UPDATE 1-Alphabet unveils Chronicle, a new cyber security business incubated at X

at X@ (New throughout, adds background and comments from Chronicle CEO)

SAN FRANCISCO, Jan 24 (Reuters) - Alphabet Inc on Wednesday unveiled Chronicle, a cyber security business founded in its X incubation unit in February 2016 that is focusing on developing digital "immune systems" for customers.

Chronicle becomes the third company spun out of X and into the holding company Alphabet, joining self-driving vehicle technology company Waymo and life sciences company Verily as independent units alongside Google.

Stephen Gillett, a former Symantec Corp chief operating officer serving as Chronicle's chief executive, said in a blog post that the new business is developing software to analyze corporate computer usage data and identify malicious programs that have infiltrated the system.

The technology is being tested at an unspecified number of Fortune 500 companies, he said.

Chronicle also houses VirusTotal, a virus-scanning tool Google acquired in 2012.

Selling cybersecurity services broadens Alphabet's expanding efforts to become a player in enterprise technology. Google is a distant rival to Amazon.com Inc in offering cloud computing infrastructure and Microsoft Corp in both cloud services and workplace productivity software, but is heavily investing to catch up as it seeks to grow revenue outside of its online advertising sales business.

"Well have our own contracts and data policies with our customers, while at the same time having the benefit of being able to consult the world-class experts in machine learning and cloud computing (among many other topics) that reside in other parts of Alphabet," Gillett said.

Chronicle aims to go beyond the dozens of security tools organizations already use, the company said, by conducting automated data analysis to reduce the time it takes to discover an incident to minutes from hours or days.

The company would seek to lower customers' data storage costs to make its technology affordable, Gillett said.

Astro Teller, head of Alphabet's X, said his team pursued cybersecurity technology after noticing that dealing with cyberattacks had become a yeah, yeah problem, as in yeah, yeah, a lot of people have diabetes, there are things to manage it.

"The reality for most companies today when it comes to cyber security is reactive: find and clean up the damage," Teller said in a blog post. "The real moonshot, which is still several years away, is predicting and deflecting cyber attacks before they infiltrate an organizations network."

Gillett, also a former Starbucks Corp chief information officer, co-founded Chronicle with former Google cybersecurity leaders Shapor Naghibzadeh and Mike Wiacek. Gillett met them after becoming executive-in-residence at GV, Alphabet's venture capital investment arm, in 2015. (Reporting by Paresh Dave; Editing by David Gregorio)