Google’s expansion into different areas is remarkable. Using revenue from core businesses to invest in areas that may offer high reward is the best way to boost the entire company.
With the Alphabet name, Google has more flexibility to invest without brand confusion. Google also makes a bit of a splash for itself and perhaps takes some of glare away from Apple (AAPL) and Facebook (FB), both of which seem to have grabbed more headlines during the past year. With the Alphabet announcement, all eyes are re-focused on Google.
The rebranding allows Google to morph into a Berkshire Hathaway (BRK.A)-like entity. As with Google, the Berkshire Hathaway name carries strong brand recognition, even though the brands Berkshire has invested in vary dramatically.
Unlike Berkshire Hathaway, Google has a brand that is still perceived as mainly a search engine, even though Google has invested in many diverse areas. Having the Alphabet backing as a company will establish it as an elite and forward-thinking brand.
Thankfully, Google, the search engine, will continue to run as that brand name as I can’t imagine trying to explain to my six-year-old, why she can’t use the term “Googling” anymore.