather a natural evolution in the potential use cases for drones.
There will be no shortage of business opportunities for autonomous drone delivery, as the technology has the potential to dramatically reduce costs and greenhouse gas emissions while improving delivery speed. Wing is also developing an unmanned-traffic management (UTM) platform to help handle the inevitable issue of air traffic congestion. The platform can manage and coordinate complex flight paths of many drones while also monitoring aircraft flights, according to Wing.
Joining Other Bets
Like other Alphabet subsidiaries, Loon and Wing will both operate independently under Alphabet's corporate umbrella and be free to make their own operational decisions. Alphabet is naming Alastair Westgarth as the CEO of Loon, with James Ryan Burgess becoming the CEO of Wing.
With Nest recently moving out of Other Bets and being reintegrated into Google (a process that entailed disclosing Nest's financials for the first time), the Other Bets segment just got a whole lot smaller, generating just $150 million in revenue for an operating loss of $571 million in the first quarter.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and AMZN. The Motley Fool has a disclosure policy.