POV: Google Buys Nest

MINDSHARE POINT OF VIEW - Hot on the heels of the CES conference where hardware manufacturers showed their latest wares, Google has paid $3.2b in cash for Nest Labs, the start-up making connected thermostats and smoke alarms. The move follows Google’s purchase of mapping app Waze and investment in taxi start-up Uber, and is probably a better sign-post of where the Internet is heading than more recent high-profile acquisitions such as Instagram or Tumblr

Nest was founded in 2010 by two former Apple engineers, one of whom had played a large part in the launch of both the iPod and iPhone. Their first product, released in 2011, was a connected thermostat that monitors energy use and ‘learns’ what people are using, thereby enabling it to maximize energy efficiency. The second Nest product, a smoke and carbon monoxide detector, was released in 2013: it can send alerts to your phone, can be switched off with a wave and, when connected to a Nest thermostat, can turn off heating if smoke or carbon monoxide is detected.

Google had already invested in two of Nest’s funding rounds, and had even launched its own energy monitor itself (the service was ‘retired’ in 2011). But this acquisition is about much more than energy, particularly given Google’s recent purchase of Waze, which tracks traffic data, and its investment in Uber, which is likely to give it access to data about driving trends. As Google looks to move beyond its core offering from a search engine, that reacts to queries, to Google Now, which aims to predict what people will want or need, having access to companies that create and log data about two of the places people spend most time (at home and in cars) makes perfect sense.

Nest have been quick to say that privacy is a major concern and that their terms of service won’t be changing (meaning Google can’t just suck this up), but it seems likely that at some point this sort of data will start powering Google services. It’s also worth noting that this is Google’s largest acquisition to date, after that of Motorola. As the Internet moves ever further away from its original home of PCs, into every device and object imaginable, owning a company that can make thermostats look as desirable as an iPad, could be very useful.

However, Google’s track record in branching out beyond search is mixed. Its entertainment streaming device, the Nexus Q, was a notable failure, while its new Chromecast product, which makes any TV ‘smart’, and costs just $35, looks much more promising. Plugging Nest into this makes Google potential “frenemies” with  the likes of LG and Samsung, who make heavy use of Android, but are increasingly pushing their own apps and services as they looks to become synonymous with the connected home. At some level, this purchase is also about Apple.

most of the big companies in tech are trying to eke out a lead in the predicted Internet of Everything; by betting big on beautiful design, intelligent use of data and smart hardware, Google has clearly shown its interest. If it can find a way of pulling its now vast array of services and products together without whipping up privacy campaigners and scaring off customers, it could well steal a march. Brands would be advised to think about what they can learn from Google’s efforts as well as thinking about new places to put relevant ads or native content.

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