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Google Inc has recently entered into a definitive agreement to acquire San Francisco-based Flutter, which is involved in the development of gesture recognition technology. Flutter software interprets gestures made by users in front of their webcams to control programs.

Flutter co-founders Mehul Nariyawala and Navneet Dalal both worked at Google after the company acquired their previous startup Like.com in 2010. Google will retain Flutter’s six-member team. Flutter makes an application for Apple’s (AAPL - Analyst Report) Mac and Microsoft’s (MSFT - Analyst Report) Windows operating systems that lets people control programs like iTunes and Quicktime through gestures captured on a webcam. In the future too, it will continue to support the applications of Apple and Microsoft.

Images captured by the Flutter app do not leave the person’s computer, nor are they saved permanently. Through an extension to the Chrome browser, it also works with Google's YouTube service, Netflix (NFLX - Analyst Report), Grooveshark and Pandora. Over a period of time, Flutter’s cutting-edge technology could be incorporated into some of Google’s technically advanced products like the Chromebook or the Google Glass system.

The acquisition is believed to be closed though the financial details have not been made public. A company of Google’s size would give Flutter all the resources to further research and develop this gesture recognition technology. In return, Google could use the technology in its future products.

Google is a market leader in online advertising and it has been trying to explore various ways to diversify its revenues and fight competition. Google continues to acquire smaller companies with specialized technology to boost its different offerings. In Feb 2013, it acquired Channel Intelligence for $125 million to boost its e-commerce business.

Earlier this year, it acquired an infrastructure startup company, Talaria Technologies, to boost its cloud offerings. Google also acquired a mobile mapping and navigation company – Waze Inc. – for about $1.1 billion.

Google recorded a profit of $3.23 billion or $9.54 a share in the second quarter of 2013, up from $2.79 billion or $8.42 a share in the year-ago period. Total revenue grew to $14.11 billion, up about 19% year over year.

The search ads and other commercial products related to web content accounted for most of Google's revenue, which is expected to approach $60 billion this year. The company has expressed its intention to increase investment in its core products in the future.

Currently, Google has a Zacks Rank #3 (Hold).

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