Here’s another reason why Google restructured under the Alphabet moniker this week: The company would like the world to know that it is about more than just advertising.
Google has long been synonymous with ads. Out of the $17.7 billion the company earned during its most recent quarter, more than $16 billion came from advertising. And Google’s ads are everywhere: On the company’s search engine, as pre-rolls to YouTube videos, on countless third-party websites, in mobile apps, and even next to your emails, if you use Google’s Gmail service.
But Google has also long looked at the next opportunity, the next big thing after the web and mobile computing. The company has been exploring new technologies in countless fields, ranging from self-driving cars to robots, and from smart thermostats to life sciences.
Some of these projects are what Google’s founders have been calling “moonshots,” years from becoming a product. Much of the commentary around Alphabet has focused on these moonshots, be it the self-driving car or the contact lenses that are supposed to help patients control diabetes.
However, as part of the restructuring, the company has also separated more mature businesses from Google, the search and advertising company. There is Nest, which has been selling self-learning thermostats and other devices for the smart home since late 2011. And there is Google Fiber, the internet service provider that offers consumers in a few select markets access to the net at Gigabit speeds.
Google acquired Nest in early 2014, and has been building Fiber since 2011. Both efforts are emblematic for the company’s attempts to go beyond advertising. Nest builds real products that sell for a premium price over competing devices, and the company has started to offer paid services for select products as well. Fiber charges consumers between $70 and $130 per month for internet access and an optional pay TV subscription.
And yet, both have also been viewed with suspicion, leading some to speculate that Google may use Nest’s data to send users who are always freezing advertising about sweaters, or even display ads on the thermostat itself. (Nest CEO Tony Fadell has denied both.) The same is true for Fiber, which critics have seen as just one more way for Google to figure out which sites consumers are looking on.
By organizing Fiber and Nest as separate entities under the Alphabet umbrella, the company is trying to quell those fears — as well as send a message to investors that may be just as important: that it is not a one-trick pony. There are many letters in the alphabet, and many ways to make money with technology, be it in the internet access business, the smart home or even some of those next-generation moonshots.
Ads are just part of the equation, and Alphabet clearly doesn’t want to be limited to this one business model.