Google's parent company is shutting down power-generating kite subsidiary Makani: 'The road to commercialization is longer and riskier than hoped' (GOOG, GOOGL)

Makani kite system

Alphabet is shutting down Makani, its power-generating kite subsidiary, a blog post from Makani CEO Fort Felker announced Tuesday.
"This doesn't mean the end of the road for the technology Makani developed, but it does mean that Makani will no longer be an Alphabet company," Felker said.
The company was acquired by Google in 2013, and graduated into an independent entity under the Alphabet corporate umbrella in 2019.
However, the business metrics didn't seem to be with it. "The road to commercial viability is a much longer and riskier road than we'd hoped," Felker said.
A small portion of Makani's employees will stay on for a few months to "package what they learned," while the rest of the team will be moving on, Alphabet says. Felker says that Shell is in talks to make use of Makani's technology.
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Google's parent company Alphabet is shutting down Makani, the company that pitched "energy kites" as an alternative to wind turbines, Makani CEO Fort Felker announced in a blog post Tuesday.

Makani first joined Google in 2013 following an acquisition, and was put under the auspices of Google X, its famed "moonshot factory." In 2019, Makani was spun off into an independent company under the Alphabet umbrella, categorized as one of the company's "Other Bets." That same year, Makani and Shell demonstrated the system running at scale, with its kites flying from a platform off the coast of Norway.

However, in the blog post, Felker said that Alphabet decided to cut ties with Makani because of uncertainties about the roadmap of the business itself.

"Despite strong technical progress, the road to commercialization is longer and riskier than hoped, so from today Makani's time at Alphabet is coming to an end," Felker wrote.

Astro Teller, the head of X — formerly known as Google X — told Business Insider in a statement that following the change, most Makani employees will be moving on, but "a small team will stay on for a few months to package up what they've learned so others can build on it." He also echoed Felker's comments on Makani's path to becoming a sustainable business.

"Over the last decade we've developed a range of frameworks and metrics to help us work out if we're on the right path," Teller said in the statement. "When these signals tell us that the risks will outweigh the potential upsides, we remain committed to walking away and redirecting resources to more promising areas."

However, Felker said that this may not be a complete dead-end for Makani.

"This doesn't mean the end of the road for the technology Makani developed, but it does mean that Makani will no longer be an Alphabet company. Shell is exploring options to continue developing Makani's technology," Felker wrote. Shell did not immediately respond to Business Insider's request for comment.

Makani's departure now marks yet another shift in Alphabet's ecosystem, which has been undergoing significant changes over the past two years. Google has reabsorbed promising "Other Bets" like cybersecurity subsidiaries Chronicle and Jigsaw, and smart-home device maker Nest.

While Google has absorbed promising Other Bets like Jigsaw, smart home device company Nest, and cybersecurity firm Chronicle, the rest of Alphabet's Other Bets have been bleeding cash. Other Bets, which includes self-driving car company Waymo, reported $4.8 billion in losses in the last three months of 2018.

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