Aug. 11--Google, coming to grips with its giant size and the splintered nature of its many businesses, is remaking its corporate structure and changing its name to Alphabet.
The name Google isn't going away: its main search business will still be called Google, as a subsidiary of Alphabet. But several other businesses, such as Fiber, Nest and investing arms such as Google Ventures, will report to Alphabet as well.
Larry Page, co-founder and chief executive of Google, will become Alphabet's chief executive. Sergey Brin, the other co-founder of Google, will be the new company's president, and Eric Schmidt, Google's executive chairman, will hold the same post at Alphabet.
Significantly, Sundar Pichai, currently Google's senior vice president of products, will become CEO of the Google operation.
Industry analysts aren't surprised. "It's about scaling. People have always asked, how does Google scale? How does Larry Page scale?" said Mike Vorhaus, tech analyst at research firm Frank N. Magid Associates. "This is their way of saying here's a huge business that needs a CEO, and one man can't do that...when that one man is Larry Page and he wants to do all this other stuff."
Founded as one of many search engines competing for attention in 1998, Google quickly emerged on top. It's used its abundant advertising revenues to finance a mind-boggling array of projects, from self-driving cars, to insulin-pumping contact lenses, to balloons that distribute Internet signals, to the famous Google Glass, and much more.
Alphabet Inc. will replace Google Inc. as the publicly traded entity, and all Google shares will automatically convert into the same number of shares of Alphabet, Page said. The company's two classes of stock, however, will continue to trade as GOOG and GOOGL.
Google shares shot up more than 5% in after-hours trading following the announcement.
In the Monday announcement, via blog post, Page said the company is changing its structure to help shake things up.
"We've long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes." he wrote. "But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant."
The new Google will be slimmed down, with companies that are "far afield" of the main Internet products -- including health efforts such as Life Sciences and Calico -- to be contained in Alphabet, Page said.
In the announcement, Page praised Pichai, noting that he "has really stepped up since October of last year, when he took on product and engineering responsibility for our internet businesses."
"Sergey and I have been super excited about his progress and dedication to the company," Page wrote. "And it is clear to us and our board that it is time for Sundar to be CEO of Google."
Pichai, 43, has ascended from overseeing one Google service when he joined the company in 2004 to managing nearly all of them.
He started with the Google Toolbar, an add-on for Internet browsers that served as a shortcut for doing a search. He pushed Google to go one step further and make its own browser, Chrome.
That spurred the development a full-fledged computer operating system, Chrome OS, and a line of laptops. Gmail and other apps became part of his purview, as did Android, the mobile operating system. Twitter tried to hire him in 2011, bringing the calm, straight-forward executive further into the limelight.
Last October, Pichai took the helm of Google's moneymaker: its search and advertising businesses. Many saw that as a clear indication that Google's co-founders viewed Pichai as CEO material.
Before coming to Google, he had worked at the consulting firm McKinsey Co. and the technology company Applied Materials. Pichai grew up in southern India, but came to the U.S. for graduate study. He earned a master's degree in engineering from Stanford University and a master's in business administration from the Wharton School.
UPDATES
3:07 p.m.: This article has been updated with background on Sundar Pichai.
2:43 p.m.: This article has been updated with additional details.
2:33 p.m.: This article has been updated with additional details.
2:23 p.m.: This article has been updated with additional details.
This article was originally published at 2:16 p.m.
