Review

As Alphabet, Google Wants to Avoid Becoming Microsoft


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If you bought 100 shares of Microsoft some 25 years ago, you’d be a millionaire, thanks to the prodigious growth of MSFT until 1999. Since then you’d be a less  than happy camper as the stock price has meandered lower since, reflecting more than a decade of a price mired in the 40’s. Hoping to avoid the mistakes of Microsoft is one reason, according to a recent Egadget.com article, that Google has made the decision to restructure and diversify with the introduction of Alphabet. It’s all about avoiding stagnation.

To be sure, it won’t be easy getting used to the new name. After all,  the name –Google- is synonymous with technology, especially search technology. It’s so ubiquitous that we don’t say, ’’I’ll search it”, or ’’I’ll look it up.” We simply say, ’’I’ll Google it.” So the move to Alphabet may at first appear strange but, upon further examination and in light of the many innovations it has in the pipeline, it makes sense. One thing is for sure, the Co-founders Larry Page and Sergey Brin won’t have to answer questions about why a search company is delving into areas like self-driving cars or extending lifespans, or even getting involved with YouTube.

Microsoft is, of course, not alone in the arena of being a growth machine before levelling off to be a more conservative company. Does the name IBM ring a bell? Being unable to pivot from its massive mainframe edge, it lost out with the advance of the PC to Microsoft and Apple. MSFT, you may recall, had the smartphone market before Apple’s ascendancy. Apparently Google does not want to fall into the complacency trap-not when it already has developed dynamite proprietary businesses like Google search and Android OS. MSFT had reason to become overreliant on cash cows such as Windows and Office.

Under a new regime and now the new name, they will be separate with individual CEO’s. This raises the potential for them to keep innovating as each move they make will not affect the welfare of the entire conglomerate. But at the same time, notable successes will cut across all lines to the benefit of all. “We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes,” Page said in his announcement yesterday. “But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”

While Google’s move is bold and unconventional, the jury is still out on whether it will work. For while each division will have its own CEO and Sundar Pichai is the new Google overall CEO, they will still ultimately answer to Page. So, we’ll have to wait for the dust to settle before we can assess the failure or success of the move. But one thing is sure, Google is not satisfied to stand pat and perhaps go the way of the other, aforementioned behemoths. Soon, Wall Street will register its satisfaction or dissatisfaction with the restructuring and the public will weigh-in with their wallets.

 


Stan Ward Stan Ward has enjoyed writing for 50 years. Writing has been a comfortable companion to a successful business and teaching career for him. Find him on Google+.

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