Google made a surprise announcement August 10 that it was to create a new holding company, named Alphabet, in a bid to simplify and streamline its operations. The shake-up, which caught many analysts unaware, means that Google can more effectively preside over the catalogue of companies it has acquired over the years.
The shake-up, which caught many analysts unaware, means that Google can more effectively preside over the catalogue of companies it has acquired over the years
“We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant,” wrote Larry Page in a company blog post.
The new parent company, which will go under the address https://abc.xyz, is to be led by Page, alongside the company’s co-founder Sergey Brin, whereas the core search engine business will go to the 43-year old up-and-coming senior vice-president of product Sundar Pichai. “This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead,” wrote Page. “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.”
The holding company will preside over acquisitions that diverge somewhat from the company’s core focus, including, perhaps most notably, healthcare though extending also to smart home and drone technology. Google, meanwhile, will preside over many of the company’s better-known apps, not least YouTube and Android.
This new structure means that investors will be able to more easily digest the company’s spending and strategic decisions, and the initial response to the shake-up has been positive. The new Alphabet enterprise will replace Google as the company’s publically traded entity, that’s according to Page, and all shares will be converted automatically.