Google has paid $3.2 billion for smart thermostat maker Nest Labs, founded by ex-Apple executives Tony Fadell and Matt Rogers. Will the acquisition mean "conscious homes" where Google sees everything we do?
Founded in 2010 Nest Labs is a relatively new startup that has 300 employees. It currently has two products - its energy-efficient, "self-learning", thermostat that allows you to control home heating from your smartphone or other Internet-connected device and Nest Protect, a smart smoke and carbon monoxide smoke detector that tests itself so you don't have to.
If you have both devices in your home and Nest Protect detects a problem it will automatically switch off the heating as well as sending you a message.
While it probably makes sense for Google to acquire a company that has successfully revolutionized products that are found in every home across not only North America but the entire developed world, the sum paid for Nest Labs comes as a surprise and has led to speculation as to why.
There seem to be three reasons:
Nest's revenue is probably higher than you might imagine from a two-product outfit. According to Morgan Stanley analyst Scott Devitt Nest is selling 100,000 thermostats per month and with a retail price tag of $250 per unit he estimates annual revenue at $300 million
Business Insider's chief correspondent Nichols Carlson points out that Nest is a good fit for Google CEO Larry Page's vision for what Google does. He points out:
Nest uses complex technology to solve a problem that lots of people have on an everyday basis.
That's what Page wants to do with Google.
He wants to use complex technologies to come up with simple solutions for complex problems that huge masses of people have — like controlling their climate of their homes in an energy-efficient way.
Larry Page (center) with Matt Rogers (left) and Tony Faddell (right)
It transpires that Fadell showed the prototype smart thermostat to Page back in 2011 and Google has helped the start-up raise venture capital ever since.
But wouldn't Apple have been a more obvious partner for Nest given it was founded by two ex-Apple guys?
No; it was hostility between Jony Ive and Tony Fadell that was the impetus for Fadell, who is credited with the iPod, to leave Apple. But presumably Google is able to count its acquisition as a win in its own stand-off against this rival.
Writing on the Next blog about why Nest decided to partner with Google, Tony Fadell states:
Google will help us fully realize our vision of the conscious home and allow us to change the world faster than we ever could if we continued to go it alone. We’ve had great momentum, but this is a rocket ship.
Google has the business resources, global scale and platform reach to accelerate Nest growth across hardware, software and services for the home globally. And our company visions are well aligned – we both believe in letting technology do the hard work behind the scenes so people can get on with the things that matter in life. Google is committed to helping Nest make a difference and together, we can help save more energy and keep people safe in their homes.
Google has been busy acquiring robotics companies and now it seems home automation is on its list. There is a synergy here and just as we have already seen advances in robot locomotion maybe there will be a breakthrough that will provide us all with safe and energy efficient homes at an affordable price.