What Does Google's Purchase Of Nest Mean For The Internet
Source: Drew Hendricks
The Internet of Things (IoT) seemed to be an underlying theme of this year’s Consumer Electronics Show (CES), with companies showing off cloud-connected Crock-Pots, heart monitors, and even bed mats that monitor how a person sleeps.
As wearable technology and home automation increasingly seep into the consumer market, companies like Google GOOG -0.59% are taking note. The company recently announced its acquisition of Nest, a home device company that is responsible for the best-selling Nest Learning Thermostat. The purchase is expected to propel Google into the home automation space, positioning the tech company to be a fierce competitor in the market.
What is Nest?
Co-founded by two former Apple AAPL -2.51% engineers, Nest’s mission is to reinvent those devices that are a necessary part of every home. While the company also offers cloud-connected smoke and carbon monoxide detectors, its signature product is its thermostat, which learns its owner’s behavior. Rather than having to figure out how to program the thermostat to change its temperature for various times of day, the homeowner needs only manually change the temperature. In time, the thermostat learns the homeowner’s routines and adjusts automatically.
But one of the most useful things about Nest is its app. Using a mobile device, homeowners can check the thermostat’s settings and adjust them from anywhere. Both of the company’s products are considered the best in the industry, which is likely why Google took interest.
Google’s IoT
No longer satisfied to be a mere search engine, Google has increasingly shown an interest in cutting-edge technology. While the company’s cloud efforts are currently being eclipsed by Amazon’s success in that arena, Google may simply be attacking the competition by taking a different direction. By entering the IoT space early, Google could gain an edge over the many competitors that are sure to follow.
In addition to the $3.2 billion Google handed over to Nest, Google can bring its business savvy to the company. Nest has specialized in doing one thing and doing it well. The company’s two products may be the best in the industry, but they’re only a small part of what can be a bigger picture of home automation, with everything in a person’s house connected and communicating.
One-Click Service
Companies like ADT ADT +1.2% are already offering home automation controls through its smartphone apps. At CES, ADT showed off its Pulse™ voice app that can control lights, thermostats, door locks, and even small appliances. Comcast CMCSA +0.07% is another company that is also offering remote lighting and thermostat control through a smartphone app, with a bevy of other customers battling to meet the demand.
While home automation is nothing new, only in the last couple of years has it become accessible to the average homeowner. Previously, a customer was forced to work with an audiovisual company that usually charged a price for custom home design. Just as Amazon is working hard to make cloud services more affordable, Google likely sees the demand for budget-accessible services that can operate alongside other services consumers use every day, like Digital Video Recorders and car alarms.
Privacy Concerns
One concern being voiced by consumers is that as Google expands, consumer privacy could be at risk. Nest operates by extracting data from the environment, including information about lighting, humidity, and the daily behavior of a home’s residents. When combined with the vast amount of data Google already could access on each of its customers if it chose, this puts Google in a powerful position.
While Google has responded to these concerns by stating that information will not be shared, Google has signed users up for new initiatives in the past without making it clear. If information is shared by default, requiring users to opt out to be excluded, these privacy concerns may not be without merit. Especially since Google has a history of using information from one app to improve another.
Google Power
With Google’s backing, Nest can improve its service to be more competitive. While its products are great, updates are few and far between―a habit that may become more of an issue as the company tries to compete. Google has the resources to not only drive innovative improvements to Nest’s existing products, but also to inspire new products based on the same general concept.
As Forrester Research’s Frank Gillett pointed out, however, Google wouldn’t have shelled out so much money for the company if it wasn’t looking at the bigger picture. The $3.2 billion purchase wasn’t for two innovative products or to gather data on consumers. The company, as Gillett put it, is betting on IoT with this purchase.
The Next Step
So what’s next for Nest? Many believe this is Google’s first step toward the connected home. In the future, consumers will likely be able to communicate with their refrigerators to determine how much milk they have left and gain statistics on how much energy appliances are consuming each month.
But for Google, the connected home is only part of the picture. With its recent announcement of a new Open Automative Alliance (OAA), Google is thought to have its eye on the connected world. Google is heading up OAA, which also includes big automakers, to power the dashboards of cars with its Android operating system.
It isn’t difficult to understand Google’s motive for purchasing Nest. Consider a world in which one consumer has a home full of devices powered by an operating system, combined with a smartphone and car with the same O/S. Each of those devices could speak to each other, seamlessly learning a user’s preferences. A person’s home thermostat could begin warming the house up an hour before he gets up, with the coffee pot chiming in an hour later. Fifteen minutes before he ordinarily leaves for work, his car could fire up, ensuring the interior is comfortable and the windows clear for his drive in.
This sort of Jetsons existence isn’t as far away as sci-fi movies would have consumers believe. Google simply wants to make sure the operating system powering this connected world is Android, rather than iOS or Windows.
| }
|