Mountain View, California — Google on Thursday reported Q4 2010 revenues of $8.44 billion, but the bigger news was a surprise move that could signal the Internet search engine giant is going back to its start-up roots as challenges mount. Google shook up its ruling triumvirate yesterday, announcing that CEO Eric Schmidt would be moving out of day to day leadership to become Executive Chairman, while co-founder Larry Page will become CEO, a startling move to make the company more nimble at a time when competition heats up with fast-growing rivals like Facebook, Google said.
Facing new threats to its role as the world’s most powerful Internet company, while the company’s earnings are still stellar, Schmidt has made a series of embarrassing statements and the company has endured some very public failures.
But yesterday’s announcement that Google’s 37-year-old co-founder, Pager will be taking the reins from Schmidt, the boardroom master-blaster who instilled corporate discipline to the fledgling Web start-up with 200 employees a decade ago into the owner of the world’s most-used search engine.
“Larry is ready,” Schmidt, who will become executive chairman, said on a conference call yesterday. “It is time for him to have a shot at running this.”
Page’s commandeering of day-to-day operations marks a return to Google’s technological roots, 13 years after he and fellow Stanford University student Sergey Brin founded what has become the world’s No. 1 Internet search engine with $29 billion a year in revenue.
“Day-to-day adult supervision no longer needed!” Schmidt tweeted after the announcement.
But is it really a meaningful idea to pass on the day-to-day activities of one of the world’s biggest and most essential organizations to the guy who conceived of it in his dorm room at Stanford University? There is no doubt that Larry Page is a mastermind with technology, but does he have the ability and know-how to lead a 24,000-employee company–one with its fingers in dozens of different businesses–not only running but advancing? That question makes this management shuffle a very high-stakes gamble.
Schmidt, 55, who has served as Google’s high-profile CEO for a decade, would remain with the Mountain View, California-based company as executive chairman, focusing on partnerships, customers and government outreach, he wrote in a blog post.
Google said the management changes would take effect on April 4.
Technology bloggers and analysts were uncertain what exactly to make of the management reorganization at the company which dominates the search engine market but has been coming under pressure from social networking rivals such as Facebook.
“We view this as evidence of the founders staying fully engaged in the business — a positive,” said Mark Mahaney, an analyst at Citigroup Inc. in San Francisco.
Danny Sullivan, editor-in-chief of technology blog SearchEngineLand.com, said Google’s “probably overdue for a major management reorganization.”
“The structures between the three have remained exactly the same over the past 10 years — which might as well be 100 years of Internet time,” he said in a blog post.
John Battelle, author of “The Search,” a book about Google and technology rivals, said: “Eric has been at it for a decade, a very long time to be running a company, particularly one that has very headstrong founders in key positions of power.”
“I think it is fair to say that Larry Page will not be a conventional CEO – he is not been much of a public figure for the past ten years,” Battelle added on his blog, Battellemedia.com.
“It will be interesting to see if that changes, or if Page chafes at the relentless public demands of running a massively scrutinized public company.”
Sergey Brin, who co-founded Google with Page, will retain the title of co-founder and will focus on strategic products. “I would like to work more on my personal passions, including several new significant products that I hope to tell you about in the future,” he said.
From left (Eric Schmidt, Larry Page, and Sergey Brin) (Credit: Google)
Schmidt, in a blog post, said: “Larry, Sergey and I have been talking for a long time about how best to simplify our management structure and speed up decision making.”
“For the last 10 years, we have all been equally involved in making decisions,” he said.
“This triumvirate approach has real benefits in terms of shared wisdom, and we will continue to discuss the big decisions among the three of us.”
But even though it has transformed into an all-powerful company with a rich stock price and enviable profits, Google is facing increasing competition from younger upstarts such as Facebook Inc., the social networking marvel that is vying with Google for Internet advertising revenue.
“A lot of the growth of the company used to be driven by invention,” said Yun Kim, an analyst at investment firm Gleacher & Co. “Having someone with the very strong products background that Larry has could bring some innovation back to Google.”