With not a single rumor to foretell the news, Google shocked the tech world Thursday by announcing that Chief Executive Eric Schmidt will step down to a smaller role of executive chairman. Co-founder Larry Page is the new CEO, and Sergey Brin's official title will be Co-Founder.
Now, management shakeups usually don't have a direct, immediate impact on consumers. I'd put them just ahead mergers and acquisitions on the spectrum of boring-yet-important tech news.
But Schmidt's stepping down is big news, and it's going to have a major impact on how Google evolves in the next few years. To get a sense of this, let's consider some of the biggest challenges Google is facing now:
Search: Google's been taking some heat lately over the quality of its search results. Spam abounds, and last December, Google had to tweak its algorithm to stop shady business owners who were feeding on negative reviews to boost their search rankings. Search is Google's core product, so any lack of faith in search results is a big deal, and needs to be addressed in earnest.
Social: Related to Google's search problems is Facebook's ascent to more than 500 million users. People use Facebook to share links and recommend products -- essentially, the same services Google offers -- and the results are inherently more trustworthy because they come from people you know, rather than computer algorithms. With Orkut and Buzz, Google has failed to create a legitimate Facebook rival. A third attempt, known in rumors as Google Me, is reportedly in the works. Google can't afford to strike out on social.
Software: Google has built a successful smartphone platform in Android, but now it has to make the transition to tablets. Meanwhile, Google must figure out what to do with Chrome OS, its browser-based PC operating system. Android's sudden popularity has made Chrome OS seem irrelevant even before the availability of any consumer products. If Chrome OS doesn't take hold when the first laptops ship this year, Google may have to kill it or merge it with Android.
Advocacy: Outside of its product offerings, Google must lobby the government on net neutrality, as the company is now taking a stance that is friendlier towards Internet providers. Separately, Google has to make friends with the entertainment industry. Broadcasters have blocked Google TV's access to their Web sites, fearing encroachment on their ad space. There are also persistent rumor that Google is planning a music service, the success of which will likely depend in part on Google's relationships with music labels. Google has become so large that it must make nice with outside forces.
Here's the way I see it: Larry Page is going to bring a renewed focus on improving Google products -- that is, dealing with the first three challenges listed above. Note how Schmidt, in a blog post, said the management change would "speed up decision making." Nimbler leadership is what the company needs to overhaul search, build a social network and figure out the best strategy for operating systems.
As for advocacy, that's all Schmidt. His blog post says he'll be focusing on "deals, partnerships, customers and broader business relationships, government outreach and technology thought leadership." In other words, his only job now is to make Google look nice to the outside world. (In that case, he might want some practice at avoiding creepy comments about privacy.)
Only time will tell if Page is ready for the job, but a shake-up seems like the right call. Google now employs 24,000 people, and having a visionary at the top seems like a good way to tackle some very big challenges ahead.