Google CEO Larry Page on the Official Google Blog today:
Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company, called Alphabet (http://abc.xyz). I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as President.
What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We'll also make sure we have a great CEO for each business, and we’ll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.
Roughly— Google creates Alphabet, the two merge into each other, with Google, Google Capital, Google X, Google Ventures, Nest, Calico, and Sidewalk emerging as wholly owned subsidiaries of Alphabet, each under separate management. The newly focused Google will include search, Android, and YouTube, under the watch of new SEO Sundar Pichai, allowing Larry Page and Sergey Brin (now CEO and President of Alphabet) to dream up new ways to change the world with technology— just before turning those ideas into additional Alphabet subsidiaries.