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Google to acquire Nest for $3.2 billion for home automation and Internet of things play

In what is perceived to be a surprise move, Google has announced it will acquire Nest for $3.2 billion in cash. Founded by former Apple exec Tony Fadell, who had played a major role in the creation of

nest-smoke-detector

In what is perceived to be a surprise move, Google has announced it will acquire Nest for $3.2 billion in cash. Founded by former Apple exec Tony Fadell, who had played a major role in the creation of iPods, Nest makes connected thermostats and smoke detectors. Nest’s thermostats have been one of the most popular connected devices bought at Apple Stores.

Nest’s vision is to bring design and utility to unnoticed devices at home that are important and can also save energy and money. “From the beginning, our vision was to create a conscious home. A home that is more thoughtful, intuitive – and nice to look at. No one had cracked the code and we were confident we could do it with the right product, the right team, and focus,” Nest founder and CEO, Tony Fadell wrote in a blog post announcing the deal.

According to terms of the deal, Nest will continue to function under its own brand name and will work out of its current office. Fadell will report directly to Google CEO Larry Page.

This decision wasn’t made on a whim – Google has been in the mix in some way or another for about three years of our almost four-year history. In fact, my first meeting with Google as a Nester was before we’d launched. At the 2011 TED Conference, Erik Charlton and I huddled in a corner with Sergey Brin to show him a video and an early model of the Nest Learning Thermostat – he instantly got what we were doing and so did the rest of the Google team when we showed them. In May 2011, Google Ventures led our Series B round of financing, and in 2012, Series C. Time and time again, Googlers have shown themselves to be incredibly like-minded, supportive and as big of dreamers as we are. I know that joining Google will be an easy transition because we’re partnering with a company that gets what we do and who we are at Nest –and wants us to stay that way.

This will be an interesting play for Google to get a leg up inside people’s homes. Google has tried doing this earlier but failed first with its Google TV and later with the Nexus Q. Google had also attempted something similar to Nest but without getting into the hardware with PowerMeter, a solution that let people get an analytics for their electricity usage and recommendations to lower their usage. However, Google killed it during its 2011 spring cleaning spree.

“Nest’s founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family. They’re already delivering amazing products you can buy right now – thermostats that save energy and smoke/CO alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries and fulfill their dreams!” said Google CEO Larry Page in the announcement press release.

What Nest provides Google is a talented team of industrial designers along with a lead into home automation solutions market. While we saw what LG and Samsung showcased at CES earlier this month with their vision of connected devices, their vision is limited to the consumers investing entirely into their own ecosystem. There’s an assumption (and understandably so) that users would buy all their home appliances from one brand, which can then talk to each other and the user for the connected home experience. However, that seldom works, unless there is a broad industry standard so devices can talk to each other irrespective of their brand.

Google understands that perfectly. The Nest acquisition is just the beginning of “Androidification” of connected devices, Internet of things and the automated homes.

  • Published Date: January 14, 2014 4:41 AM IST
  • Updated Date: January 14, 2014 4:48 AM IST