It's no secret that Google (NASDAQ:GOOGL) is betting on robots. The search giant's sudden love affair with the technology is evident by reviewing its recent acquisitions. What's Google up to? While it's still difficult to articulate the company's long-term plans, a new Wall Street Journal report sheds light on some of its robotics ambitions with Foxconn, arguably Apple's most important supplier. Citing "people familiar with the matter," the Journal's Lorraine Luk says that Foxconn has been quietly working with Google since last year to bring groundbreaking robotic automation to the electronics factory.
A sneak peek?
Luk goes as far as to say that Google's plans at Foxconn mark the beginning of the search giant's "vision for robotics." The plan is to automate technology at the factory by integrating one of the technologies that "Google is acquiring." According to Luk, analysts think the partnership makes sense, saying Foxconn would serve as an excellent testing ground for Google's new technology.
The vision is big. Among the topics discussed between Google's Android chief Andy Rubin and Foxconn chairman Terry Gou is a robotics operating system that Google thinks could revolutionize manufacturing.
Of the 20 acquisitions in the past year, robotics was the most common theme. Obviously, Google is betting big on the industry's future.
The expansion to robotics isn't unlike Google. The search giant is well-known for its experimenting. For instance, Google is particularly known for its autonomous car, which has reportedly logged more than 500,000 miles. Google even has a guiding rule at the company that encourages experimentation, called the 70-20-10 rule. The rule stipulates that about 70% of the work at the company should go toward core efforts, 20% toward adjacent areas or expansion, and 10% toward experimentation.
Given Google's hefty spending on robotics, it suggests that the project has moved from the 10% category to 20%, as one of its adjacent efforts.
Is Google's robotic splurge good news for investors?
That really would depend on your thoughts of the trajectory of robotics adoption in manufacturing and among consumers in the future -- but it's difficult to argue that the category doesn't offer any upside. Bullish on robots or not, it's far too early in Google's robot story for investors to start adjusting their thoughts about Google's future now based on this report from The Wall Street Journal.
Investors should keep in mind that no matter how exciting Google's experiments are, it is primarily an online search and digital advertising company. The bulk of Google's revenue and operating profits come from advertising on Google sites and the sites in the Google network.
Even more, if there is upside to Google's robotics aspirations, it may already be priced into the stock. The company trades at a pricey 33 times earnings.