Google has shocked the world today by announcing the arrival of parent company Alphabet Inc, as the technology giant prepares for a major restructuring process.
Many have labelled this project a simple "rebranding" of Google, however it isn't all that simple. In its simplest form, Google and many of its side projects (such as the Smart-Home unit Nest) will now run under the name of Alphabet Inc.
The reason for this restructuring process has been made pretty clear by Google Founder, Larry Page, as the 42-year old released a statement on the almost sudden announcement.
During one of Page's recent Google blog posts, he said: "This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google. 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."
Concerns have been echoed of late regarding Google's latest movements, such as the development of drones and so on. The media will often associate the name "Google" with some of these latest projects, a product that is renowned for its search engine/web browser service.
This new structure will seemingly allow similar ventures to be run under the collective name of "Alphabet," as opposed to Google. Presumably this will give Google and many other businesses more independence to develop individual brands – instead of throwing the "Google" umbrella over all different products and services – giving people the choice whether to invest in each venture individually.
It has been reported that any shares that have been purchased within the Google brand will automatically translate to shares within Alphabet Inc.
Google announced the news via Twitter today:
Today's news brought to you by the letter G: http://t.co/3sv9rZ9Ui6
— Google (@google) August 10, 2015
Alphabet Inc. has already launched its own website, explaining the process in much more detail through an official statement.
The statement reads: "What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. 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. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.
"Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We'll also make sure we have a great CEO for each business, and we’ll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole."
We understand that senior vice president Sundar Pichai will become the new CEO of Google, as Larry Page will secure the chief executive role at Alphabet Inc.
For those that were wondering, the name "Alphabet Inc." was selected for two specific reasons according to Larry Page. He said that the name represents "the core of how we index with Google search," stating that Alpha- bet eludes to the concept of: "investment return above benchmark, which we strive to do."
