What happened?
Google is getting ready to shed its self-driving car project and turn it into a separate unit under the Alphabet (GOOG 1.43%) (GOOGL 1.42%) umbrella, according to Bloomberg reporter John Lippert.
Citing an anonymous source with a direct view of Google and Alphabet's inner workings, Lippert said that the move should happen in 2016. This would help Alphabet separate Google's online search and advertising business from the growing sprawl of other ideas, and also set the self-driving cars on a path toward becoming a revenue-generating business.
Does it matter?
This separation should have been obvious from the very announcement of the Alphabet holding company. The very reason for this company structure was to allow the sprawling conglomerate to do business in fields not related to online searches, without freaking out investors and users who will always connect the Google name with that ubiquitous search box.
If there's a surprise here, it would be that Lippert also noted the self-driving cars becoming part of an Alphabet-owned public transportation service. Think of this as a next-generation Uber or Lyft, except that the cars don't come with drivers and were designed by the same company that provides the ride-sharing service.
The path to that endpoint is long and winding, of course, and there's no guarantee that Alphabet will ever make it happen. At the same time, the self-driving vehicle idea is starting to take the auto industry by storm. Ford Motor (F 6.10%) was just given a license to test-drive its own unmanned vehicles on public roads in California, for example.
In short, Alphabet may simply be blazing a new business trail to be followed by hordes of other businesses -- Ford included.
That being said, if the car business takes off, we might soon forget that Alphabet sprung from an online service at all. So this particular move was not a big surprise, but the overall project bears watching very closely. Every little step will matter.
