For a company that’s valued at close to $450 billion and posted revenues of $66 billion last year, it’s hard to imagine that Google would ever feel the need to create a new business name, but this unlikeliest of scenarios became a reality this week after it announced it was rebranding itself as Alphabet.
The creation of a new holding company will see Google remain as its largest wholly owned subsidiary. To the millions around the world who use its services every day, nothing will change. The search business, YouTube and the Android and Chrome operating systems, which accounted for nearly all of Google’s revenue last year, will all remain under the Google umbrella.
This all begs the question why the need to restructure? It’s one that can be answered by looking more closely at how Google has evolved since its birth as a search engine 16 years ago. With interests in everything from media to driverless cars, medical devices, longevity research, smart home appliances, fibre-optic cable and drone delivery, Google has ascended to become a true technology giant. Yet despite this diversification, its founders believe it is still seen as “just” a search company – something which they feel is a handicap and was a major factor in the decision to come up with a different business name for a new holding company.
It is also a move that is likely to appease investors who have long been irritated by a lack of clarity on how much Google is spending on its riskier projects. The investment and research divisions, the smart home unit Nest, and the drone arm will be run under Alphabet. By separating these from its core services under the new structure, they hope it will give them the transparency they are looking for.
In his blog post to announce the rebrand, Google founder Larry Page said it would create a simpler structure for what had become a diverse group of businesses.
“This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google,” he said.
“Our company is operating well today, but we think we can make it cleaner and more accountable. The whole point is that Alphabet companies should have independence and develop their own brands,” added Mr Page.
Regarding the choice of Alphabet as the business name for the holding company, he said it was because it represents language, which is “the core of how we index with Google search”. Even the domain name for the new site seems to emphasise this point: https://abc.xyz/. Another reason for settling on the name was due to the fact that Alpha-bet means “investment return above benchmark, which we strive to do”.
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