Over at TechCrunch, Romain Dillet is floating an interesting theory (based on chats with anonymous sources) about Google, Motorola, and Nest: Having sold off Motorola Mobility to Lenovo for a couple billion, Google will now transform Nest (which it acquired in mid-January for $3.2 billion) into its hardware arm.
While Nest currently builds a very limited portfolio of products (most notably the Nest Protect, a $190 smoke detector that includes an embedded system-on-a-chip and an advanced sensor system), Google may task its subsidiary’s engineers and designers with building a wide range of hardware, although it’s unclear whether that mandate will include mobile electronics such as tablets and smartphones.
The TechCrunch piece suggested Google’s little adventure with Motorola was a “false start,” but that the Nest team brings enough design know-how (many, including Nest CEO Tony Fadell, are former Apple employees who worked on projects such as the iPhone) to transform Google into much more of a force in consumer hardware.
If Nest starts building tablets, smartphones, and other consumer devices for Google, it’s safe to assume that hardware will run some variant of Android. And if that’s the case, Google could find itself in the same conundrum that hobbled its Motorola deal: anxious to keep its Android partners happy, Google didn’t spend the marketing dollars necessary to make its Motorola devices into standout competitors; even its Nexus devices, considered the flagship of the Android ecosystem, rotated manufacturing partners on a regular basis. By the time Google actually began investing into Motorola’s sales efforts (it reportedly spent hundreds of millions of dollars to promote the Moto X), it was a case of too little, too late.
Until Google solves that quandary—perhaps it will start emphasizing its in-house devices over its Android partners’ offerings, and risking their wrath—any Android-based electronics produced under its label probably won’t receive the backing they need for at least a shot at dominating the market. Which means, at least for the time being, it’s probably best if Nest sticks to devices for the “smart” home—an arena that, at least based on increasingly stratospheric projections, could become insanely profitable over the next several years.