Just days after the conclusion of International CES, the annual tech bonanza in Las Vegas where, this year, the phrase on the tip of everyone’s tongues was (aside from “Wi-Fi enabled Crock-Pot") “connected home,” Google has made an aggressive, game-changing entry into just that: the connected home.
Earlier today, it was announced Google plans to acquire Nest Labs — Tony Fadell’s nearly four-year-old Silicon Valley startup responsible for making household thermostats smarter and smoke detectors, well, sexier — for $3.2 billion in cash.
The announcement sent shockwaves across the tech word not just because of the staggeringly high price tag attached to the acquisition but also because of the heated rivalery between Google and Apple, a company with which Nest shares a long and complex history (and many former employees). It's kind of like sleeping with the enemy, but well after the fact.
The highly revered Fadell, of course, is the erstwhile Apple design demigod responsible for introducing the world to the original iPod. Fadell’s co-founder at Nest is Matt Rogers, a fellow Apple expat who served as a software exec. Often dubbed the “Apple of smart home tech,” Nest Labs, to date, has released a sophisticated, non-shrill smoke/carbon monoxide detector called Nest Protect and, before that, two incarnations of its signature product: an intuitive thermostat that, when used to its full advantage, has the potential to save homeowners a significant chunk of change in energy costs.
Some have long assumed that if Nest were to be purchased by a tech titan, Apple would be the one to do it. After all, such a deal would have paved the way for a homecoming of sorts for its two most prodigal sons. Others aren't surprised at all that Google was the one to step foward. CNET shares its thoughts on why Apple didn’t make the move (insider reports reveal that Apple was never in the mix as a serious bidder to begin with) while Business Insider theorizes that alleged bad blood between Faddel and Jony Ives, Apple’s lead hardware and software designer, might have something to do with Apple’s non-interest in procuring the quickly growing home tech brand.
Also, let us not forget that Google Ventures, the investment arm of the Mountain View-based Internet search behemoth, has had its hand in Nest Labs since the very beginning as an early funder of the startup. With the acquisition, Nest will continue to operate independently as its own distinct brand — a brand dedicated to, as Fadell puts it in a blog post announcing the acquisition, reimaging and reinventing “unloved products that proliferate in our homes." However, as things go, Fadell will now report to Google’s chief executive and co-founder, Larry Page.
The acquisition has also managed to raise a few eyebrows due to, well, the very of nature of how Google operates. Google analyst Danny Sullivan explains to the New York Times: “Google likes to know everything they can about us, so I suppose devices that are monitoring what’s going on in our homes is another excellent way for them to gather that information. The more they’re tied into our everyday life, the more they feel they can deliver products we’ll like and ads.”
Nest users concerned about how the acquisition will alter Nest’s existing privacy policies needn’t fret. Fadell explains to the Times that nothing will change: “That was a major concern or question we had, and they have done an amazing job of convincing us that our privacy policies are going to be well-respected in their organization.”
Adds Sullivan: “History has shown that privacy policies do change. They won’t hand over Nest data to Google, and Google mines it for whatever they want, but there could be incentives or reasons why it might make sense to tie it to a Google account.”
Over at Gigaom, columnist Katie Fehrenbacher shares her take on the big winners — Fadell and Rogers, Nest’s investors, cleantech investors, etc. – and the big losers – Apple, traditional thermostat manufacturers, “consumers worried about data," etc. — in the yet-to-be-sealed deal. Fehrenbacher also goes into detail about one aspect of our daily lives that she believes will truly benefit from the acquisition: overall home energy consumption:
Yes, Nest isn’t just an energy software and hardware company — its evolving into more of a consumer electronics and internet of things company — but it has one of the most interesting, sophisticated and coveted home energy tools out there. If Google is able to give Nest the resources it needs to get its thermostat and software out there at a much greater scale, that means lower energy consumption ahead for homes that adopt it. And that’s a good thing overall for the world and for lowering carbon emissions.
When Matt and I started Nest in 2010, we were determined to change our homes and the world around us. Starting a business focused on the lowly thermostat seemed like a crazy idea at the time, but it made all the sense in the world to us. That little device that went unnoticed and unchanged year after year on the walls of our homes was a lost opportunity to save energy and money. We knew we could do better.
So we got to work. 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.
Fast-forward to today, and we are well on our way to achieving what we set out to do. Our products are loved by customers, best-sellers across major retailers and installed in homes around the world. We have partnerships with some of the largest energy companies in the country to help people save energy and money. We have a huge team of 25,000+ certified professionals who help install Nest in the US and Canada and our company has more than 300 employees spread across three countries.
So if things are going so well, why did we decide to partner with Google?
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.
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