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Google’s Alphabet pivot shows danger of having that one great product

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As far as brands go, Google is about as strong as they come. Not only has it become synonymous with the rise of the internet and the way in which we go about our lives, but it has actually made it into the Oxford English Dictionary as a word describing how we search for something online.

As the brainchild of Larry Page and Sergey Brin, the business has gone from a raw tool for bringing some sense to the increasingly cluttered world wide web to a collection of businesses, projects and moonshots spanning a dizzying array of industries.

Google has become famous for investing heavily in ground-breaking technologies and experiments which could have a positive impact on society and the future, rather than putting cash in the till. 

For me, the best example of this was when Google senior vice president Alan Eustace broke the world record for the highest altitude jump, blowing out of the water the one set by Red Bull and Felix Baumgartner two years earlier. Whereas Baumgartner’s effort was characterised by the traditional razzmatazz you’d associate with a Red Bull stunt, nobody knew of Eustace’s stunt until after he’d done it. It epitomises its desire to push the envelope, not to get column inches but just to prove what can be done.

The problem comes from the fact that Google’s underlying search engine and advertising business success has effectively bankrolled these activities.

Away from those undoubtedly market-leading services, Google hasn’t really managed to replicate success. Its range of Chromebooks never really took off while the company’s driverless cars seem like they’ve been in beta mode for years.

Now, it seems, the powers that be want Google’s web services to be able to stand as a success on their own. Alphabet will now serve as a parent company, an umbrella covering all of Google’s global endeavours.

Aleksi Aaltonen, assistant professor at Warwick Business School, summed it up pretty well when he said: “Innumerable acquisitions made by the company over the years and its bold new industries have so far failed to create commercial success on the scale of its search advertising business.

“Google is commercially still a one-trick pony, whereas, for instance, Apple has brought iPod, iPhone and iPad to the market since Google launched its search engine.”

Increased investor pressure should bring about a bit more short-term thinking and expectations when it comes to projects like those hidden away at Google X, and maybe make its founders and executive management think long and hard about what will be part of the technology behemoth in 20 years time.

Whether you agree with Aaltonen’s declaration that Google is commercially a one-trick pony or not, the business has now effectively put pressure on itself to prove other ventures can be just as lucrative. Eventually, Google will have its own share price – demonstrating the pure performance of web services. We will then be able to see how Alphabet is doing as a combined force.

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There’s not doubt Brin and Page do not want to go down in history for simply creating a lucrative online advertising platform. Like fellow trailblazer Elon Musk, they instead want to be known for being at the helm of unprecedented disruption – making the world a better place and providing us with technologies we didn’t even know were essential.

That the reigns of Google have been handed over to long-serving lieutenant Sundar Pichai is even greater evidence that Page and Brin are distancing them from the company’s traditional roots and fighting the history book’s desire to label them as creators of one great product.

In true Google fashion, nobody had any idea this was about to happen. The business has made a habit of surprising us and staying one step ahead of the curve. This is undoubtedly one of its most risky corporate decisions ever made – but then it wouldn’t be Google without that perverse nature.

The markets responded well to the news, pushing its share price up by five per cent. It will be a case of watch this space to see whether that continues. What is concrete is that Page and Brin are taking the fight to the likes of Facebook, Amazon, Uber, Apple and Netflix. This could be the latest salvo in a fascinating battle to reach the top.

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