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Google's restructure to Alphabet - what it means

13 Aug 2015

Google earlier this week announce it was restructuring itself, with the creation of a new parent company called Alphabet tasked to oversee the internet giant’s range of activities.

The company’s core internet, search and Android businesses will continue to operate under the Google name and will be managed by Sundar Pichai. 

Pichai previously managed a range of Google products including the Chrome browser and Android operating system. 

Google’s capital and venture businesses will be organised under their own CEOs, as will Google X, its lab responsible for new projects such as the driverless car. 

Francesco Radicati, senior analyst at Ovum, says Google’s rebranding as Alphabet spells a tighter focus for core businesses.

“While the move is primarily intended to make the company’s operations more transparent, it has implications for each of the core businesses,” Radicati says. 

“First is the core Google brand, which will retain control of Android, YouTube, search, and maps, among other businesses. Removing the moonshots and connected home activities from Google’s portfolio should enable it to focus on increasing its penetration in key markets such as India and China.”

Radicati says China is a large market for so-called “forked” versions of Android, which don’t connect to the wider universe of Google services, effectively putting the company in competition with itself.

“What’s less clear is the implication for Google’s IoT-related businesses,” Radicati says. “Projects such as Thread and Nest weren’t mentioned in CEO Larry Page’s letter announcing the restructuring. 

“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.”

Radicati says another benefit of the restructure is that less successful products won’t necessarily tarnish the main brand as severely.

“Examples include the Google+ social network, which was recently decoupled from YouTube and other Google products, and Google Glass, which has been placed under the responsibility of Tony Fadell at Nest,” Radicati explains. 

“Unsuccessful ventures won’t be associated with the Google name, while successful ones will be more easily tied into the overall brand once they’re established.”

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