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The giant Google is going to reorganize.
On August 10, Google announced that it would debut under the brand name Alphabet, and the address of the company’s website would also break with convention and be changed to https://abc.xyz/.
Under the new corporate structure, Google will become Alphabet's largest wholly-owned subsidiary, with annual advertising revenue of more than $60 billion, providing funds for the development of other businesses. The rest of Alphabet's subsidiaries include numerous experimental projects and investment entities, including drone delivery, self-driving cars and health systems.
Click on Alphabet's new website, and below the capital G in white letters on a blue background is a message from Google co-founder Larry Page: "Google is not a traditional company, and we have no intention of becoming one."
"From today on, Google is responsible for making money to support the family, and other businesses are responsible for changing the world." This is how the Silicon Valley technology circle interprets Google's new move.
What is Alphabet?
The English word alphabet comes from the Vulgar Latin alphabetum, which in turn comes from Greek.
Page explained that Alphabet is a collection of language letters, and language is the most important innovation of mankind and the core of Google search index.
At the same time, the new name is also a pun on "Alpha-bet", which means that Google is willing to take risks and make huge investments in ideas that have the opportunity to outperform other stock market investments. Such investments are called "Alpha" in market terms. Page said that "we will try our best to bring returns to (investors)." Stimulated by the reorganization news, Google's stock price soared 6% to $705 per share after the market that day, and the company's market value increased by more than $28 billion.
Bloomberg believes that Google has a clearer understanding of its position. It has put itself in a more strategic position, transformed itself into a management model that controls both revenue business and the company's future direction, and handed over the company's operations to more trusted deputies. The Associated Press quoted analysts as saying that under the new umbrella company structure, it will be easier for Google to sell or acquire assets.
New leader
According to documents submitted by Google to the US Securities and Exchange Commission (SEC), Page will serve as the chief executive officer (CEO) of Alphabet, Sergey Brin, another Google co-founder, will serve as president, and Eric Schmidt will become the executive chairman of Alphabet. Sundar Pichai will serve as the chief executive officer of Google, and he was previously the senior vice president of Google products.
In the eyes of the outside world, Pichai will be the brain and spokesperson behind Google in the future. "Wall Street really likes Pichai," said an American investor.
Pichai was born in Tamil Nadu in southern India in 1972. This child from an ordinary Indian family received a bachelor's degree from the Indian Institute of Technology (IIT-Kharagpur). In 1993, he moved to the United States to study and received a master's degree in materials science and engineering from Stanford University and an MBA from the Wharton School of Business in Pennsylvania.
Just looking at his resume, you will find that Pichai is a technical person. On the Internet, he is often called "Chop Wood". The metaphor behind the joke is sharpening knives and chopping wood, just like his great contributions to Google. Google Chrome browser, Android system, Google Maps, etc., are all inseparable from his efforts.
For many Google employees, Pichai's promotion is not surprising. A former employee who wishes to remain anonymous said that in the past few years, Pichai has shown the potential to be a CEO. The former employee said: "If you understand his rise, you will naturally find that he is destined to be the CEO of Google."
Unlike other Google executives, Pichai is a low-key and quiet person. He doesn't like sports cars or descending from the sky with a parachute to participate in the Burning Man festival.
In October 2013, Pichai also invited Lei Jun, the founder of Xiaomi, to visit Google headquarters.
Google has lost many excellent executives in the past few years, and they have all gone to startups, capital companies, and even its competitor Facebook. It is said that in 2011, Pichai had an opportunity to switch to Twitter, but his wife advised him not to do so. In the end, he chose to stay at Google with a $50 million benefit package.
Google's offer came before Twitter's, and the two companies spared no expense in their fight for Pichai. It is reported that Microsoft also considered poaching Pichai as its new CEO when it was looking for Steve Ballmer's successor.
In fact, Pichai's responsibilities have been greatly expanded since October last year. He is not only an engineer for the Android system, but also responsible for the product and engineering work of Google's Internet business. Page said: "Both Sergey and I are very excited about the progress Pichai has made... We and the board of directors believe that it is time for Pichai to take the position of CEO of Google."
Buffett Structure
It is worth mentioning that Google's new corporate structure is considered similar to investor Warren Buffett's Berkshire Hathaway, which has more than 80 subsidiaries that operate relatively independently.
Page has previously hinted that he is following Warren Buffett's model. In an interview with the Financial Times last year, Page said he wanted Google to become more like Warren Buffett's Berkshire Hathaway, making bets on a range of unrelated markets.
Colin Gillis, a technology analyst at BGC Partners, said the move would allow investors to more clearly assess Google's core business while highlighting other assets behind Google's fame. "It would allow people to see the true nature and details of Google's core operations."
"Make Google a long-lasting company that makes the world a better place." In the view of some management experts, Alphabet can only succeed if each of its independent projects and companies is successful enough and can eventually be spun off. The new corporate structure creates conditions for this to happen, but it certainly cannot guarantee it.
Investors want more transparency from the company. Expenditure on research projects, including Google's self-driving cars and the "moon landing project," which have been costly and angered many investors, is expected to be made public under the new corporate structure; many details of Google's investments will be known as early as when it releases its fourth-quarter earnings report early next year.
"Overall the news is positive," said Brian Weiser, an analyst at Pivotal Research. "It provides an opportunity to increase transparency into Google's business and shows that the company is finding a balance between the interests of its founders and employees and investors."
Page pointed out that Google is "slimming down" and that companies that are "quite far from our main business Internet products" will be integrated into Alphabet. Google's health industries, such as Life Sciences and Calico, will have their own CEOs; independent companies will also include the famous Google X laboratory and drone delivery company Wing, as well as its "Internet of Things" company Nest.
In the future, Google will be responsible for search, advertising, maps, Apps, YouTube and Android systems, as well as the technical foundation for providing the above services - this means that almost all money-making businesses will be bundled together and handed over to Pichai. Currently, Google's advertising revenue accounts for 90% of its total revenue.
"Alphabet" will be registered "later this year" and the subsidiaries will begin reporting their own financials in early 2016.
According to Xinhua News Agency, starting from the fourth quarter of this year, Alphabet will become Google's listed entity, and all Google shares will be directly injected into Alphabet. All Google shares will be automatically converted into Alphabet shares and continue to be traded under the stock codes of Goog and Google.
As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity. |
