Why Alphabet?

Content note: Everything here is almost wholly speculative. I have no position in Google or Microsoft.

It’s hard to overestimate the shadow that Microsoft casts. While Microsoft is still a big company, it has decidedly fallen from grace. No one really expects the next great thing to come from them. They aren’t even a second fiddle. No one is eagerly waiting for the Microsoft Watch to come out.

So, companies that *are* it right now don’t want to end up like Microsoft. This includes Google.

It’s worth noting that Microsoft did not fail by failing to see what the future would bring. They foresaw mobile computing and invested billions into it. They foresaw tablet computing and invested billions into it. They beat everyone to market in the markets of the future. But they did it with products that were basically awful.

But why were they awful? Microsoft for decades had first pick among engineers graduating from prestigious universities. They set these people to work on the most important problems of the day with gobs of funding. Why didn’t it work?

The answer (if not in truth, then at least in legend) was a subservience to the company’s two cash cows: Windows and Office.

Microsoft’s tablet computers necessarily had to run a version of Windows. The purpose of the tablet from the beginning was to sell more copies of Windows. The decision to fork Windows into a tablet edition was not made because that was the best way to design a tablet. It was because the whole point was to extend the Windows franchise into a new space.

Similarly, Windows Mobile had to comport with the idioms of Windows, the desktop operating system. And its biggest selling feature had to be a bundled copy of Office, and the design of the device had to follow from the belief that what people really wanted in a mobile device was to review and edit Office documents.

The corporate apparatus faithfully executed these charges and produced the resultantly undesirable products.


cheerleader spelling photo

Image by schnaars Why Alphabet?

Google is even more of a one-trick pony than Microsoft. Google the company and brand mean many things, but Google the cash-generating business is search. Or more precisely stated, search-driven, contextual advertising.

This can be a problem if you are, say, running Google Ventures and are able to make an investment that is wise but doesn’t mesh well with the needs and philosophy behind contextual advertising. It can be a problem if you are running Nest and want to craft user policies that make selling contextual advertising more difficult.

Sundar Pichai has undoubtedly received a hefty promotion by being named CEO of the new Google. But it must be acknowledged that the new Google businesses are carefully walled off not only from experimental projects but also from anything it might develop a conflict with. The other businesses under the Alphabet umbrella will not have to answer to Pichai, and they will have a wall purposefully constructed by the company’s founders that allows them to act without worrying about the implications for search.


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Vikram Bath is the pseudonym of a former business school professor living in the United States with his wife, daughter, and dog. (Dog pictured.) His current interests include amateur philosophy of science, business, and economics. Tweet at him at @vikrambath1. ...more →

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30 thoughts on “Why Alphabet?

  1. Two questions:

    1) Does it really take starting a whole new company to make sure that individual teams don’t get corrupted by the main company mantras?
    2) Is starting a new company with the sole purpose of mitigating (1) really enough?

    I have a hard time believing that Googlers will ever forget that the Alphabetniks butter their bread.


    • To answer your questions:

      1) In my experience, the question is not “is it necessary to prevent corruption?”, but “is this enough to prevent corruption?”

      2) See answer to 1. But really, they didn’t start a new company. They just moved the building blocks around. This also makes the company more transparent, as it becomes easy for analysts to see how Google’s core business is doing, as opposed to their long term gambles.


  2. I like this, Vikram. I hadn’t thought of it this way before, but it makes sense. I had assumed that what was going on is that Larry Page had got tired of looking at daily revenue reports from search advertising and finally phoned in rich.

    Now, that might have happened, too. Many decisions have multiple drivers, after all.


  3. Criticize Microsoft all you want, but the basic default software is still Office. I’ve got Office on my Mac.

    Nobody produces a version of the Apple word processor (called Pages) that’s compatible with Windows, because there isn’t demand.


    • On this note: is there any aspect of Microsoft Office (except possibly slideshows*) that is not equally well handled by free software?

      I’m thinking of Will Truman here, mostly, but others might want to chime in: does MS Office have any advantage over, say, libreoffice? Other than the admittedly rather significant market share advantage, anyway.

      *Slideshow compatibility between office suites is not great, and I recall being, well, unimpressed with Libreoffice Impress the last time I used it.


      • The Windows version of Excel is the standard computing platform across a disturbingly wide range of disciplines. VBA is sometimes part of the Mac version, sometimes not. As the source trees for those two versions are distinct, it is unclear whether the two VBAs are bug-for-bug consistent. None of the other spreadsheets, including the Mac version of Excel, have the equivalent of Solver, a nonlinear generalized reduced gradient (GRG) optimization tool. GRG solvers have their own set of strengths and weaknesses. When I was in graduate school the first time I worked on the code that eventually became solver (although I didn’t find that out for some years). I ran some of the old test cases through Solver, and it failed in the same ways that the code I worked on occasionally failed.


            • One of my major projects at Big Aero was born of the realization that people had been changing the macros & in-cell functions of our spreadsheets that we used for initial estimations, without any kind of commenting or notations as to why.

              I spent a year going over all the original documentation for the process and then writing a standalone application (with version control) that would produce the Excel spreadsheet with the correct estimation.

              I also impressed upon my management the need to standardize to a process as quickly as possible & then code that up in a similar manner so as to avoid repeats of the issue.


      • Excel is better than the OpenOffice/LibreOffice equivalents for highly advanced use. For every day use, though, no real difference.

        Neither Open nor Libre are close to having anything comparable to Access, for people who care about that.

        For my own sake, I’ve become so reliant on OO/LO that I have proficiency problems in Microsoft Office, which I am going to need to address!


        • With the exception of Excel, I wonder how many of MS Office’s “advanced” features are of use to just about anybody. I know that I always dreaded the periodic Office upgrade. I was never salivating over the latest new features in Word or PowerPoint. I was normally cringing and hoping that they didn’t move too many of the menus for the 1% of the features I actually use. It seemed like most Office upgrades were just fringe features that are useless to most users combined with a meaningless reshuffling of the UI (and possibly some compatibility breakage).

          I’m thrilled that the past couple of years for me have been completely free of office suites of any sort. It didn’t take me long to realize that I only used those tools when somebody sent me a document in an MS Office format.

          Vikram is absolutely right that MS has been panicking over the tablet/smartphone revolution in large part because of the damage it does to MS Office lock-in. People can go all day being productive with a smart phone or tablet and then say, “Hey, I did a whole day of work without Office. Maybe Office isn’t that important.”


          • The Excel exception does a lot of work there, but yeah I think you’re correct.

            OTOH, one of the things that StarOffice/OpenOffice learned the hard way early on was that “People spend 90% of their time using 10% of the features of MS Office” doesn’t mean you can leave off the other 90% of features, because they do actually need it for the other 10% and everybody needs a different set of the other 90% of features.

            (One of the reasons I became delinquent in my MS Office skills is that when I did need to use Office, I had a license to Office 2000 that I could use. Which was before their major overhaul.)


            • I’m a little bit weirded out by the number of features in Excel. There’s a ton of stuff that people do in Excel that really shouldn’t be done in Excel. The fact that it is done in Excel is good for Microsoft, but jeez is it scary.

              My problem is that I’m more willing to learn new tools than most people, so when I find myself pushing the limits of what a simple office program will do (e.g. trying to do nice layout in Word or major automation in Excel), I just figure I’m using the wrong tool for the job and find a different tool that specializes in what I’m trying to do. Most office workers don’t have that luxury, so they’re stuck using Word’s new “edit video” feature when they need something to edit video or Excel when they need to validate a CPU design. Office is the king of “just barely good enough at almost everything.”


          • Guy:
            My instinctive response to that is “nothing like Access belongs in an office suite”, but I suppose business people disagree with me.

            I disagree in part. For an enterprise environment large enough to host any kind of IT staff other tools are superior. But for a small/home office it’s a reasonably user-friendly, accessable (heh) database solution. At least it beats the he’ll out of trying to use Excel as a database, which I have seen and which should be punishable by flogging.


            • Even in the larger environment, there’s the issue of ongoing support. At my last full-time gig, neither the budget director (my boss) nor the IT director were willing to add support for a real database application to their list of responsibilities without an authorized headcount increase. I didn’t blame them. The IT director had been burned in the past with the cost of taking over half-assed but now mission-critical apps built by staff organizations. And while it was true that my boss had, at that point in time, two people on his staff who could have handled development and maintenance, turnover was relatively high and he didn’t want to have to constrain his choices about budget staff so that he would always have a part-time developer available.


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