Commentary

The Alphabet Contains All Things Google

Google’s surprise restructuring yesterday — attempting to provide linear clarity to what has become an alphabet soup of enterprises and visions — was by and large cheered by analysts and commentators, as well as supported by investors in after-hours trading, with its shares up as much as 7%, Reuters reports. 

Search Marketing Daily’s Laurie Sullivan covered the breaking news here. In short, Alphabet Inc. will be a new publicly traded holding company run by Google co-founders Larry Page (CEO) and Sergey Brin (president) as well as Eric Schmidt (executive chairman) and Ruth Porat (CFO), who joined the company from Morgan Stanley in May and has been pushing for more transparency. Subsidiary Google Inc. will contain the Search, Ads, Maps, Apps, YouTube and Android businesses and be run by Sundar Pichai.  

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“What will fall outside the slimmer Google: newer, more experimental businesses such as the Internet of Things gadget maker Nest, the high-speed fiber-optic Internet project Fiber and Google's effort to extend human life with Calico,” writes Jessica Guynn for USA Today. “There will also be two financial businesses: Google Ventures, the venture capital arm, and Capital, which invests in private equity deals. Google X, which is the company's experimental laboratory, will be run separately by Brin,” Guynn reports.

“They are aware that they've got this hodgepodge of companies,” Endpoint Technologies Associates analyst Roger Kay tells a hodgepodge of Reuters reporters covering the story. “Maybe it's better to sort them out a bit and make it clearer which ones are bringing in the bacon and which ones are science projects and which ones are long-term bets.”

“Shifting from Google to Alphabet could catalyze a new wave of product development,” particularly in the robust area of health care, writesForbes contributor Dan Diamond.

“As Google argues in its ‘Ten Things’ document, the best technologies come out of an obsessive dedication to working on a single large problem, points out Farhad Manjoo in the New York Times. “But as Mr. Page has stated repeatedly, the tech industry is rapidly producing expertise he believes can be applied to dozens of other problems that affect humanity — a belief that argues for an expansive application of Google-style tech to a variety of endeavors.”

The move was also a preemptive way to keep the low-key, popular and tech-savvy Pichai within the Alphabet fold, several reports suggest. 

Born in India, Pichai, 43, got his undergraduate degree there in metallurgical engineering then did graduate work at Stanford. He joined Google in 2004 and “owes his new job to his success in making Google products easier to use and thus more popular,” write David Streitfeld and Mike Isaac for the New York Times.

“He … made a name for himself early as a product manager, working on high-profile efforts like Chrome, the company’s web browser,” they continue. “Chrome grew like a weed, exploding from a single-digit percentage of market share to become the most widely used browser across desktops and mobile devices in the world, according to StatCounter.”

He took over oversight of Android 2013 and last year “became Google's product chief, overseeing virtually all Google software products not named YouTube,” writes USA Today’s Guynn. 

“Sundar has a talent for creating products that are technically excellent yet easy to use — and he loves a big bet,” Page wrote when announcing that Pichai would lead Android, the NYT’s Streitfeld and Isaac point out. “Take Chrome, for example. In 2008, people asked whether the world really needed another browser. Today Chrome has hundreds of millions of happy users.”

But the folks on Wall Street have not been as enamored of big bets as the folks at Google, observes Russell Brandom for The Verge, and  “have raised objections over how much those experimental R&D projects are costing the company. But while Page and Brin aren't backing off those projects, they are offering a closer look at how all the numbers separate out.”

The new company can be found at the domain, abc.xyx

In explaining the choice of names for the holding company Monday, Page blogged: “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!”

To use language, think of the company born as Google on Sept. 4, 2008, as a hydra now, rather that a megalith. And amend the succinct first sentence of Truth Six to read: Alphabet is many businesses, each with its own reporting structure.

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