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Google Acquires Smart, Connected Products Manufacturer Nest

Written By: Ted Rohm
Published On: January 15 2014

Google has announced that it has entered into an agreement to buy smart device manufacturer Nest Labs for $3.2 billion (USD) in cash. Nest is a startup company that makes cutting edge smart home devices such as the Nest Thermostat and Nest Protect. Nest’s mission since its launch in 2011 has been “to reinvent unloved but important devices in the home such as thermostats and smoke alarms.”
 
At this year’s National Retail Federation’s (NRF) Big Show in New York, we saw industry leaders like Samsung announcing an entire line of smart and connected consumer products, Staples extending its smart home initiative, and tens of other players announcing products that will be part of the IoT (Internet of Things) era. A recent report from McKinsey Global Institute goes so far as to say that the IoT will generate up to $6.2 trillion (USD) in new economic activity by the year 2025. Now the future of smart, connected products takes on an entirely new twist with Google strongly in the mix.
 
Foreshadowing the Future IoT
This acquisition by Google likely foretells the future of the IoT. With Google behind a growing line of smart products, they will be able to pool from huge sources of information and drive it down to the devices. It will be possible to link personal information such as one’s schedule and shopping and entertainment preferences with smart devices in the home. The devices will work in harmony with the personal information to, for example, send a shopping list from the refrigerator on the commute home and queue the evening’s viewing. Of course, at the same time Google will be able to push ads out across a broader network of screens and eyes.
 
With this acquisition, Google extends its reach further into more traditional manufacturing arenas. And with other acquisitions, like that of robotics firm Boston Dynamics, Google is becoming an interesting model for a conglomerate in the 21st century. The traditional corporate conglomerate models like GE, Siemens, Honeywell, and even the software conglomerate models are continuing to fade. These conglomerates and manufacturers on all levels will now find themselves facing Google and its massive war chest in the race into the IoT. And as the song once said, “The future’s so bright, I gotta wear” Google Glass.
 
What Does the Acquisition Mean for Nest Customers?
In the near term, Nest will continue to operate under the leadership of Tony Fadell and with its own distinct brand identity. Matt Rogers, Nest’s founder and VP of Engineering answered key questions for Nest customers on a Q&A on the Nest blog:

Will Nest continue to support iOS so I can have the Nest app on my iPhone or iPad?
Yes, absolutely. We’ll continue support iOS, Android and modern Web browsers so you can check in on your home and control the temperature from wherever you are.
 
Will Nest and Google products work with each other?
Nest’s product line obviously caught the attention of Google and I’m betting that there’s a lot of cool stuff we could do together, but nothing to share today.
 
What will happen to the Next warranties on products?
No change there—we stand behind our products like we always have.
 
Will I still be able to find Nest products at my local retailer?
You bet. We intend to continue selling through the same partners in the U.S., Canada, and the U.K.
 
Will Nest customer data be shared with Google?
Our privacy policy clearly limits the use of customer information to providing and improving Nest’s products and services. We’ve always taken privacy seriously and this will not change.
 
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