Some hours ago Google acquisition of Nest Lab Company has been announced. The price is in the order of about 3.2 Billion $, that is a huge amount of money if you simply think about the fact that Microsoft in September 2013 announced that it bought Nokia’s phone business for 7.2 Bln $.
Google bought Nest
What is Nest? In principle from rough numbers point of view, it could be defined as a small-medium company located in Palo Alto, California with 130 employees by the end of 2012 (Wikipedia source) that has its business in home automation designing and manufactures sensor-driven, Wi-Fi-enabled, self-learning, programmable thermostats and smoke detectors, so not so much respect a lot of other companies that you can see in US, Europe and Asia selling some very technical devices that the interior design usually try to hide in the modern houses or that try to integrate in a sort of display panel shape.
But sometimes the rough numbers doesn’t explain the potentiality about a product that in such case I would define a business more than a simple product. For example, think about iPod (this example is not accidental, as we see soon); the first portable MP3 player was launched in 1997 and sold in Asia by Saehan Information Systems with “MPMan” player and some good players from technical point of view were released in the years after as Diamond Rio, Creative Nomad and so on, but what was a revolution in the mp3 music was the iPod that put in a same device high technology, fashion design and the use of an ecosystem as iTunes, and the iPod was the first step in a positive business turnaround for Apple.
Nest Logo
I said that the iPod example isn’t a casuality, this because Nest Labs has been co-founded by former Apple engineers Tony Fadell and Matt Rogers in 2010, Fadell known as “one of the fathers of the iPod” and so it is quite clear that Google see in Nest Lab not only a manufacturer of devices that in some way could be categorized in Domotic Area but a trend setter company highly focused on the “Smart world” revolution.
Let see what Nest offers up to now: it has two devices in its portfolio and both of them are “fashion” with a design that could easily integrated in quite all homes.
The first one is the thermostat with a quite small form factor that offer a self-programming with auto-learning feature and the Company claims that “the Nest Thermostat learns what temperatures you like and builds a personalized schedule. Teach it efficient temperatures for a few days and, within a week, it’ll start setting them on its own” and promising that such auto-learned programming allows to save about 20% of heating and cooking bill.
Nest Thermostat
The above features jointly with the very important one that is a nice “toy” make it as an object that someone doesn’t buy for himself but also for a gift giving so a very important added value to such object.
The other device sold by Nest Lab is a smoke and carbon monoxide (CO) alarm that also gives you an earlier warning if there’s an emergency, or allows you to silence Nest Protect if it’s just a nuisance alarm. Also in this case we could say that is an object that is some way is innovative and integrated in a home WLAN, but also it is a nice object and… let tell me if the product details below and the two colours don’t remember something other?
Smoke and CO Alarm screenshot from Nest web site
Of course, but is quite obvious, both Nest Lab products have a good integration with smartphones with appropriate Nest App.
The Google choice to leave the Nest brand as it is without Google re-branding is in my opinion important because it allows to separate such devices from the “too geek devices” smell that Google and Android brand have, allowing to create a real new business.
Such acquisition is in the line that Google had in the last times, i.e. to be not only a Web Company but a Company with different and “concrete” business sectors, think about Nexus products, Chrome computers – that are rising their sales in US -, the Google Glass business, Motorola smartphones (this business bought, I suppose, mainly for its IPR) and not forgetting its recent interest in Automotive with Android and OAA (Open Automotive Alliance) and Robotics with Boston Dynamics, with this last business that could also see some interesting overlap with Nest itself.
So, are worth 3 Bln $ for a small company producing two devices for Co/smog alarms and temperature measurements? The first answer could be that is a crazy purchasing but if we see the added value of Nest, the interest on Domotics with IoT -Internet of Things- and “Smart Integration” seen at Las Vegas CES 2014, the effort spent by Google could be justified and why not … part of the money spent could be considered a sort of advertising and the hype created by this acquisition is in the right way to focus media and market attention to “smart domestic appliances”.
Let’s see in the next future if Google’s choice will be winning or not.