One of the world’s best-known tech companies, with a name no one can forget, just announced a new name for itself that’s exceptionally generic.
Google said Monday it will be owned by a new umbrella company, Alphabet.
Alphabet is meant to be a collection of companies, with Google as its largest subsidiary, wrote Larry Page, Google’s co-founder, in a blog post. Popular services and products like Maps, Android and YouTube will still operate under the Google brand, but other divisions like Internet-connected thermostat maker Nest and Ventures, the company’s investment arm, will be spun out into their own separate companies under Alphabet.
“Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related,” Page’s blog post said.
The move won’t mean much to the 3.5 billion people around the globe who run Google searches each day. But it will shake up the tech giant’s corporate structure, analysts said, allowing certain divisions like Nest to expand and operate more independently from Google’s core business, which is advertising.
“It makes a lot of sense,” said Tim Bajarin with Creative Strategies. “Google has really become many companies, not just a single company.”
In a way, Google had become “more like an investment company than a single company with multiple investments,” he added.
Both Page and fellow Google co-founder Sergey Brin will serve as key leaders in Alphabet. Page will be Alphabet’s CEO and Brin its president. Google’s new CEO will be Sundar Pichai, currently a senior vice president overseeing products. Google Executive Chairman Eric Schmidt will now be executive chairman of Alphabet. Ruth Porat, the longtime Wall Street executive who recently joined Google, will be chief financial officer for both Google and Alphabet.
Other former Google divisions that will become separate Alphabet companies include the biotech business Calico; Sidewalk, a business that aims to use technology to improve city infrastructure; and X lab, which oversees futuristic projects like drone delivery.
The Alphabet companies will now have more freedom to make larger acquisitions without having to justify how they relate to Google’s core business. For example, Nest could become more aggressive in expanding its reach in the world of Internet-connected devices without being forced to explain how that relates to the core business strategy of Google, Bajarin said.
The restructuring may also help keep talented employees at Google when they want bigger titles, said Rob Enderle of the advisory services firm Enderle Group. Some former Google employees have landed in big jobs at other Silicon Valley tech firms. For example, Marissa Mayer, a former vice president at Google, left the tech giant to become CEO of Yahoo.
“If you want to retain people and not have them go off and do startups, this structure addresses that,” Enderle said.
Page said the name Alphabet was chosen because it represents language, an important part of Google search. It also means “alpha-bet” — “alpha is investment return above benchmark,” Page wrote in a blog post. Alphabet Inc. will replace Google’s name as a publicly traded company; its website is https://abc.xyz. Its stock symbol will remain GOOG and GOOGL on the Nasdaq.
“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,” Page wrote.
John Simpson, Consumer Watchdog’s privacy project director, said the shift won’t mean much for average users. “It’s easy as ABC — call us Alphabet, call us Google, it really doesn’t matter — they’re still the Internet giant; they’re still going to be doing what they’ve been doing,” he said.
Dossiers of data
And whether it’s Google or Alphabet, the company will still be grabbing your data. “Google has services that are useful to people, and many people like them, but often don’t understand the price they pay in terms of the personal information they turn over — Google amasses all kinds of digital dossiers about you,” Simpson said.
Although most analysts called the name Alphabet “generic,” there are some perks to changing the parent company to a different name from Google — albeit one that may be too commonplace to trademark.
Ira Kalb, an assistant professor of clinical marketing at USC’s Marshall School of Business, said Alphabet is an interesting name because there are 26 letters — and you can also have a slogan that says, “We do everything from A to Z.”
Having another name can give corporations more leeway because “when you mess up in one area, if you have a separate corporate name it’s not necessarily going to hurt other areas,” Kalb said.
Larry Page (CEO)
Sergey Brin (President)
Eric Schmidt (Executive chairman)
David Drummond (working with Page and Brin on managing investments in portfolio companies)
Ruth Porat (CFO of Alphabet and Google Inc.)
Some Alphabet companies include: Google, Nest, Calico, Sidewalk, X lab, Capital and Ventures