Google Acquires Nest, the Company Founded by the “Father” of the iPod

by Istvan Fekete on January 14, 2014

When the news broke that Google will pay $3.2 billion to acquire Nest, and that the father of the iPod would become a Google employee, social media channels went crazy. What? Tony Fadell, the man who helped create one of the most successful Apple products, the iPod, now works for the iPhone maker’s most fierce rival?

Yup. And the $3.2 billion in cash he will see in a couple of months is a good reason to join Google. On the other hand, you can forget about Nest Thermostat and Nest Protect, the smoke and carbon monoxide detector, as you know it. As CNET puts it, this deal could “spur growth of ‘Internet of things.'”

“When we first showed up two years ago, people were like, ‘thermostats, poo-poo,’ and they didn’t even talk about connected homes or the Internet of things,” Nest CEO (and “father of the iPod”) Tony Fadell told CNET. “We changed the landscape, and made them top of mind. When it comes to the Internet of things, we can take a large piece of credit for kick-starting that. What we’re doing [with the Google deal] is we’re changing the landscape yet again…[Google] is a major corporation saying, ‘We believe in these products,” and we want to help them succeed even further.”

The most significant aspect of the deal, however, is that Google has agreed to let the smart home company stay largely autonomous – Nest will stay Nest – and to keep its hands off Nest’s user data. But how long will that continue?

The industry has reacted to the shocking announcement largely positively, with some, such as Forrester Research analyst Frank Gillett, saying that Google may have paid too much for Nest in the short run, but that if we consider the deal on a long term, they could end up looking smart. The deal also is about Google’s plans to build the online services platform for the connected home.

In its own statement, home automation developer Revolv applauded the acquisition. “We think that Google’s acquisition of Nest is positive for the smart home industry overall as it will raise awareness for the space,” Revolv co-founder Mike Soucie said in the statement, and it “opens up third-party development for Nest devices as well as drives faster adoption of smart home technology by mass consumers.”

While Nest was able to obtain funding from different parties, Google’s resources could help the startup to throttle some of its smaller rivals and branch out more quickly into new product categories that are currently dominated by other players.

So, what will Google get for $3.2 billion? While there are multiple answers to that, the most obvious ones are that it will control the biggest name of the smart connected home space, gain entry into the energy management space, and have access to technology that could be at the heart of the future connected home hub.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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