Google restructures its holding company Alphabet

Google has been a company that is difficult to define. It began as an Internet search engine. Later, it expanded into other tech fields such as drones and driverless cars. Soon after, it ventured into non-tech fields such as venture capital and pharmaceuticals. The company continues to defy convention by reorganizing its corporate structure and naming it Alphabet.
The decision to restructure was primarily a financial one. Many of Google’s offshoot businesses don’t make a lot of money, which has caused some investors to be scared by the prospect for dwindling returns. Alphabet gives investors stability and allows the company to continue innovating in a safe environment.
In a blog post, Larry Page, chief executive of Google wrote that “For Sergey [Brin] this is a very exciting chapter in the Google life — the birth of Alphabet.” “We liked the name Alphabet as it represents a collection letters that represent language, which is one of humanity’s most important innovations and the core of how Google search indexes.”
Alphabet, which is run by Page and Brin will become the parent entity to several companies, including Google. The Alphabet umbrella will also include Calico, a biotech company focused on longevity, and Nest, a smart-home business. Sundar Pichai will be Google’s new CEO. He was previously the senior vice president in charge for products. Google will now be focusing on Internet projects like search, maps and applications like Gmail. Alphabet will take control of the financial divisions of Google Ventures, Google Capital, and Google Ventures. Incubation projects such as Google X, which develops self-driving cars and delivery drones, will also shift under their control.
Google has proven to be a Silicon Valley giant that is ahead of the rest, as Alphabet’s creation is yet another proof. It is becoming increasingly difficult for large technology companies like Amazon or Facebook to control the expanding sprawl as they move beyond their original goals.
Amazon is an example. Amazon, which started out as an online bookstore, has grown to be one of the largest companies on the Internet. It is also known internally as the “Everything Store”. Jeff Bezos, the CEO, has expanded his offerings to include cloud computing solutions, streaming media, and original content creation. Despite having many successful ventures, Amazon has yet not made a profit. Each of its new business ideas requires capital. This may be the cost of doing business, but it can scare away investors if they don’t believe they’ll ever see significant returns.
Financial stability and technological innovation. Page and Brin created Alphabet to avoid speculation and mistrust of their financial situation. Structure Alphabet as a holding company gives investors more financial transparency. This helps to reduce fears that Google might become distracted by other business ventures and lose focus of its founding principles. Alphabet will release financial results for Google Inc. and the company as a whole in the last quarter of 2015. While investors won’t see the results of each company individually, they will be able to get a general idea of how Google’s core business is doing.
“Google’s portfolio-like approach to Alphabet allows it to remain innovative.”
Google can stay innovative by using a portfolio-like approach to managing its many business ventures. Google’s new structure allows it to give operating divisions more flexibility in making decisions and make the business operations more agile.
Page stated in his blog that “we’ve always believed that companies get comfortable doing the exact same thing over time, only making incremental changes.” “But in technology, where innovative ideas drive the next big growth areas,” Page wrote in his blog post.
Complacency or comfort can be disastrous in the technology industry, leading to the downfall of large companies, or at the very least, their downsizing. Although IBM was a huge success in creating mainframes and it lost the chance to remain dominant in the PC market to companies like Microsoft, it had great success with other technologies. Microsoft was in the smartphone market before Apple. However, it didn’t win the race to the top because it was too focused on its money-making machines Office and Windows. While all companies must worry about making money and maintaining a profit, it shouldn’t stop them from innovating and staying relevant, especially in the tech sector. Google’s founders have set out to kill two birds with Alphabet. But only time will tell if this is a successful hunt.