Google's restructuring will let new ventures shine

'Otherwise, it's just a bunch of science projects,' one analyst says

A Google drone flies through the sky.

A Google drone flies through the sky.

Google may be best known for its ubiquitous search engine, but it has long been associated with seemingly whimsical ventures into areas as diverse as self-driving cars, drones and human aging. On Monday, it took a step toward making those "side" ventures more legitimate -- and more transparent.

Thus Alphabet was born, catapulting Google's top executives into new roles with new titles. Cofounders Sergey Brin and Larry Page are now president and CEO of the Alphabet holding company, respectively, while Sundar Pichai, formerly a vice president in charge of Android, Chrome and Google apps, will become Google's CEO.

It's a move that allows Google's well-established search business to continue along unabated in the competent hands of Pichai while those diverse side ventures -- the exciting ones, some might say -- get a more prominent and clear role in the hands of Brin and Page, even as the entrepreneurial cofounders maintain the freedom to step back into Google as needed.

"The core Google search business has been a cash cow forever," said Bob O'Donnell, president, founder and chief analyst at Technalysis Research. "It has essentially justified all these explorations into other weird stuff."

That relationship worked fine for a while, but "there's been an increasing sense of, 'Hey, you need to get serious about these other businesses if you're really going to do them,'" O'Donnell said. "Otherwise, it's just a bunch of science projects."

Perhaps most notably, the new restructuring will force Alphabet to break out revenues for its many different pieces, he added.

"Lack of transparency has actually been a longstanding issue among financial analysts who follow Google," said Charles King, president and principal analyst with Pund-IT, via email. "The Alphabet structure seems designed to specifically address those complaints."

In fact, a big part of the motivation behind the move appears to be to restructure Google in a way that makes it more clearly understandable to outsiders, particularly investors and financial analysts.

"At one level, Google is a hugely successful business that largely dominates online and mobile advertising," said King. "But headline news tends to focus attention on the less conventional sides of the business, including those areas where Google regularly makes -- and often misses -- big bets."

In reality, those efforts may have just a minuscule effort on the business overall, but the fact remains that when they don't take off, they can be "something of a drag on public perception of Google and its share value," King said.

The new structure should allow more agility by giving each separate venture the ability to take risks while remaining "at arm's length" from the corporate structure, noted Rob Enderle, principal analyst with Enderle Group, via email.

At the same time, the move could limit liability and government reach, Enderle said, such as when Google is faced with fines over its search practices.

"With most of the anticipated fines coming in at search, this could allow Google to bankrupt the search business or argue for a smaller fine tied to that now-smaller business," he explained.

It could also contain requests for information to the specific business that retains it, and not the entire firm, he added.

In addition, "they could incorporate some of the businesses in regions with better tax and regulatory structures, though pulling that off might be more difficult than it would be worth," Enderle said.

Last but not least, the move will likely help with executive retention, Enderle said.

"Because there are far more top executive spots to fill, fewer will have to leave Google to become CEOs," he said. "They now can leave acquisitions largely intact like Dell does, so they dont bleed these executives after an acquisition."

Join the PC World newsletter!

Error: Please check your email address.

Tags business issuesGoogleinternetsearch enginesrestructuring

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Katherine Noyes

IDG News Service
Show Comments

Cool Tech

Crucial Ballistix Elite 32GB Kit (4 x 8GB) DDR4-3000 UDIMM

Learn more >

Gadgets & Things

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Family Friendly

Lexar® JumpDrive® S57 USB 3.0 flash drive 

Learn more >

Stocking Stuffer

Plox Star Wars Death Star Levitating Bluetooth Speaker

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest News Articles


GGG Evaluation Team

Kathy Cassidy


First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni


For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell


The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi


The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott


My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?