Google - The Green Machine?

Financial Aspect of Google’s Environmental Goals Grows - NYTimes.com

So this article that Professor Kane posted talks about Google’s foray into the world of the energy sector. The article talks about how Google has always spent millions in improving the efficiency of their data centers, but they have recently upped their involvement by investing in renewable and alternative energy sources.

At first this may look like a huge mistake for the company because energy research and production is so far away from their core business of information gathering and advertising. Google has no expertise in this field and over-extending their involvement in this sector could spell disastrous results for the company.

That being said, I think it’s an excellent idea for Google to be involved in the industry. Their core business is not in energy, but every company in the world has a responsibility to its shareholders and to itself to operate in the most efficient manner possible. This almost always means minimizing expenses. For Google, one of their largest expenses is its energy consumption, so it seems like good business practices to spend resources to find ways to minimize these costs. Suppose Google is successful in finding a way to produce renewable energy cheaper than current energy costs. Any company that could turn its largest expenses into a profit center would be well-advised to do it.

With all that in mind, Google must not jump too quickly or too far into the energy sector. It is a completely different business entirely and Google cannot stray from its core business too far. Over-extending outside of ones core competencies has been the demise of countless companies. If the energy research arm of the company begins growing and having success, Google would be best to spin this division off into its own company, separate from the search and advertising businesses, still owned under the master parent company. In this manner Google could benefit by lower energy costs without disrupting their primary businesses.