It’s wrong to say that Google is solely an Internet search company given that it has so many diverse businesses, however, the Internet search arm is one among the few that actually earns money.
Google has announced that it is reorganizing under a new name – Alphabet – in order to separate its money making businesses from the moonshot ones.
Under the new structure, Lary Page will be the CEO of Alphabet while co-founder Sergey Brin will take up the position of President. Alphabet will house several companies under it, the largest of which will be Google.
Companies such as smart home device maker Nest and Calico that’s developing smart contact lenses to determine blood sugar level will now be part of Alphabet’s portfolio. These companies were previously under Google.
Sergey and I are seriously in the business of starting new things. Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure. [Larry Page]
While Google entered the business with a singular business purpose, it has diversified to the extent that investors might not see eye-to-eye with everything the company is doing.
Amazon too which started off as a book seller for the first time this year revealed financial results of its cloud services business. In short, they’re diversifying, but Google has gone one step further by formalizing its portfolio.
Sundar Pichai who headed product and engineering for the entire Internet business has been made CEO of Google, albeit a slightly slimmed down one.
Lary Page said that his core focus at Alphabet would be to devote time, allocate resources and make bigger bets on innovative technology, something that has spooked investors at Wall Street who claimed that Google had got distracted from its core search and advertising business.
Financial transparency is another big reason for the existence of Alhphabet. It will break out financial results for Google Inc as well as the overall company. Financial results of the rest of the portfolio companies will not be disclosed, but investors will get a better sense of how well the core business is performing.
Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights.