Google Moves into Smart Homes with $3.2 Billion Acquisition
By Jennifer LeClaire / Mobile Tech Today. Updated January 14, 2014.
The battle over home automation has heated up as Google buys into a thermostat maker. The technology giant just grabbed Nest Labs for $3.2 billion in an all-cash deal.
Nest's mission is to reinvent unloved but important devices in the home such as thermostats and smoke alarms. Since launching in 2011, the Nest Learning Thermostat has been a consistent best seller. The company's recently launched Protect smoke and CO alarm has earned good reviews.
"Nest's founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family," said Google CEO Larry Page. "They're already delivering amazing products you can buy right now -- thermostats that save energy and smoke/CO alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries and fulfill their dreams!"
Creating the Conscious Home
Tony Fadell, CEO of Nest, called the acquisition a "momentous day." When he and Matt Rogers founded the Palo Alto, Calif.-based company, he said, the two were determined to change their homes and the world around them.
"Starting a business focused on the lowly thermostat seemed like a crazy idea at the time, but it made all the sense in the world to us," he wrote in a blog post. "That little device that went unnoticed and unchanged year after year on the walls of our homes was a lost opportunity to save energy and money. We knew we could do better."
The duo got to work creating what Fadell calls a "conscious home" -- a home that is more thoughtful, intuitive and nice to look at. Fadell and Rogers were confident they could do it with the right product, the right team, and focus. The rest has become part of Google history.
"Google will help us fully realize our vision of the conscious home and allow us to change the world faster than we ever could if we continued to go it alone. We've had great momentum, but this is a rocket ship," Fadell said.
"Google has the business resources, global scale and platform reach to accelerate Nest growth across hardware, software and services for the home globally. And our company visions are well aligned -- we both believe in letting technology do the hard work behind the scenes so people can get on with the things that matter in life. Google is committed to helping Nest make a difference, and together, we can help save more energy and keep people safe in their homes."
The Google-Powered Home
We asked Greg Sterling, principal analyst at Sterling Market Intelligence, for his take on the acquisition. He told us Nest is an interesting albeit pricey acquisition for Google.
"It indicates the company is very serious about developing products for the 'smart home.' In some ways the acquisition is very similar to that of Motorola mobility," Sterling said. "Google was also very interested in getting Nest's co-founders as part of the deal. This should dramatically accelerate Nest's ability to roll out new 'smart appliances.' However, for some people being owned by Google will tarnish Nest's brand appeal."
Nest will continue to operate under Fadell's leadership and with its own distinct brand identity. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the U.S. It is expected to close in the next few months.