For keen watchers of the tech giant Google, the announcement of a new company to replace Google did not come as a surprise. The surprise was in the name chosen to replace Google.
On the 3rd of August, Larry Page, who with Sergey Brin are the founders and brains behind the rise of Google, released a statement which had this interesting bombshell as part of the statement, ‘So we are now creating a new company called Alphabet. I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as President.
And just like that a new global tech giant was created. The initial confusion surrounding the birth of Alphabet centered almost exclusively around what is to become of Google. So it became imperative, for the consumers and developers, to clarify this and many other questions.
First of, even though Alphabet replaced Google Inc. as the quoted company in stock markets all over the world, it is just a parent company that now includes Google as the biggest single entity in the Alphabet Inc. portfolio. In that respect a new head had to be appointed for Google, and this went to Sundar Pichai who was until now was Page’s deputy at Google. So for Pichai, this constitutes a seamless transfer.
This restructuring should on paper allow Google and all the other brands in the company to focused more on developing dynamic portfolios with each having a dedicated CEO. In the heat generated by the creation of the new parent company, the public somehow forgot the old Google contained other brands like YouTube, Android os, smartphones and project Calico with its offshoots Google X and Nest, the home device manufacturer it acquired last year.
For Page and Brin, the change is part of a long gradual process whose ultimate aim was to free them from the day to day running of the company and allow them to focus on the bigger picture. This bigger picture is of course the company’s future in the face of stiffer competition from other tech giants like Apple and Microsoft.
But the overriding question now for the company is, what happens to the new company Alphabet now that it is effectively open to share holders scrutiny? As Google, Page and his team were able to focus on anything they believed was in the long term interest of the company without explaining themselves to external parties. For instance, many of Google’s projects are initiated without an eye for profits but with the long term view; with future benefits that comes from million of people using their free products. But would investors who are more interested in immediate profits allow a division of Alphabet to keep guzzling funds with nothing to show for it? The fact is, financial investors don’t care about the uncertain future.
This is where Page’s skills as a good boardroom negotiator would be put to full use. Either that or we would see the gradual wind down of many unprofitable aspects of the former Google Inc. Which is going to be a shame because those developers and geeks are the closest thing the tech world has to visionaries.
Now that the dust has settled, and the new CEOs are getting used to their new roles as subsidiaries of Alphabet inc., we hope that Wall Street and other financial markets will fall in love with the new company as it did with Google.