By Sara Brown
This week Google reorganized—folding a “slimmed down” version of the search giant into a newly created holding company: Alphabet. I found the announcement letter from founder Larry Page more than a little ironic—as it begins with a promise to remain unconventional, which is immediately followed by nearly 1000 words worth of typical corporate doublespeak . . . peppered with phrases like:
—“. . . do important and meaningful things with the resources we have.”
—“rigorously handle capital allocation and work to make sure each business is executing
I could go on, but I don’t want to put you to sleep.
So what is really driving this move? Could it be as simple as optimizing their corporate tax structure, as my lawyer/economist husband suggests? Could the move have been a dodge to avoid forced restructuring, which has been recommended by the EU since last fall? As a professional marketer, I can’t help but think the ideal possible outcome to which Alphabet aspires is to protect one of the world’s most valuable brands (Forbes estimates the Google brand is worth $65.6 Billion) from losing face (and, of course, value) as a result of high profile failures resulting from their many bold experiments. The Google+ debacle comes immediately to mind. And who can forget Google Glass?
So, what does all this mean for the Internet of Things? Google has been dancing around the IoT for a while with forays into wearables (I know, I know), connected/autonomous cars, smart homes and now healthcare. So far, all this experimentation has been almost wholly supported by advertising revenue from search and YouTube. By disaggregating the main revenue drivers of the business (about 90%, also according to Forbes), from what Page refers to as “things . . . that aren’t very related,” Alphabet will force their IoT experiments to stand on their own two feet. After all, as Google Glass proved, just because they can (invent something super creepy) doesn’t mean they should.
Since the announcement late Monday, Alphabet has inked a deal with DexCom, a medical sensor company, and spun off app maker Niantic Labs. It will be interesting to see what comes next. Hopefully some meaningful IoT innovation capable of real market success. Stay tuned.