NEW YORK (AdAge.com) -- Google announced today that co-founder Larry Page will take over as chief executive and Eric Schmidt will be stepping down into a new role as "executive chairman," overseeing the company's expansions abroad. Mr. Page was the company's CEO prior to Mr. Schmidt coming on board a decade ago, and managed it from the first two employees to 200.
"I am enormously proud of my last decade as CEO," Mr. Schmidt wrote on the company blog. "I am certain that the next 10 years under Larry will be even better! Larry, in my clear opinion, is ready to lead."
Executive shakeups have long been a staple process to the growth of Silicon Valley startups, which led Google to hire Mr. Schmidt, a former Sun Microsystems executive, to head the company in 2001 and to build its nascent search-advertising business.
During the last decade Mr. Schmidt, who holds a Ph.D. in computer science, led the company through impressive growth and an initial public offering in 2004. Google is now one of the world's largest companies, with more than 24,000 employees and a market capitalization of more than $200 billion. The company recently reported earnings of $6.37 billion for the recent holiday quarter, a staggering 28.7% increase of the same period a year ago, driven largely by an upturn in the economy and increase in consumers' online-shopping habits.
The company had famously been run during the last decade by triumvir, with Mr. Schmidt, Mr. Page and co-founder Sergey Brin making decisions together. That structure will change under Mr. Page's leadership; going forward, decision-making would become more efficient, or in his words, "better."
On an earnings call with analysts, Mr. Schmidt said he doesn't anticipate any material change to Google's strategy. "We agree on almost everything anyway," he said. "I'm sure this partnership will continue." Separately, he said of Mr. Page, "I believe Larry is ready. He's been working in this area for some time," and underscoring what had long been thought of Mr. Schmidt's parental role at the company, he had written in a tweet announcing the management change: "Day-to-day adult supervision no longer needed!"
Mr. Page said despite Google's established presence, there's more room to innovate. "When we started Google, people thought we were coming in too late," he said. "The internet computing life is still at the early stages. I cannot be more excited about moving this forward."
For his part, Mr. Schmidt talked briefly about his new role looking at "external issues," such as dealing with foreign governments, such as the European Union, which have become wary of Google's dominance, suggesting Mr. Schmidt will have a fairly workaday presence, despite his title. "We're talking to them more," he said of foreign governments. "Our core strategy is to literally communicate," he said. "We're tying to be a transparent as possible, and we think it's working."
Tellingly, in a recent blog post on Harvard Business Review, Mr. Schmidt wrote a few weeks ago about Google's ambitions for 2011 in which he talked about the growing importance of the mobile business, but specifically in global terms.
"We want to increase the availability of inexpensive smartphones in the poorest parts of the world," he wrote. "We envision literally a billion people getting inexpensive, browser-based touchscreen phones over the next few years. Can you imagine how this will change their awareness of local and global information and their notion of education? And that will be just the start."
One former employee recalled Mr. Schmidt's inspirational leadership style. "He made you believe that you were working on the fundamentals of the internet and that the internet could not exist without you working on it," said Jamie Divine a designer who worked at Google for four years under Mr. Schmidt's reign and often sat with him, Sergey and Larry in meetings. "Over the next years we'll see a different kind of risk-taking come out of the company -- since the risks that Larry and Sergey will take will be different than the kinds of risks that were possible under Eric as the CEO."
As for the company's core search business, Google continues its long-run dominance. "Its share of the search market grew in the recent holiday quarter to 82.6% from 77% in the same period last year, according to technology marketing firm SearchIgnite. Google's only significant competitor, upstart Bing, which completed its integration into Yahoo search at the end of last year, actually lost market-share, falling to 17.4% in the last three months of the year from 23% in the same period in 2009.
"Google outpaces the competition with a better product," said SearchIgnite CEO Roger Barnett. "They tend to convert. Marketers are willing to pay more for them." Mr. Barnett pointed out that search advertisers may have been wary to buy into Bing for holiday planning as it was in the midst if integrating with Yahoo, which wasn't complete until October, by which time plans for search buys for the recent quarter were already completed.
Google's shares saw a slight uptick of 2% in after-market trading.
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Contibuting: Irina Slutsky