2014/01/23 Google Makes $3.2 Billion Bet on IoT Hardware
By Greg Potter
Google has announced that it is purchasing Nest, makers of smart thermostats and smoke detectors, for $3.2 billion. Nest, founded by former Apple engineers and executives, started out two years ago selling a smart connected thermostat that could learn the comings and goings of the occupants to better manage the HVAC system. More recently, Nest released a smart connected smoke and CO alarm, the Nest Protect, which can network with the previously mentioned thermostat to do things like shutting off the furnace if CO is detected.
The Nest Thermostat and Nest Protect devices are well thought out products with price points of $249 and $129, respectively. The main selling point of Nest devices, other than their utility, is their user interfaces. Both devices allow for control via a dedicated smartphone app, and the thermostat learns your habits so you don’t have to fiddle with it except in certain situations. The UI for the Nest Protect also allows for physical interaction. For instance, the Nest Protect’s alarm can be shut down simply by waving your hand in front of it, mimicking what one may naturally do with any other smoke detector, fanning the smoke away in order to turn the darn thing off.
Every week it seems that someone is launching a new home automation platform. From big box retailers like Staples and Lowes to startups like SmartThings and Revolv, everyone wants to get into the next big market for electronic devices. Nest stood out because it did not launch a platform itself, but concentrated more on hardware design and the user experience. With Google now in charge, a whole host of interconnectivity options are opened up for Nest users. With this acquisition, Google is most certainly on course to begin developing its own platform to interoperate between Android and Nest devices, and probably other home automation protocols as well. With Google’s large reserves of cash and huge Android base, it’s kind of like an Orca doing a belly flop into a plastic kiddy pool.
That comes with problems though. The biggest of which is a privacy concern. The Nest Thermostat, in particular, is interesting because it uses a combination of sensors to detect whether or not anyone is at home in order to better manage your HVAC system.
Those sensors can be integrated with other systems and platforms via Nest’s API. Therein lies the crux of the problem for some consumers; are they comfortable with Google knowing where they are at all times?
MRG Analysis
With traditional high-end home automation platforms like Control4 moving downscale from the high-end to more mid-range pricing, PayTV operators, alarm companies, as well as the aforementioned big box retailers and startups involved in the home automation market, Google’s entrance is certainly evidence that much larger companies will also begin to enter the home automation market. Samsung, for instance, while concentrating on connected home appliances for the high-end home automation market, should soon release a set of connected light bulbs for the lower end of the market. While this is a small start to entering the lower end of the market, don’t expect them to lie around and wait for Google or others to take the market away from them as Android did to competing mobile operating systems.
Source: MRG Analysis
