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Google restructures and changes name to Alphabet; Sundar Pichai appointed CEO of Google

Internet giant Google has announced a surprise restructuring, putting the lion's share of the company under the umbrella of a new holding company called Alphabet - with the company wisely taking the abc.xyz URL first, although not the associated Twitter handles...

While Google will form the main part of the company, especially in terms of revenue, it will also house a number of other initiatives led by the company's founders Larry Page and Sergey Brin. Google shareholders will become shareholders of Alphabet Inc, although the company will trade on Nasdaq under the old ticker symbols, GOOGL and GOOG.

"Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity)," wrote Page in a blog posting.

Alphabet will be led by Page, who shifts from being CEO of Google to CEO of Alphabet. Sundar Pichai, meanwhile, will take over as CEO of Google. Pichai joined Google in 2004 and has been involved in the development of Google Chrome, Chrome OS, Gmail and Google Maps, before taking over as Android head in March 2013 from Andy Rubin.

"Fundamentally, we believe this allows us more management scale, as we can run things independently that aren't very related. Alphabet is about businesses prospering through strong leaders and independence," continued Page, explaining why he and Brin decided to restructure the company.

"In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We'll also make sure we have a great CEO for each business, and we'll determine their compensation."

On top of that, Page promised segmented reporting from Alphabet's fourth quarter results, which will enable investors and analysts to better determine how each part of the businesses. Page also indicated that he and Brin plan to use Alphabet as an incubator of new business start-ups and other initiatives - provided the Google cash cow keeps delivering.

"Sergey and I are seriously in the business of starting new things. Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure," he wrote.

And why Alphabet? "We liked the name Alphabet because it means a collection of letters that represent language, one of humanity's most important innovations, and is the core of how we index with Google search!

"We also like that it means alpha-bet (Alpha is investment return above benchmark), which we strive for! I should add that we are not intending for this to be a big consumer brand with related products - the whole point is that Alphabet companies should have independence and develop their own brands."