Where X remains to be defined after the “waters” settle (and more pertinent opinions appear – yes, it is slightly amusing that all analysts have tons of opinions now, but none predicted this move ).
Anyway. Beyond beautiful words and aspirational statements, there is always a rational and colder calculations (business and/or politics).
But, let’s start filter some explanations:
- Clarity. I believe the most important reason is that both internally and, mainly, in the relation with the investors and with the governments that start to cause them troubles, the representatives of Google needed clarity. Practically, they clearly separate the “consolidate” present from the uncertain future.
“Over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant. Our company is operating well today, but we think we can make it cleaner and more accountable”, explains Larry Page.
This way, the businesses that remain part of Google are:
- Advertising and AdTech
Separately within Alphabet, as distinct companies, there will be:
- Calico (life-extension biotech research)
- Nest (maker of the Nest Thermostat and other smart home products)
- Fiber (high-speed Internet service)
- Ventures and Capital (early and growth-stage investing)
- X lab (“moonshot” research incubator that includes projects such as self-driving cars and delivery drones) [source]
- Investors. Google can be lacking transparency (and it is) with a lot of people. With the publishers, with the media agencies, with the clients…but it cannot be a completely obscure “black box” also with the investors who want to know where are their money “spreading”
And Page is thinking at them and sends them a clear signal:
“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.”
- Governments. When you are too big and/or too good, you start to be inconvenient. With the recent announced move, Google will “seem” less monolithic and, therefore, it will have the freedom to play easier in the multiple lawsuits it has on this subject, especially in Europe. A good read on this subject is available here.
- Ambition. When you created a sensational company, it is only normal to hate limits.
(Excuse my clumsy comparison, but I just remembered involuntarily: when I launched, in 2009, Q2M I was thinking to a name to cover the new digital “alphabet”, where qwerty keyboard change a paradigm and A became Q and Z became M. A “solutions from A to Z”, said in another way. An ok name for a digital services company from the end of the world).
That is why I can imagine that, when you own the internet and want more and more, the psychologic mechanism though which you decide to choose an URL like abc.xyz is triggered on its own (to some’s fortune).
Sincerely, the ABC.XYZ domain seems to me more suited than the Alphabet brand: if not for other reason, but only 26 letters – even if “G is for Google” -, don’t seem enough to me for the ambitions of those who created maybe the most spectacular business in the modern history.
As a stop-gap conclusion (until other info appears), it is clear Brin and Page wish to play future of the internet and, maybe, even humanity’s (somewhat) free from the political pressures and from investors’ ones.
It’s therefore normal to try to separate the consolidate present from the future not always clear (but, exactly for that reason, much sexier)
PS Some funny reactions on Twitter.