We’re all familiar with Alphabet Inc, right? That’s right we’re referring to the company, not the set of characters and letters!
Widely known and acknowledged as the parent company of the tech giant Google, Alphabet Inc is a holding company that encompasses more than 160 subsidiary businesses under its umbrella. These businesses have played a considerable role in making the organization emerge as one of the largest across the globe when it comes to its market capitalization.
What is Alphabet Inc?
“Many companies get comfortable doing what they have always done, making only incremental changes. This incrementalism leads to irrelevance over time, especially in technology, where change tends to be revolutionary, not evolutionary. People thought we were crazy when we acquired YouTube and Android and when we launched Chrome, but those efforts have matured into major platforms for digital video and mobile devices and a safer, popular browser. We continue to look toward the future and continue to invest for the long term.”
Alphabet Inc. operates as a holding company. Through its many subsidiaries, the corporation offers facilities ranging from software applications, web-based search, enterprise solutions, hardware products, maps to advertisements.
In the year 2015, the multinational tech giant Google rebranded itself as Alphabet. Although when it comes to the stock market, the company still trades there under GOOG and GOOGL. Formerly led by co-founders Larry Page and Sergey Brin, the reins of Alphabet were handed over to Sundar Pichai, the chief executive of Google, in December 2019, when the duo announced their decision to step down from management.
Whereas Google is still fixated on search, cloud offerings, and smartphone platforms, and of course advertising since the lion’s share of its revenue is generated from the same, Alphabet has started zeroing in on other “big bet” organizations.
Google’s hardware products include Pixel phones, Chromecast with Google TV and the Google Nest Hub smart display. Meanwhile the Other Bets segment is focused on the sales of Internet and television services, licensing and research and development (R&D) services.
Alphabet Inc’s Google segment is incorporated in two parts - Google Services and Google Cloud.
Google Services - The products and platforms of this segment include Chrome, Android, Gmail, Google Maps, Search, YouTube, Google Drive, Google Photos, and Google Play.
Google Cloud - This segment offers enterprise-ready cloud services that include the Google Cloud Platform and Google Workspace.
Google Cloud Platform: This platform allows developers to develop, test, and set up applications on its infrastructure.
Google Workspace: The Google Workspace collaboration tools include applications such as Gmail, Docs, Drive, Calendar, Meet.
Popular Subsidiaries of Alphabet Inc
While we are all definitely acquainted with the Google products like Google Drive, Docs, Maps, Android, and Gmail, but when it comes to the various “Other Bets” subsidiaries of Alphabet, we may not be as familiar with the same. Some of the prominent subsidiaries have been highlighted below :
Business Type: Online video-sharing platform
Acquisition date: November 13, 2006
YouTube, the leading video sharing platform, was acquired by Google back in 2006 for $1.65 billion. Interestingly it is believed that about half a dozen players that include Viacom, Microsoft, and News Corp, were involved in the bidding war for YouTube with Yahoo and Google being the two remaining contenders towards the end till Google obtained the company.
The acquisition ended up becoming a valuable investment for the tech giant with the company now accommodating over 2 billion users on its platform.
Business Type: Research and Development biotech company
Founding Year: 2013
This is a research and development company that aims at harnessing advanced technologies to enhance the understanding of biology which controls aspects like aging and lifespan.
As per Alphabet’s Q3 2019 financial statement, Calico, joining forces with biotech company AbbVie Inc (ABBV)., has a mission to “discover, develop, and bring to market new therapies for patients with age-related diseases, including neurodegeneration and cancer.”
The platform has been working to gain answers regarding longevity in human DNA by developing its own hardware and software for automating and expediting that search.
Business Type: Healthcare research organization
Founding Year: 2015
Verily, the life science arm of Alphabet is a platform that deals with organizing health data. The company is working towards developing a set of devices and technologies that include surgical robots that aim at improving human health.
Alphabet noted in its 2018 annual report that the investment company, Temasek acquired a noncontrolling interest in Verily for an aggregate of $800 million in cash in 2017. The transactions were reckoned as equity transactions without the consideration of any loss or gain.
The platform was recently under the spotlight for raising $700 million in fresh capital for expanding its commercial business, which also included its clinical healthcare platform Baseline, which has been adopted for conducting Covid19 research. The investors included existing investors of the platform like Temasek.
Business Type: Autonomous driving technology development company
Founding Year: 2009 (as Google self-driving project) / 2016 (Alphabet subsidiary)
Waymo dreams of a future in which there are minimal accidents triggered through distracted, careless, or impaired human drivers and also minimal traffic, a world where it is easier for the public to get around.
The platform has termed itself as a self-driving technology company rather than a self-driving car company.
Waymo’s 360-degree perception technology allows it to identify obstacles like pedestrians, other vehicles, or any construction work from up to several hundred yards away. The platform recently completed an externally led investment round raising in total $3.2 billion, which includes investment from Alphabet.
Business Type: Drone-delivery venture
Founding Year: 2012
This subsidiary operates under “Moonshot factory” or “X” in Alphabet’s Other Bets category. The platform develops drone-based freight delivery technology.
It is a diverse group of inventors and entrepreneurs who build and launch technologies that aim to improve the lives of millions, even billions, of people.
Project Wing aims at revolutionizing the approach with which goods are delivered. The platform is building autonomous drones with the aim of delivering items like local food, products, drugstore supplies, and even library books to the doorsteps of suburban homes in a more efficient and eco-friendly manner.
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The platform is operating on an unmanned traffic management platform for safely routing drones across the sky. In 2014, the platform came under the spotlight for helping deliver medicines, candy bars as well as dog food for farmers in rural Queensland, Australia. In September 2016, it delivered burritos to students at Virginia Tech.
Business Type: Cybersecurity platform
Founding Year: 2018
With Chronicle, Alphabet ventured into the cybersecurity field. The platform’s core product, Backstory, is developed on the booming Google infrastructure, and it focuses on a cheaper approach for organizations to interpret and store their security data in one place for investigating and detecting threats at Google speed and scale.
In 2019, Chronicle was folded by Alphabet into its Google Cloud service.
Business Type: Technology incubator platform
Founding Year: 2010
Formerly going by “Google Ideas”, Jigsaw is an incubator on the lookout for solutions to a set of global security concerns, like corruption, censorship, violent extremists, organized crime, online harassment, and corruption. The name “Jigsaw” originated from the obvious understanding that complex issues generally make themselves known as challenging puzzles.
The platform, as per its website, is a unit under Google that focuses on the threats to open societies and develops technology that inspires scalable solutions. In February 2020, Jigsaw was moved under Google management by Alphabet.
Business Type: Smart home products
Acquisition year: January 2014
Nest was purchased by Google in 2014 for a sum of $3 billion and the tech giant officially opened the doors to the “smart home device” field with this acquisition.
For around 3 years Nest functioned separately from Google but from early 2018, Alphabet undertook the decision of folding the platform into Google Home and all the Google Home devices were marketed within the Google Nest brand such as thermostats and smart speakers.
Business Type: Wearable device maker
Acquisition date: 14th January 2021
Fitbit was recently acquired by Google in January 2021. The platform has over 29 million active users and is widely acknowledged for its wellness devices that keep track of aspects like steps and health metrics.
The platform had been established back in 2007 and went public in 2015. Following the conclusion of Fitbit’s acquisition, the platform’s stock became untradeable.
How Alphabet Inc Makes Money
Alphabet is known for being the parent company of the leading tech giant Google as well as for its Other Bets. Let’s take a look at how Alphabet derives its revenue through these platforms as mentioned in the platform’s 2020 Annual report.
As mentioned before, Google’s platform incorporates two segments: Google Services and Google Cloud. Revenue is generated by both segments in varying ways.
How Alphabet Inc is making money
Google Services: Revenue is primarily generated by delivering both performance advertising and brand advertising.
Google Cloud: Google Cloud generates revenues primarily from fees received for Google Cloud Platform services and Google Workspace collaboration tools.
Other Bets: Alphabet’s Other Bet platform incorporates businesses at varying development stages and the company aims to make each of them thrive and become successful in the medium to long term. Although the early-stage businesses are uncertain in terms of profitability, many have already begun generating revenue and prospering within their industry. The revenue in these platforms are mainly generated from internet and TV services, as well as licensing and R&D services
Evolution of Alphabet Inc during COVID19
As stated in Alphabet’s 2020 Annual Report, From the start of the pandemic, the platform’s teams have been focusing on building new features for helping users in their daily life tasks to supporting businesses working towards serving their customers in these uncertain times. Entering into an affiliation with Apple, Exposure Notification apps were introduced which are being adopted by local governments worldwide.
The platform states that its COVID-19 Community Mobility Reports are being adopted by public health agencies and researchers around the globe, and it has offered hundreds of millions of dollars for aiding small businesses via a combination of small business loans, grants, and ad credits.
The platform has attempted to make authoritative content a prime point of focus across both Google Search and YouTube for helping its users in discovering trusted public health information. Many of Alphabet’s Other Bets have a similar agenda. Its autonomous driving platform Waymo has been working towards making transportation more simpler and secure for everyone while its life science platform Verily is focusing on building tools and platforms for boosting health outcomes.
Technologies like AI and Machine Learning have been playing an integral role in dominating the platform’s latest advancements. An example is Google’s NLP framework BERT, which enhances the results for each search query made in the English language.
Yet another example is that of DeepMind, solving a 50-year-old protein folding challenge, which will help in enhanced comprehension of the fundamental building blocks of life.
While we have already witnessed Google surpassing stages and paving its way to emerge as the powerful tech behemoth that it is now, it will be interesting to observe how Alphabet’s Other Bet platforms strengthen and build up their presence in their respective industries.