Google’s Nest Acquisition Is a $3.2 Billion Bet on the Internet of Things

This deal is about far more than thermostats and smoke detectors.

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Nest's Nest Protect smoke detector

News broke this afternoon that Google is buying Nest — the maker of Internet-savvy thermostats and smoke detectors — for $3.2 billion in cash. It’s a big acquisition by any standard, and the money involved is less interesting than the future implications — for Nest, for Google and maybe for the entire tech industry.

Nest was co-founded by Tony Fadell (the man who instigated the iPod and turned it into a company-changing business for Apple) and Matt Rogers (also an Apple alum). Google says the Nest brand will stay a distinct brand and that Fadell will continue to run it. But it’s a safe bet that Google isn’t plunking down $3 billion because it has a hankering to get into the thermostat and smoke-detector business. What it’s getting is the team that’s done as much thinking as anyone about what happens when almost anything in a home might be a polished, connected, downright pleasant smart device.

Once you’ve used Nest’s products, it’s a lot harder to think of the Internet of Things — also known as the Internet of Everything — as a mere tiresome buzzword. It’s an epoch-shifting development that’s going to change the world at least as much as the PC, web and smartphone did in their day. If I were Google, Apple, Samsung or Microsoft, I’d find the prospect both exciting and scary, and I’d want to do everything I possibly could to avoid being left behind. By snapping up Nest, Google adds enormous brainpower to its efforts — and, perhaps just as important, prevents those brains from winding up at a competitor.

I confess to at least some trepidation about the deal: Nest was already doing great things on its own, and there are far more stories about startups stumbling after being acquired than there are ones about them flourishing. (Then again, the most obvious example of a buyout working is Google’s own 2006 purchase of YouTube.)

There’s also the question of whether a Google-owned Nest will try to make money off the data that Nest devices collect about their users, as riffed upon in these tweets:

For the record, Nest says that Nest data will only be used to improve Nest products. But even if Nest remains sacrosanct, the notion of Google — and other companies — seeing the Internet of Things as an opportunity to end up with far more information about consumers than they’ve ever had before doesn’t sound so implausible. One way or another, we’re going to have to deal with the issues that raises, and this acquisition will likely speed that process.

Despite today’s emphasis on Nest remaining a stand-alone entity within Google, it’s fun to think about Fadell and Rogers’ fingerprints showing up elsewhere in the company. They know how to give even the most prosaic devices an Apple-like sheen, with hardware, software and services that blur together in a way that’s inventive, aesthetically pleasing and humane. Everything from Google Glass to Motorola phones to Chromecast to self-driving cars can benefit from what Nest already knows, and knows how to do.

So rather than worry that the deal will leave Nest looking more like Google, I’m hoping that it’ll result in the rest of Google feeling more like Nest. Let’s give this a couple of years to percolate, and then judge the results.


I'm more interested in Cisco's moves toward providing IoE services since the company seems to organically be in a better position to provide the complete infrastructure (hardware and software) for making this sort of thing mainstream. Surprised they weren't mentioned in the article at all.


If the major tech companies would pay their full share of taxes instead of sending revenue overseas, it would engender more trust to move forward with the IoT

Right now, tech companies appear to sell the public out, exposing them to security breaches, while government agencies called on to mitigate against these losses aren't able to keep up with the pace of hackers. You could say they are under-funded for the task at hand.

Therefore, it is the moral imperitive of tech firms to invest in security to prevent breaches, and pay their share of taxes to allow the governmenet to do its job in protecting against cybercrime.

Google has tightened its tax policies to compete with Apple and Microsoft:

Google Inc. posts a 36% surge in quarterly profit; Tax rate dips to 15% 


I really hate the term "Internet of things".  It's going to be the new "twerking" and "selfie" for 2014.

As for the concept, no thanks.

It's not that I don't see the utility to it.  I just know human nature.  It's one thing to have my computer get hacked and monitored and crap that businesses, governments and bad guys do all the time.  It's quite another to have my HOUSE hacked and monitored.  The former is an acceptable risk based on the utility of the services provided.  The latter I can do without the utility of the aforementioned services because I already do.

If I'm cold, I can walk to the thermostat and turn it up.  If I'm hot, I can turn it down.  I can SEE what I have in the refrigerator and cupboards and deduce what I need from what's NOT there.  If I forget something, it's not that big of an inconvenience to simply add it to the next shopping list.  

It's certainly not enough of an inconvenience to have Google, the Government and the Malware Gulag knowing what I have for breakfast just so I can always have it.  Businesses won't charge me any less for buying it (they're more likely to offer me incentives to buy things I don't get - why the hell would I buy something else if what I get works for me?)  The government isn't my privacy friend and we all know some life-lacking idiot with too much acne and no history of companionship, male or female, will create a way to hack a house and turn on all the lawn sprinklers when you're away.

I have the Internet of Media and Data connected to devices I can actually use WITHOUT the Internet if I so desire (80% of my computer time is OFFLINE.)  That ability to walk away from it and still live a perfectly normal life is to be cherished.  Because, you know, the power does still go out from time to time.  Your router can die.  Your modem can give it up.  And if that happens, and you're all thingied to the Internet, you're going to be a lot more inconvenienced than I in knowing what to buy at the grocery store, or setting the temperature to a comfortable level.

So keep your Internet of things. I don't need to charge a battery to write a list of groceries.  And no matter what you USUALLY get, no matter if you have the "perfect list", there will always be something you forgot, because you stuffed your list into your smartphone and waited in one line too long watching videos and killed the battery and don't have access to your list anymore, or simply forgot to check it as you went.

It's just the way people are.  The Intenet thingie isn't going to change THAT.


@DeweySayenoff Your electricity can also go out — just ask the millions of people who were without power from Michigan to Maine after December's big storm. In my experience, living in the southeast, I'm more likely to lose electricity than to lose internet access, although, of course, the former all but guarantees the latter. If the power goes out, I have propane-powered lanterns, and can read books, of which I have many. That said, >95% of my computer time is spent online.