What the new Alphabet and Google will look like

The current CEO of Google (NASDAQ:GOOG), Larry Page, announced on Monday that the board has decided to form a new umbrella company called Alphabet, which would be a holding company for all the existing units within Google. Alphabet, which will be looked after by Google exec Sundar Pichai, will be the parent company of all of Google’s business. With this scale-up, Larry Page and Sergey Brin will be able to focus on a broad range of business that aren’t related to the theme of Google, but can have a substantial impact on the society.

“We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google search”, he added.

The core Internet, search, and Android businesses will continue to operate under the Google name, managed by Sundar Pichai.

Google’s new chief financial officer, Ruth Porat, will hold the same title for both Google and Alphabet.

The restructuring will see the separation of Google from the group’s more speculative ventures.

All of Google shares will automatically convert to the equivalent number of Alphabet shares following the reorganization. It is clear that he will now have a bigger role to play in the company even as Page and Brin appoint other CEOs for other businesses, most notably Life Sciences and Calico. “However, these businesses, like Google X, will benefit from the tighter focus on their respective areas of interest by being separated from the search and YouTube businesses”. “[This change] simplified what Google is, which should help preserve the brand value for Google, and then they can put all the other stuff under Alphabet”. Eric Schmidt, formerly executive chairman at Google, will become executive chairman of Alphabet. While the Google co-founder has not indicated any plans to retire, he has at times struggled with a condition affecting his vocal cords that interfered with his ability to speak. We don’t yet know whether Google’s Project Fi will spin out into a separate part of Alphabet or stay under Google.

“Chrome grew like a weed, exploding from a single-digit percentage of market share to become the most widely used browser across desktops and mobile devices in the world”, it said citing StatCounter. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. “However it appears to be an effort by Page and Brin to remove themselves from daily Google operations and focus on a wider range of projects at a higher level”.

This should cause users to worry too much about the news.