Corporations change their names all the time. Usually, the change comes about when a company is in trouble and restructuring its operations. Research in Motion became BlackBerry during a restructuring that was intended to minimize other divisions. Tandy Corporation became RadioShack Corporation when they shed their other businesses, like Tandy Leather, to focus on their retail business, which was at an all-time high. What almost never happens is a company changing their name when the old name is highly recognizable.
I say almost never because this week, Google announced a corporate name change. Instead of Google, the company will now be known as Alphabet. Despite the name change, the company will continue to trade on the NASDAQ as GOOG, indicating, at least in some part, a lack of confidence in the move. The "new company" will become more of a holding company rather than an operational entity, with wholly-owned subsidiaries underneath.
A new company, called Google, will emerge below Alphabet, which will be responsible for several of the existing Google brands, such as Search, YouTube, Android, etc. Other, unrelated brands, such as Nest, Fiber and Ventures, will be spun out to their own divisions, with 8 in total (as of today). Alphabet will have CEO Larry Page, President Sergey Brin, Executive Chairman Eric Schmidt, CFO Ruth Porat and Chief Legal Officer David Drummond. The new Google will be headed by new CEO Sundar Pichai, who was previously the guy who was actually running the Google operations.
In addition to confusing everyone on the Internet, this change has the potential to cause some real problems for the company. For example, the name Alphabet is a registered trademark in many countries, some of which are existing software companies. Also, it turns out BMW already owns the trademark and domain name, and have taken issue with the announcement. Of course, the name is also bad for SEO, but Google has never been afraid to adjust their search results to emphasize their own brand.
The real problem they face is the potential loss of their trademark. It has been many years since the word Google became google, transitioning from a noun to a verb. As it becomes a common word in the vernacular, it becomes harder and harder to retain a trademark. Aspirin, Cellophane and Thermos are well-known brands who lost their protected status because of the commonality of their names in the popular vernacular. Google is headed in the same direction, accelerated by the demotion of the word even within its own corporate structure.
A potentially hidden, or at least unannounced result of the new structure is the siloing of the company. Google has long been known for having a happy, yet toxic corporate culture, one which can affect business decisions. Google product managers are paid partially based on the size of their teams, and team members can be easily poached. Add to that Google's long-term focus on information collection and advertising revenue, and companies like Nest can become a frightening brand to avoid at all costs, if affected by the corporate culture. Splitting Nest away from Google could help the company come up with its own business models without pressure from "above."
Will the new name work? Possibly, but it is clearly not going to be an easy transition for the company.