ABCs of Google’s New Parent Company, Alphabet

In the biggest shock to hit the tech world this year, Google has announced it's becoming a smaller part of a much larger holding company known as Alphabet. For one of the world's most valuable companies, which accounts for well over half of the search engine market, this has major implications that will affect everything Google — er, Alphabet — now does. Here's everything you need to know to get up to speed.

 

What is Alphabet?

Alphabet is a new umbrella company being set up by Google's co-founders. The biggest player underneath this umbrella will be Google — as in the search engine and its various applications, like Gmail, YouTube and Maps. Other businesses that will remain part of Google will be its advertising and Android divisions.

What about everything else?

Many of the projects that were once a part of Google will now be spun off as separate businesses within the Alphabet holding company. This includes all the company's projects that had nothing to do with search, such as its health and longevity initiative, Calico, or its secretive skunkworks, the innovation lab everyone knows as Google X. Google's investment arm, Ventures, is also being split out from Google. So is Google Fiber. Those details were spelled out in an SEC filing.

In this bright new future, do we still Google things? Or do we Alphabet them?

To find things on the Internet, we will all still use Google. You'll Google for recipes. You'll Google for cat GIFs. Google, Google, Google.

So how well will this rebranding work, then, if we're still thinking of Google like Google?

You're right that some rebrandings just don't work. But this probably won't be one of them. That's because so many of Alphabet's investments are in future technologies that will someday become mainstream — like driverless cars, or deliveries by drone. Eventually, we'll recognize these innovations as simply "Alphabet driverless cars" or "Alphabet drones."

With this move, Alphabet is formally acknowledging that the era of search is receding into the rearview mirror and that the era of the Internet of Things has truly begun. Alphabet has been foreshadowing this for some time, with its investments in Project Loon, Nest and other technologies that turn regular objects into smart devices or ways to connect said devices to the Internet.

Search will likely always be a core part of Alphabet. But the future belongs to connected, real-world objects.

As for why this makes sense financially, this is the clearest explanation I've seen yet: