Schnitger Corporation

Google buys Nest for a cool $3.2 billion

nest_thermostat_with_handI’ve been nattering on about the Internet of Things (IoT) lately, in part because PTC snapped up ThingWorx last month. But I’m far from alone in finding the IoT interesting: yesterday, Google announced that it was acquiring Nest Labs, the people who designed those cool Learning Thermostats and the Protect smoke and carbon monoxide alarms. Both products connect the device to the Internet via the home’s WiFi and use smartphone apps for remote control, notifications, and monitoring.

I’m not sure a 3 1/2 year old company with 2 products is worth $3.2 billion but, hey, if someone is willing to pay it … Nest has never revealed revenue but we do know that they’ve sold “hundreds of thousands” of the $250 thermostats and $130 smoke alarms.

What’s in it for Google? you ask. The IoT. In your home, connecting first your thermostat and smoke detector and, over time, adding more devices under the Nest brand. The connected home may be the first real, practical landing place for the IoT and this acquisition puts Google squarely into the convergence of IoT and home automation.

Nest founder Larry Fadell wrote in a blog post that Nest’s goal had always been to “create a conscious home. A home that is more thoughtful, intuitive – and nice to look at … 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.”

Google already knows what you’re doing when you search, email, use a smartphone or laptop … Imagine the potential for an advertiser who can also learn about your habits at home through your Nest devices: do you like it cooler at night? Maybe Google will place an ad for a down comforter into your search results. Nest said today that this isn’t in the plans, telling the Financial Times that its privacy policy limits use of customer data to providing and improving Nest’s products — but, honestly, it feels like an opportunity Google can’t pass up for long.

Regardless of what you think of Google and its policies, more and more of your actions will over time be managed via the IoT. Some of that is good: notifying you about a carbon monoxide emergency or fire while you’re at the movies, that’s awesome. But we still need to put in place privacy safeguards surrounding our data and its associativity to us and everything else we do on the Internet. Google also needs to exercise all of its IT guruness to keep hackers at bay. At the harmless end, turning your thermostat up when you want it down could be funny to an 11 year-old, but I imagine there are more serious problems looming as we connect more and more of these devices.

For now, I may give that smoke alarm another look. The Protect, according to Nest, “gives you an early warning [before turning on a loud, howling alarm]. We call it Heads-Up — Nest Protect lights up yellow and speaks with a human voice, telling you where and what the problem is so you can take care of it in peace.” If you’ve ever set off the smoke alarm when cooking, you’ll understand how appealing that is …

Image of a Nest thermostat courtesy of Nest.

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