Google has announced that it is to transition into a new holding company named Alphabet, while its slimmed-down search and ads business continues as Google, as a subsidiary of Alphabet under new CEO Sundar Pichai.
Larry Page becomes CEO of Alphabet Inc, with his co-founder Sergey Brin as President. Essentially, the old Google Inc is renamed; its shares become Alphabet’s shares; its board is now Alphabet’s board; and former CEO Eric Schmidt continues as executive chairman of the board.
Under the Alphabet umbrella, however, there’s a new focus. The new Google subsidiary gets a clear purpose, free of the distractions of its founders’ diverse interests, such self-driving cars and healthcare.
And Alphabet is free to explore those interests, to speculate and research and gamble. As Larry Page explains on the Alphabet website:
Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We’ll also make sure we have a great CEO for each business, and we’ll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.
Given our interest in domains here at Blacknight, we’re amused by the new company’s choice of domain name. Apparently, Alphabet.com is unavailable, so they’ve chosen to use abc.xyz as they’re online home.
It seems an appropriate choice, especially as they want to keep the Alphabet brand in the backseat, while its subsidiaries take the limelight.
For Sergey and me this is a very exciting new chapter in the life of Google—the birth of Alphabet. We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google search! We also like that it means alpha‑bet (Alpha is investment return above benchmark), which we strive for! I should add that we are not intending for this to be a big consumer brand with related products—the whole point is that Alphabet companies should have independence and develop their own brands. – Larry Page
The markets appear to like the plan; shares were up 5% in after-hours trading, following the announcement which was made after markets closed. The new organisation will answer critics who felt that Google’s brand and effectiveness were diluted by its more fanciful projects. And it opens the way for Alphabet to become a diversified conglomerate with its fingers in many pies.
Finally (and funnily) the choice of Alphabet as a name will no doubt irritate Google’s great rival Apple, who now find themselves leapfrogged into second place – alphabetically speaking!