Google had a big 2015: It divvied up its business into startups like Footpath, Calico, X, Fibre, and consolidated all those companies into one brand named Alphabet. Now Alphabet is very, very close to being named the world’s most valuable company — yes, more valuable than Apple.
The suite of companies that now form Google’s overarching powerbrand has been doing very well, and was valued today at over $US500 ($714) billion, nearly closing the gap with its Silicon Valley rival Apple. Meanwhile, Apple has not been doing as hot. Humans simply are not buying phones like they used to, which could destroy Apple, since the company relies on iPhone sales for more than half of its revenue.
Meanwhile, what does Alphabet have going for it? Well, Google (and I meant the original Google) is still the king of advertising, of course, even when it masquerades as an “urban think tank,” and Alphabet’s offerings are heralding a new age of autonomous vehicles, secret robots, and scary-fast internet. 2016 will be another great year for Alphabet. It might not be that good for Apple at all.
If this indeed happens, and Google ends up ascending to the top spot in all the land, you’ll want to familiarise yourself with the new ruler of Earth, Larry Page. In a sprawling New York Times profile (for which Page himself refused to comment), the co-founder and CEO is portrayed as a chill dude who mixes it up with non-billionaires:
Larry Page is not a typical chief executive, and in many of the most visible ways, he is not a C.E.O. at all. Corporate leaders tend to spend a good deal of time talking at investor conferences or introducing new products on auditorium stages. Mr. Page, who is 42, has not been on an earnings call since 2013, and the best way to find him at Google I/O — an annual gathering where the company unveils new products — is to ignore the main stage and follow the scrum of fans and autograph seekers who mob him in the moments he steps outside closed doors.
Just a regular guy running the most valuable company ever.
Also I guess that $US1 ($1) billion Google gave to Apple to stay on its phones was a pretty smart investment after all.
[NYT] 
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Alphabet could soon become the most valuable company in the world
The Google powerhouse traded on Friday morning with an equity value above $500 billion, less than 10 percent shy of Apple’s value. Investors value the search firm’s earnings from rapidly growing digital advertising more than twice as highly as Apple’s in a saturating smartphone market. Wall Street, however, may be overlooking Alphabet’s risks.
Global smartphone sales growth slowed to 10 percent last year, according to the consulting firm IDC. Reports of cutbacks at Apple suppliers suggest tepid demand for its latest phones. Analysts fear that the company may struggle this year to match the 230 million or so iPhones sold in the last fiscal year to September.
An oversupplied market could bring price wars, which could hurt margins — and the iPhone accounts for about 60 percent of Apple’s revenue and a bigger chunk of its profit. As a result, investors expect little growth in the company’s top line this year and are paying only about 10 times estimated 2016 earnings for the stock.
The mobile digital advertising market, meanwhile, should almost triple to nearly $200 billion globally by 2019, consultants at eMarketer reckon. Alphabet’s sales are forecast to grow about 15 percent this year. This wind at Alphabet’s back and the possibility that its self-driving cars, robots or medical endeavors will pay off help explain why it commands a price-to-earnings multiple above 20.
A subpar earnings report from Apple next week, or a strong one from Alphabet the week after, could bring a new name to the top of the world’s most valuable companies list.
Investors are, however, prone to overconfidence in technology trends. Facebook is snagging more and more ad dollars. European antitrust authorities are circling. Moreover, some of Alphabet’s revenue comes courtesy of iPhone users: it cost Google $1 billion in 2014 to keep its search bar on the Apple device, Bloomberg reports based on transcripts of a court case.
Alphabet is far more reliant on Internet advertising than Apple is on the iPhone. Ads bring in about 90 percent of the company’s revenue. Any hint of investor skepticism about that market could keep Apple at the top of the list.
