Google buys Nest: More questions than comforts?

Google continued its quest for tech domination with the $3.5-billion acquisition of smart-home start-up Nest. But we're still in the Wild West of the "Internet of Things." What does it mean when one of the world's biggest tech companies could be in our homes?

By , Staff writer

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    In this Tuesday, Oct. 1, 2013, file photo, the Nest smoke and carbon monoxide alarm is shown at the company's offices, in Palo Alto, Calif. The Google-owned company will acquire the home monitor start-up Dropcam for $555 million.
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Google is moving home with you.

At least that seems to be the tech giant's next move with the $3.5-billion acquisition of Nest, the home thermostat company that has made millions off making mundane home products such as thermostats and fire detectors into smart tech. But the tech world is split on whether consumers will be willing to let Google make itself at home in their houses.

Nest made a name for itself with its simple, but smart, home innovations. The company first debuted a smart thermostat in 2011, called Nest, which learns a home’s heating and cooling routine and adjusts accordingly by time of day and season. Though at $249, it's far more expensive than whatever dial comes with most houses, it claims to save money on bills by cutting on energy costs with its intelligent heating and cooling.

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This year it also released the Nest Protect, a smart fire and carbon-monoxide detector, that can broadcast smoke alarms in multiple rooms and to your smart phone (and doesn’t beep incessantly when it needs new batteries).

All in all, Nest claims to already be in one percent of US households and have sold more than a million devices. It was recently valued at $2 billion.

Looking at its upward innovation and monetary trajectory, it would seem like now is a logical time for Google to buy. But apparently this is a calculated move by both Google and Nest that has been in the works for a while.

"This was methodically planned – this was not a slapdash kind of thing over a weekend," Tony Fadell, Nest CEO, told USA Today. "This has been going on since the summer, when we started to think about raising money and when we also wanted to partner with certain teams at Google for technology, for infrastructure for various things." 

From Nest’s perspective, having the resources of a giant like Google could be advantageous. Early reports say the company will likely stay relatively autonomous within Google (somewhere between the poles of Motorola – essentially independent – and YouTube – essentially Google Video), and focus on the data aspect of the thermostats (which is what Google is far more interested in over cool gadgets). Forbes contributor Mike Rogowsky says Nest was testing out a program where the company would manage thermostats so customers wouldn’t have to.

Since Nest likely would have gone public soon, being acquired by a larger company also lets them steer clear of the financial stress and focus on future innovations.

The move seems to indicate Google is heading away from social networks and toward the Internet of Things – a term for the increasingly interconnected physical and Web world that has started to gain traction in the form of smart refrigerators, alarm clocks, and whatever other household item that comes to mind.

But it also puts Google into an increasing number of markets, a trend causing some wariness in the tech world.

Google has been an acquisition vacuum over the past year, amassing eight robotics companies in 2013, in addition to a lengthy list of other tech companies whose products range from wind turbines to cloud computing technology. Considering it has about $56 billion in cash to spend on pretty much whatever it wants, this likely won’t be the end of its conquests.

So why is a little $3.5 billion thermostat acquisition a big deal? Privacy.

"Even anonymized user data would give Google incredible new insights into our behavior in the physical world that its vast roster of very smart people could figure out how to leverage in order to advance its business," writes Wired reporter Marcus Wohlsen. "Perhaps Google could pair our movements with how we shop — say, using Google’s own same-day delivery service. Or some choice we make offline that compels us to perform a particular search."

"This may sound creepy, but much like using Google for search, it could become the price of admission for participation in the internet of things," he writes.

Nest says it will be standing by its current privacy policy, which says it will only use data that can improve products and customer experience. However, both Google and Nest have declined to discuss future plans.

It remains to be seen how the two will work together toward the future of Nest and the Internet of Things. CNET reporter Nick Stass wrote about some potential mistakes Google could make with Nest, and ultimately he says he is left with more questions than comforts.

“The challenges are looming large -- and hard to solve,” he writes. “What's the best way to get devices talking to each other without seeming too overly proprietary but still understandable and user-friendly? What happens to the data about when I leave my house or go to bed or what's in my fridge? Is that data safe? Is that data for sale? If not now, when and for what trade-off?”

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