So Google acquired Nest for $3.2 billion in cash.
A few years ago, the search-engine giant purchasing a company that builds ultra-sleek and connected home appliances would have seemed a little odd. These days, however, Google is on a hardware kick: in addition to manufacturing its own tablets and phones, it’s purchased several robotics-makers (including Boston Dynamics, which builds mechanical beasts with DARPA funding) and experimented with self-driving cars. In that context, the Nest purchase makes a little more sense.
Under the terms of the agreement, Nest will continue to operate as its own distinct entity under the leadership of CEO Tony Fadell. In a statement, Google CEO Larry Page suggested that his company would use its reach to place Nest products in more homes around the world. “Nest’s founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family,” he wrote. “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.”
Long before its acquisition, Nest was a company built on a potentially multi-billion-dollar concept: take necessary but unloved household devices such as smoke detectors and remake them with an Apple-like sheen. The Nest Protect ($190) looks more like a device for streaming music or movies than something designed to detect a burning house; its hardware includes an embedded system-on-a-chip and a handful of sensors, capable of connecting to other devices via wireless.
“Would this be a cherished product? Can it be more than a rational purchase—can it be an emotional one?” is the thought process employed by Fadell when judging new products for Nest-ification, according to Wired.
The big question now is what Google plans to do with Nest, and some answers immediately spring to mind. For years, the giants of Silicon Valley have been doing their best to crack the “connected home” market. If Google can leverage its resources to place Nest products in millions of homes (and considering how Nest’s sales were probably very tiny, that could prove a tough job), then it would be well on its way to conquering a significant portion of that market.
Nest devices also feature hardware that can capture lots of data about a home and how its occupants behave; imagine how all that data would benefit Google, which still derives the lion’s share of its revenue from targeting consumers and businesses for advertisements.
The Nest acquisition is also a defensive play: by buying it, Google takes the company off the table for potential rivals such as Apple, Cisco, and Intel. But Google moving aggressively into the connected home market could convince all those firms to launch their own smart-appliance efforts, in turn launching a whole new technological battlefront. (Imagine the electronics in your car refusing to interoperate with your sensor-enabled kitchen hardware because one system runs iOS while the other is built on some sort of Android distribution.)
But if Google and other tech giants have demonstrated anything over the past decade, it’s that privacy polices are subject to change. That could make more than a few potential purchasers leery of Nest’s sleek hardware.