Google’s recent acquisition of Nest – the second largest acquisition in Google history – has far greater implications than the addition of the Nest Thermostat and Nest Protect, a smoke and carbon monoxide detector, to its product line.
Why has Google offered up a jaw-dropping amount of cash for the hardware business? Beyond the initial product offerings, Google has also bought the thinking and design expertise behind these products and staked its claim in the connected home race. Nest will continue to be run by co-founders Tony Fadell and Matt Rogers, both former Apple execs. Fadell, former SVP on the Apple team that created the iPod and iPhone is often referred to as the ‘Father of the iPod’. Google’s purchase will pave the way for a big push into connected consumer devices and just may fill the design gap between Google and Apple. The acquisition also makes us wonder what patents Nest must have up their sleeve.
The connected home
The connected home or the ‘internet of things’ has been a battleground for several years. Last week’s CES was filled with connected devices from kettles and fridges to cars. So far there is a massive selection of connected gadgets, but no one has yet owned the hub to communicate and control all these devices. Google now has the opportunity to create that hub with the combination of Nest and Android.
Brand and retailers
The connected home will again change the way consumers shop, for instance fridges will start to monitor their own contents and cars will know when they need new tyres. Brands will need to be in front of consumers no matter what platform that is on.
Retailers have a unique opportunity to educate their customers and build showrooms of connected devices interacting with each other, to highlight the benefits of home automation.
How will Nest’s competitors react?
It will be interesting to see how home services and utilities providers will react to Google’s leap into the home. Will the likes of BT and Sky fight back or look to integrate their services?
British Gas already have a directly competing product in the UK – Hive. As the largest energy supplier in the UK, with a customer base of 12 million, will Google’s Nest be able to compete from a standing start when they launch in the UK?
And what about Apple?
Many had speculated that Nest was more likely to sell to their former employees rather than Google. Nest will continue to support both iOS and Android devices though.
Apple hasn’t yet made a decisive step into ‘the internet of things’, but they have several products that lend themselves nicely to it. For example, iBeacons can track your exact location within the home and Siri can assist with voice commands. It won’t be long before Apple makes its play for the connected home, so watch this space.
Met with scepticism and privacy concerns from some existing Nest users, Google are taking another step into users’ lives, now actually invading their households. They will learn when users are home and how they behave there. Google’s previous forays into the home haven’t always been a resounding success with the Nexus Q Orb, Chromecast and Google TV all receiving mixed reviews. However, Nest’s emphasis on machine-learning should be enough to establish the tech giant as a serious player.
Google is all about data, and that is a key element of the purchase. Google already collects user data across online and mobile to sell advertising — imagine the appeal of adding consumer habits at home. Google will be able to refine ads and services based on where people are within their homes.