Google CEO Larry Page wrote an open letter in Google Blog to introduce Alphabet and clear everyone on the tech giant’s directions. With billions of dollars being invested into non-core operations, a massive corporate overhaul was in order and that’s how Alphabet came to life. Pichai will focus on the central business, which consists of Android smartphones software, YouTube and the celebrated search engine. Moreover, this would give all the subsidiary companies more independence, and let them easily develop their own brands.
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Valued at over $70bn, Softbank has made an annual 45% return on its internet company investments over the last ten years, largely thanks to its hugely successful investment in Chinese e-commerce firm Alibaba.
The company’s new ventures such as Calico, which focuses on longevity, and connected home products maker Nest will be managed separately.
Yesterday, Google revealed its latest and most controversial move as a company yet, as Google will no longer be Google per-se.
Another employee, Igor Markov, said: “For an hour or so, productivity dropped to zero here in Search, with engineers discussing the history of reorgs at Google and how a reorg can increase the value of a company”.
43-year-old Pichai, who expanded his initials and shortened his name after shifting to the US, began his career with Google in 2004 as a “low-key” manager and colleagues say there is no single Googler who did not like him ever.
How does Alphabet affect Google’s legal challenges?
“This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google”, Page said.
As my colleagues at the Advisory Board Company, Ben Umansky and Tom Cassels, recently explained, the goal of a holding company is to empower the individual business units and maximize their performance. As you can see below, Google, or rather Alphabet’s, stock soared 5 percent on the news. He pushed Google to go one step further and make its own browser, Chrome. And by putting all of Google’s central businesses under Sundar Pichai, one of Page’s most trusted lieutenants, the other ventures get his fuller attention.
Google said its chief financial officer, Ruth Porat, will hold the same title for both Google and Alphabet. During this first year have felt less so part of a company but more so part of a conglomerate of tech startups and initiatives that use common internal infrastructure and run by common values.
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Larry Page and Sergey Brin have been hands-off with Google’s day-to-day running for sometime, and so, in Pichai’s life, today’s announcement is simply making it official: he’s in charge. The hope is that the segmentation means more market power so that revenues don’t just disappear into the huge Google construct but can be channeled into specific segments. After leading efforts to build the company’s Chrome browser and related products, Pichai was given responsibility in 2013 for Google’s Android mobile operating system – a crucial role as the company was seeing much of its Internet business shift to mobile devices.
