Sunday, September 27, 2015

Google becomes part of the ‘Alphabet’

Google is undertaking a massive restructuring process. Is Google aiming to consolidate it’s position as an industry giant and is it ready for the challenges ahead?

For most people Google is just a search engine.  It all started 17 years ago as a research idea by two Phd students, with their first servers set up hastily in a garage.  In all these years Google expanded, the company acquired other successful ventures such as Youtube, created analogous services such as Gmail and the Android operating system but also managed to diversify from virtual services into real world applications such as self driving cars, medicine and life extension technology. 

Some of these ventures may sound like they are coming straight out of a science fiction movie, but these subsidiaries are already bearing fruit.  The self driving cars project started in 2005 and is already being tested in the streets of California.  Complete commercialization of these driverless vehicles is expected to hit the markets by 2022.  So we should expect the life extension project initiated in 2013, currently researching cures for Dementia and Parkinson, to start bearing fruit in a few years time as well.  Many might be surprised that Google is investing in such ventures and that is the reason why earlier this summer their top executives felt they have to restructure the company, which at present is employing more than 57,000 employees.
A holding company called Alphabet Inc. has been set up to oversee Google’s search and internet business, the bioresearch company Calico, the artificial intelligence research facility Google-X and also other various venture investments such as SkyBox, a satellite business and Nest Labs which is aiming to create home automation appliances.  They plan to employ a different CEO for each company, aiming to focus entirely on one particular field of expertise, whilst the original founders, Larry Page and Sergey Brin will be running Alphabet Inc. as CEO and President respectively, aiming to have a general overview of all the companies.  Alphabet Inc. is expected to continue to invest in new endeavors, the most recent of which is the ‘Wing’ project which will be using drones for delivery of goods, something which Amazon had thought of originally but it seems that Google wants a piece of this pie as well.  
The complete restructuring process should be complete by December and will include separate financial reports for each company.  This change is expected to help investors make better informed decisions.  It seems that Wall Street is already excited about the reorganization, as shares of the company went up 4% a day after the announcement was made.
As might be expected personnel were slightly worried about their future and Google’s internal forums chats were exploding with questions.  Googlers, as Google employees refer to themselves, were questioning their future with the company, but the worries were addressed a few hours after the first announcement, as a new CEO was named.  Sundar Pichai addressed employees and told them that now Google can focus on it’s core mission statement i.e. Organizing the world’s information and making it universally accessible.  This resulted in most employees reporting an optimistic, though slightly uncertain outlook for their position within the company.  Other employees, not directly related to Google’s search engine, did not share such optimism though, especially since Sergey Brin used the word ‘leaner’ in one of his speeches a few days later, which could only be translated to mean that as a worst case scenario some employees will lose their job at the other experimental ventures within Alphabet Inc. or at least fewer opportunities for advancement will be available.  
A few days after the Alphabet Inc. announcement was made Google also drastically changed it’s logo.  It was introduced to the world on their homepage with an animation showing a hand erasing the old logo and drawing the new one, thus making sure users take notice.  In the last years the logo, bar for some minor tweaks, remained practically the same.  The new design will drop the old serif font Catull and instead a simpler sans-serif font is used.  The font was designed inhouse, however it bears an uncanny similarity to the Futura font.  The logo will be retaining it’s famous blue, red, yellow and green colour pattern.  The new design has been described as simpler and younger.  Marketing experts are unavoidably split on this change, some like it and some hate it but it is evident that this change is not just about design, Google executives admitted that mostly they changed the logo to ensure that it looks easier on the eyes on mobile phone applications, hinting that Google will be aggressively pursuing this stage in the coming months.
The truth is that even though Google is expanding and trying out new ventures, the fact remains that at present 99% of Google’s profit is coming from it’s search engine business and revolves around advertisements.  No other search engine company is threatening Google, the second largest search engine, Bing  is still light years behind in terms of market share.  
It’s major threat is Facebook.  Looking at how Facebook is expanding rapidly onto mobile phones one cannot notice that most people are using Facebook as their first web-destination whilst using their smartphones instead of Google.  A silent shift is taking place in reading news as well, people are turning to social media to see what others are following and what’s trending rather than searching for news on Google.  A few years ago Google already tried to compete directly with Facebook when they launched GooglePlus but this strategy failed miserably since Facebook had the first-mover advantage and most users have already invested time and effort in Facebook and are therefore reluctant to use a different social media platform.  It is probably too late for Google to jump on the social media bandwagon.
It is estimated that there are 7 billion people on Earth, 5 billion of which use the internet regularly.  It seems the last battle of this war will be fought in Africa and Asia to try to influence the 2 billion people in these continents who are still not on the internet.
A few years ago Mark Zuckerberg, Facebook’s CEO & founder announced an ambitious effort to connect the world’s poorest by providing free internet access to the most remote areas and allow anyone free wireless access to social media.  Zuckerberg was not doing this for any altruistic reason, in fact this decision might be a business game changer in the near future as for the first time Facebook has a significant advantage over Google in a particular continent, this time it’s Africa.  The median age in this continent is strikingly low, just 20 years, meaning that both internet giants will fight fiercely for control in this area.
Whatever the outcome for Google, whether it succeeds or fails in trying to surpass Facebook, the next few years will be lots of fun to watch how this will play out.   

This article was published on the Sunday Times, 27th September 2015 TechSunday Supplement. Please do not reproduce without permission. Copyright may be shared between newspaper and author.

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