Boston Dynamics, Nest and DeepMind. In the past month, Google has gone on yet another acquisition binge, spending at least $4 billion on a trio of startups that seem only loosely connected — robotics, home automation and artificial intelligence, respectively. Is there a central strategy, and what does it mean to the future of Google, the Internet of Things and Customer Experience?

The Answer is Yes

Based on a pattern of deals and feedback from leading experts, it appears Google believes the future is heavily connected to data gathering, machine learning and automation, which all of these companies have in common.

"In a broader pattern, if Google is focusing on artificial intelligence (AI) and machine learning, how is this kind of semantic understanding going to help us make decisions faster and do our jobs, " said David Schubmehl, a research director with International Data Corp. (IDC). "We're still a ways away from (real AI). It's more about putting 10 to 15 connections together to help me handle a thinking process and make decisions faster."

Google's dealmaking has traditionally been prolific and wide-ranging. It has bought hundreds of companies in the past four years — averaging almost 50 per year. But the last three deals are emblematic of what Google likes and may provide a good vision of what consumer-facing technology will look like in a number of years. The sums paid were not small. Google paid $3.2 billion for Nest and $400 million for DeepMind (it didn't release the cost of Boston Dynamics).

"They're being quite aggressive. They can afford it with the cash and stock they have. It's smart, I believe, using their assets to keep up the influx of innovation into the company," said Mike Volpi, former head of Cisco Systems's M&A strategy and now a venture capitalist with Index Ventures.

What Google Likes

Let's follow the patterns. Here are the main things Google appears to like in its deals:

Smart People: Google no doubt makes deals where really smart people are involved. It clearly likes Nest Founder and CEO Tony Fadell, a former Apple design guru credited with designing the iPod. DeepMind was founded by neuroscientist and chess champion Demis Hassabis, who many consider to be a genius

Data: Google likes to buy things that have the capability to either collect or analyze data. Nest, for example, is a home-automation startup that produces a sophisticated thermostat and smoke detector, giving Google to access to a million or more homes. This gives it access to a larger swath of consumer data, much as when it bought Motorola Mobility for $12.5 billion in 2011 it expanded its data connections with millions of mobile handsets.

Analytics and AI: Once you have the data, you need to do something with it. This is Google's strength, going all the way back to its first product, the search engine. If you take the data, analyze it, and process it, and you can provide value to people. That's Google's core function in a nutshell. It wants to take this further by introducing machine learning and eventual artificial intelligence (AI), which is basically an outgrowth of the functionality it provides in search.

Ambitions in AI

"They seem to have longer-term ambitions [in AI]," said Pedro Domingos, a professor of Computer Science at the University of Washington. " If you look at the kinds of things they have been buying and hiring, a lot of it looks like they are trying to solve AI. And, to provide search, at the end of the day,is to solve AI."

Critics have pointed out that despite all this activity, Google is still an advertising company and that many of"science experiments," such as the famous driverless car program, yield little to no business benefit. In making deals, Google rarely focuses on revenue or profits, though there are some specific cases, usually in advertising, such as its acquisition of DoubleClick for $3 billion in 2007.

James Whittaker, a technology executive and ex-Google employee, left Google and last year wrote a blog post lambasting Google's drift away from innovation and toward advertising, saying the company is now corrupted by its thirst to consume personal information:

"The Google I was passionate about was a technology company that empowered its employees to innovate," wrote Whittaker. "The Google I left was an advertising company with a single corporate-mandated focus … Perhaps Google is right. Perhaps the future lies in learning as much about people’s personal lives as possible."

It's true that from a practical angle, Google is still mostly an advertising company, where it still garners more than 90 percent of its revenue. Google probably didn't make any of these recent deals with near-term profit in mind. This carefree attitude toward business often leaves some smart people perplexed by the acquisitions.

Learning Opportunities

Gasee Questions Nest

Former entrepreneur, Apple executive and VC Jean-Louis Gasee wrote a blog post called "Puzzling Over Google's Nest Acquisition," which poked a lot of holes in the idea of the recent $3.2 billion Nest acquisition. He points out that as a consumer business, Nest appeared unattractive, with narrow margins and manufacturing "scaling" challenges singled out by Nest Founder and CEO Tony Fadell himself.

Gasee pointed out other possible reasons for the deal, including Fadell's design leadership and the company's patent portfolio. But overall, he had a hard time justifying the price tag and had many questions about where Google is going.

"This leaves us with the usual questions about Google’s real business model. So far, it’s even simpler than Apple’s: Advertising produces 115 percent or more of Google’s profits. Everything else brings the number back down to 100 percent. Advertising is the only money machine. All other activities are cost centers. Google’s hope is that one of these cost centers will turn into a new money machine of a magnitude comparable to its advertising quasi-monopoly."

An Angle Toward Automation

Kerry Rice, a financial analyst with Needham, points out that it's hard to read the business benefit Google's M&A deals, because many of them are not done for revenue and end up as technology or Intellectual Property (IP) that is folded into the company. But he thinks much of it is technology driven, acquiring pieces of a puzzle that might fit together later.

"Maybe the M&A strategy is to find things to have multiple applications rather than a deal that will have a huge, transformative impact on one thing," he said. "Whether it's driverless cars or robotics, they can go in a lot of different directions." He points out that Nest has implications for alternative energy, in which Google is involved; Internet of Things (IoT), where it's been active; and design, with Nest CEO Tony Fadell having input on Google's devices.

The other two recent deals — Boston Dynamics and DeepMind — point more in the direction of robotics and AI. Clearly AI and robotics has become more of a focus for Google lately. In 2012 it hired futurist, inventor, and entrepreneur Ray Kurzweil, author of the seminal book on artificial intelligence, "The Age of Spiritual Machines: When Computers Exceed Human Intelligence." He is the father of the idea of the "singularity," or when society can be turned over to the robots. He is now Google's Engineering director.

Google has also acquired at least seven robotics companies in the last year, including Meka, which makes robots that look a bit like people, and Industrial Perception, a producer of factor and business robots.

So, back to the themes: Smart people, big data, AI and automation. Google obviously thinks something's up with all of this stuff. It is interesting in collecting data, analyzing and applying machine learning to it, and then bringing consumers a more automated future. Maybe Google wants to be the company that brings you the Jetsons.

One thing that can be counted on: Google probably won't slow down its thirst to scarf up companies with automation and machine-learning technology. At last count, it has about $60 billion in cash and short-term investments on the balance sheet, and its still piling it up as it generates about $12 billion in cash flow, quarterly. Google's so rich, it can't afford not to do the deals.

Title image by Oliver Sved (Shutterstock)