Alphabet (Alphabet Eyes New Frontiers by Juan Alcacer, Raffaella Sadun, Olivia Hull, and Kerry Hull) has requested that you perform a review of their organizational structure. Specifically, they would like you to look at their core search business, YouTube, and Nest. In terms of resources, capabilities, and business model, what do these businesses have in common? How are they different? Based on this assessment, what is the ideal way to organize these different business units?

Uses appropriate factual support. Uses quantitative or qualitative data from the case that helps provide evidence / support for assertions or recommendations. Uses appropriate theoretical support.

Applies class theories, frameworks, and terminology from following readings:

-Creating Corporate Advantage by David J Collis and Cynthia A Montgomery

-Growing Beyond The Core Business by McKinsey&Company

-How Technology is Redrawing The Boundaries of the Firm by The new-look corporation.

Do not forget to make deep analysis and recommendations.

Exhibit 1a Alphabet Selected Income Data, Q3 8: Q4 2015 (in millions US$) Q3 2015 Q4 2015 Revenues 18,675 21,329 Costs and expenses Cost of revenues 7,037 8,188 Research and development 3,230 3,510 Sales and marketing 2,223 2,679 General and administrative 1,477 1,572 Total costs and expenses 13,987 15,949 Income from operations 4,708 5,380 Other Income (expense), net 183 (180) Income from continuing operations before income taxes 4,891 5,200 Provision for income taxes 912 277 Net income 3,979 4,923 Source: Alphabet, Inc, 2015 Ammal Report, https: / / abc .xyz / investor / pdf/ 201 5123'1_alp11abet_1 0K.pdf, accessed Februaryr 2015. Exhibit 1b Alphabet Selected Segment Information, 2013-2015 2013 2014 2015 Revenues Google 55,507 65,674 74,541 Other Bets 12 327 448 Total revenues 55,519 66,001 74,989 Segment operating income (loss) Google 16,260 19,011 23,425 Other Bets (527) (1,942) (3,567) Administrative costs and other miscellaneous items (330) (573) (498) Total income from operations 15,403 16,496 19,360 Capital expenditures Google 7,006 11, 173 8,849 Other Bets 187 501 869 Reconciling Items 165 (715) 197 Total capital expenditures 7,358 10,959 9,915 Source: Alphabet, Inc., 2015 Annual Report, https:/ /abc.xyz/investor/pdf/20151231_alphabet_10K.pdf, accessed February 2015.2,000.00% 1,500.00% 1,000.00% 500.00% 0.00% -500.00% Exhibit 2 Alphabet, Inc. Share Pricing, Relative to the S&P 500 Index, August 2004 to June 2016 Aug-19-200 Dec-06-2004 Mar-24-2005 Jui- 12-2005 Oct-26-2005 Feb-14-2006 Jun-02-2006 Sep-19-2006 Jan-08-2007 Apr-26-2007 Aug-13-2007 Nov-28-2007 Mar-18-2008 Jul-03-2008 Oc -20-2 Feb-06-2009 May-27-2009 Sep-11-2009 Dec-29-2009 Apr-19-2010 Aug-04-2010 Nov-18-2010 Source: Alphabet Share Pricing, August 2004 to June 2016, Capital IQ, Inc., a division of Standard & Poor's. Mar-09-2011 In-24 11 Oct-11-2011 Jan-30-201 Alphabet Inc. (NasdaqGS: GOOGL) - Share Pricing ....... S&P 500 Index ("SPX) - Index Value May-16-2012 Aug-31-2012 Dec-20-2012 Apr-11-2013 Jul-26-2013 Nov-11-2013 Mar-03-2014 Jun-18-2014 Oct-03-2014 Jan-22-2015 May-11-2015 Aug-26-2015 Dec-11-2015 Apr-01-2016Exhibit 3a A Selection of Top Innovations at Bell Labs Innovation Applications Data networking, late 1940s Digital Subscriber Line (DSL) Transistor, 1947 Computers, radios, stereos Cellular network, suggested in 1947, installed 1980 Mobile phones Silicon solar cells, 1954 Solar power First patented laser, 1958 Medicine, electronics, communications Communications satellites, 1962 Long distance phone calls, television, and radio Touch tone dialing, 1963 Replaced rotary dialing on telephones Unix C, C++, 1969-1972 The Internet, computer programming Source: Alcatel-Lucent, "Bell Labs Top 10 Innovations," from the University of Texas website, http://www.cs.utexas.edu/ ~cannataetworking/Class%20Notes/02%20Bell%20Labs%20Top% 2010%20Innovations.pdf, accessed June 2016.Exhibit 3b A Selection of Top Innovations at Xerox PARC Innovation Applications Laser printing, 1972 Photocopiers Xerox Alto personal computer, 1973 Apple's Macintosh Computer Ethernet networking, 1973 Local Area Network (LAN) Cut-and-paste and text editor, 1974 Microsoft Word Graphical User Interface, 1975 Computer user interfaces, popularized by Apple Multi-beam lasers, 1986 Advanced printers 16-bit coding system, 1989 Unicode standard, allows computers to communicate across languages Source: Todd R. Weiss, "Timeline: PARC Milestones," Computerworld, September 20, 2010, http://www.computerworld.com/ article/2515874/computer-hardware/ timeline--parc-milestones.html, accessed June 2016; and Dan Farber, "Tracing the Origins of the Macintosh," CNet, January 21, 2014, http://www.cnet.comews/tracing-the-origins-of-the- macintosh/, accessed June 2016.25.00% 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% Exhibit 4 Alphabet Inc. Share Pricing, Relative to the S&P 500 Index, August 2015 to June 2016 -15.00% -20.00% Aug- 03-20 15 Aug-17-2015 :. . Aug-31-2015 Source: Sep-15-20 Sep-29-20 15 Oct-13-2015 . . O t-27-20 15 . . . . . . . lov-10-2015 lov-24-20 15 ec-09 -2015 ec-23-201 Ja 1-08-2016 ". . . . Jan-25-2016 W ...... S&P 500 Index (^SPX) - Index Value Fe -08-2016 Alphabet Share Pricing, August 2015 to June 2016, Capital IQ, Inc., a division of Standard & Poor's. Feb-23-2 3-2016 Alphabet Inc. (NasdaqGS:GOOGL) - Share Pricing Mar r-08-20 16 Mar-22-2016 Apr-06-2016 Apr-20-2016 May-04-2016 May-18-2016 Ju -02 -2016 Jun-16-2016Exhibit 5 Alphabet's New Corporate Structure, 2016 Alphabet Larry Page, CEO | Sergey Brin, President | Eric Schmidt, Chairman nest. Access & Energy verily Calico SIDE WALK LABS Tony Fadell Craig Barratt Andy Conrad Arthur Levinson Dan Doctoroff Thermostats and smart-home Energy and internet access - Healthcare and disease Research into longevity, life Urban innovation. devices. Acquired by Google in including Fiber, which provides prevention research. Formerly expansion. Name stands for Solving cities' problems. January 2014. low-cost broadband. Google Life Sciences. California Life Company. Google Google [X] G/ Google Capital Google Self-Driving Car Project Sundar Pichai Astro Teller Bill Maris David Lawee John Krafcik All of Google's "traditional" Secretive "moonshots" and Formerly Google Ventures, A growth equity fund that Self-driving cars. It will products are here. outlandish projects. GV is Google's venture capital draws on advisors from Google reportedly become an Alphabet nvestment arm. to help portfolio companies. any in 2016.* Replicant PROJECT LOON Project Wing Project Titan Google Self-Driving Car Project Robots. Formerly Delivering internet to Drone deliveries. High-altitutude John Krafelk seperate Alphabet the developing world hercial launch in solar-powered, with high-altitude 2017. Self-driving cars company, it recently internet-delivering drones. It will reportedly rebooted. balloons. become an Alphabet company in 2016. You Tube G Technical Infrastructure Google AdSense Susan Wojcick The original, core Google The backend that powers other Adverts, which drive the The famous Google Maps. The video-hosting site was search engine. units across Alphabet. majority of Google's revenue. acquired by Google in 2006 Google Apps for Work Google for Work Google DeepMind ATAP Applications like Google Docs. Google's dominant mobile Google's enterprise division. Artificial intelligence research. Advanced Technology And operating system Projects. A buzzy research lab. NOTE: The list of Google departments is non-exhaustive, as is the list of Google X projects - because they're so secretive. Source: Rob Price and Mike Nudelman, "Google's Parent Company Explained in One Chart," Business Insider, January 12, 2016, http:/ /www.businessinsider.com/chart-of-alphabet-google-parent-company-infographic-x-gv-2016-1, accessed February 2016.Exhibit 6 Alphabet's "Other Bets" Companies, 2016 Company Function Location Access/Google Fiber Provides TV and Internet service in 9 U.S. cities Various through fiber-optic networks Calico Conducts research into human longevity with the San Francisco, CA goal of increasing the human lifespan Nest Makes smart thermostats and other remote- Palo Alto, CA monitoring devices for residential use, founded in 2010 and acquired by Google in 2014 Verily Conducts life science research mission: "To bring Mountain View, CA together technology and life sciences to uncover new truths about health and disease GV (formerly Google Ventures) Venture capital firm investing in life science, Mountain View, CA healthcare, artificial intelligence, robotics, transportation, cyber security, and agriculture Google Capital Growth equity fund investing in tech entrepreneurs, San Francisco, CA founded in 2013 X (formerly Google X) Conducts research on moonshots like robots, self- Mountain View, CA driving cars, and drones, pursuing breakthrough technologies Sidewalk Labs Consults with cities on innovation and problem- New York, NY solving Deep Mind Conducts research into artificial intelligence, founded London, England in 2010 and acquired by Google in 2014 Source: Compiled by casewriter from the company websites: calicolabs.com, solveforx.com, nest.com, gv.com, googlecapital.com, verily.com, sidewalklabs.com, fiber.google.com, and deepmind.com, all accessed February 2016. Note: This is not an exhaustive list of Other Bets ventures.Exhibit 7 Top Five Institutional Shareholders (GOOGL), March 2016 Owner Name Shares Held Value (in $1,000s) FMR LLC (Fidelity) 18,588,835 $12,661,599 Vanguard Group, Inc. 17,822,708 $12, 139,759 State Street Corp. 11, 181,006 $7,615,830 T. Rowe Price Associates, Inc. 8,076,641 $5,501,323 Blackrock Institutional Trust Company 7,618,239 $5, 189,087 Source: Adapted by casewriter from "Alphabet Inc. Institutional Ownership," from the Nasdaq, Inc. website, http://www.nasdaq.com/ symbol/ googl/institutional-holdings, accessed June 2016. Exhibit 8a U.S.-listed Technology IPOs, 1995-2015 Deal value ($bn) - Number 50 +00 40 300 30 200 20 100 10 0 0 1995 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Source: Dealogic data via Nicole Bullock, "Technology Unicorns Stay Shy of IPOs," Financial Times, February 9, 2016, http://www.ft.com/intl/cms/s/0/85bd0034-cb2b-11e5-a8ef-ea66e967dd44.html#axzz4BrLFhyjY, accessed June 2016.Exhibit 8b U.S.-listed IPOs since 1980 600 500 400 number of companies 300 200 100 0 1980 1985 1990 1995 2000 2005 2010 2014 Source: Jay Ritter, University of Florida