“In a deal surprising only for its enormous purchase price, Google has announced that it’s buying Nest Labs, the hot maker of tech-infused household devices such as thermostats and smoke alarms, for $3.2 billion in cash,” Robert Hof writes for Forbes. “Nest, which had financial backing from Google’s venture arm, has been lauded for its elegant takes on common household products, and it seems clear that it has no intention of stopping at thermostats and smoke alarms.”
“Internet-connected smart devices continue to proliferate in the home and beyond, it’s likely that they will create, or disrupt, multibillion-dollar markets in much the same way Apple did for smartphones and tablets,” Hof writes. “That’s why a Nest backed by Google, now the second big pillar in mobile devices with its Android software and hardware, could blunt apparent intentions by Apple to move beyond computing and communications devices. While Apple has not announced plans for other devices, it’s said to be working on a smart watch and a television, and many observers believe it’s likely Apple would be interested in offering new takes on other home and consumer devices.”
“While the price seems dear for a company with only two products, those products clearly impressed Brin and Page with their potential. (Page, who took over as CEO with a mission for Google to create more beautiful products, no doubt was also impressed with the design of the Nest devices,)” Hof writes. “But in any case, that goal would seem to present a challenge to Apple, known more than anything else for producing elegant products that people can’t live without. Buying Nest gives Google a way to do the same well beyond the sphere of computing – and do it right away.”
Read more in the full article here.
MacDailyNews Take: Tim Cook: Asleep at the switch, in total command, or somewhere in-between?
While you ponder that, we’re off to peruse the complete line of Honeywell Programmable Thermostats…
Related articles:
Google to buy Nest Labs for $3.2 Billion – January 13, 2014
Tony Fadell introduces Nest Protect smoke and carbon monoxide detector – October 8, 2013
Tony Fadell, Father of the iPod: From Apple to Nest Labs, always a designer – July 24, 2013
Apple Store to sell Tony Fadell’s Nest Learning Thermostat, report claims – May 25, 2012
‘Father of the iPod’ Tony Fadell shows off his new project: Thermostats – October 25, 2011
In a word, yes, Tim Cook did blow it by not buying Nest before Google did. Now Nest devices will now be powered by the virus infected Fragmandroid OS. If Apple bought them, you would have sleek modernist designs that complement the iOS platform. With Google, the Nest GUI will have the same, gaudy, garish, and immature colors that Android Krappy Kandy has.
Now that Google owns and controls Nest, they won’t know how to implement these “smart” household devices in a way that regular (mainstream) consumers find desirable, not more trouble than it’s worth. And with Google in charge, those consumers will fear even more advertising and “data collection” as the price to play in Google’s universe.
Ultimately, if Apple wants to get into this market, Apple will define it and set the standard, and make it cool and popular to typical “non-geeky” consumers. THEN, Google (and Samsung) will copy it. Google could have done that without spending $3.2 billion to buy Nest.
Won’t most people want to have their thermostat automatically post their vacation schedule to their friends of Google+ ?
Google makes new inroads in the home burglary scene.
Brings a new menaing to don’t leave home without it…
I checked with Heddy Lamar and he said Cook knew there was a turd in the punch bowl.
Hedy Lamarr, woman, actress and inventor.
For educational purposes:
https://en.wikipedia.org/wiki/Hedy_Lamarr
Hedy Lamarr was an Austrian actress and inventor, celebrated for her great beauty, who was a contract star of MGM’s “Golden Age.”
She and composer George Antheil invented an early technique for spread spectrum communications and frequency hopping, necessary for wireless communication from the pre-computer age to the present day
Beauty and brains. <3
Solid contribution to the river of intelligence that constitutes MacDailyNews. I commend you, especially on behalf of WUGSS (Women Usually Given Short Shrift), an organisation with chapters almost everywhere.
I propose a toast! To the future of diversity, sharing, kindness, caring and intelligence! All for one and one for all! Cheers.
Women aren’t given short shrift. They just don’t accomplish nearly as much as men. Not even 5% as much, really.
Perhaps that could explain why women outlive men in almost every country of the world except Botswana, where women do all the work. Our advantage in the US and UK is about five years; in Russia it’s 12.
Oh. I thought he was talking about the sheriff in Blazing Saddles.
I mean attorney general, not sheriff!
That’s HEDLEY!
Apollonia Jackson: You wrote the Gaffaw-Of-The-Day! 😆 Thank you!
I kind of have to wonder if this was indeed a blunder. But I can’t imagine Nest is pleased to have Google wrecking their ideals with crapware and bad attitude.
And I didn’t close my bold tab properly. I also haven’t had dinner yet! Which explains why.
That should be ‘bold TAG’, not tab. ‘My brain hurts!’
If they weren’t pleased with Google they didn’t have to take the money.
True. Very true. They’d already happily taking Google’s investment before the purchase. Maybe it’s a great synergy and will offer some useful competition with Apple.
It could happen! I hope it does.
Would you turn that much money down if you weren’t pleased?
I can get pleased over a $100.
I agree with you on her take. I could see Nest being made available for multiple platforms. Linux, Windows, Android, Java, even iOS.
In spite of Google, Apple’s implementation of an iOS-powered Nest would counter the awful time had by anyone not using the iOS version.
This might be one of those items you never thought you needed until you’ve had a chance to play with one but I don’t think you’ll ever see this item gracing tables in the Apple Store.
Google will never realize their ROI,
SO WHAT IS REALLY GOING ON HERE?
Well, for this week anyway: Google is getting a PR surge, kind of like when they bought Motorola.
But then the ‘whoop-tee-doo!’ factor runs out and it’s obvious that Google hasn’t a clue what to do with what they bought. Case in point: Motorola.
Time wears away all venires, revealing what lays beneath. IOW: Sell your GOOG stock while the bubble still floats.
Spelling Police! Please read: “Time wears away all VENEERS…”
It’s past my feeding time.
Yes. Nest & Co. should have been brought back to the Mothership that it is genetically related to. That purchase bothers me.
The question is does Apple want to be in the thermostat and CO detector business? You know these kind of devices carry a bigger liability than phones and tablets. Maybe Tim dodged another FAD bullet for Apple.
As I said in my previous post:
“Nest was starting to get a lot of competition from several companies. These companies already had roads into the home through electricians, heating/cooling and cable companies. This is now a battle ground and those companies and Tony’s business plan could not compete with a very large sales force like this.”
A majority of the people will call a technician to replace their thermostat or call their heating/cooling company or electrician. Without the support of these companies, Nest will get squeezed. I’m sure Apple along with others very much though about it as I’m sure Honeywell at one point. This is a perfect example of competition and knowing when to invest in something and when not to.
Granted, Nest has great products and literately changed the market but their model can not compete with the competition when the competition has a huge advantage.
Again, another stupid acquisition by Google and a smart choice by Apple. Apple still made money off Nest and vise-versa because Apple sold the Nest product on their site first. I’m guessing that will be gone soon from the Apple Store.
Totally agree. Nest is not part of Apple’s strategic business. None of Apple’s aquisitions have been for revenue. The revenue would be miniscule anyway. T-Mobile would be a better choice.
Apple may very well have tendered an offer for Nest at some point. But Google was willing to pay more, and $3.2B is a lot of change. That exemplifies one of the aspects that I most admire about Apple’s management — fiscal restraint and responsibility. Even with tens of $B at their disposal, they don’t waste it by overpaying for companies. Instead, Apple makes carefully considered, strategic acquisitions that fit into a long term plan.
The Nest products to date do appear to be rather Apple-like — clean, well designed and functional products focused on improving the user experience. However, they are rather expensive. Given their relatively high cost, long operational lifetime (low churn), and very inexpensive “dumb product” competition ($20 or so will buy a standard thermostat or smoke detector), I believe that the market is relatively limited. Few Nest products are likely to be installed in hotels, apartments, office buildings, condos, or even most homes. As noted by Observer, the Nest products are also being challenged by other “smart” products. That lends even more uncertainty to the future profitability of a $3.2B acquisition.
I would have been fine with Apple acquiring Nest for a reasonable price. But I am also fine with Apple passing it up.
These product
Well said.
If Apple decides to pursue a smart home product line, they are more than capable of developing a thermostat of the Nest’s complexity in- house. And with Apple’s retail reach and brand they’d catch up in installed base overnight.
it seems like it that Tim Cook missed the boat, but lets see how it plays out, shame Tony Fadell had to shake hands with Google 😡
No reason for Apple to buy Nest. Unlike MS and Google they aren’t in the business of collecting companies that aren’t related to their primary business.
Recall when SJ returned his first action was to get rid of a slew of products that were eating resources distracting from the concentrated Apple vision. TC is smart enough to understand the danger in taking that path.
Well stated. Also, the profile of aapl acquisitions has been smaller in scale for some time:
https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Apple
No. It is not worth $3.2 billion dollars. Thermostat is not the next big thing.
@ Rick, the next big thing will be Thermostop A gadget that will counteract the effects of a thermostat that is spyware enabled.
As usual, you heard first from me, don’t tell anyone!
Spyware? From Google, a company revered for its careful custodianship of customer credentials? From a leadership passionate about values, obsessed with trust, maniacal in its attention to the details that matter? From the most advanced mind-reading laboratory in the world, whose processes learn what we really want, and provide it?
And for free! Truly the greatest boon conferred upon mankind since the cultivation of crops replaced hunting and gathering.
If only the benign men at the helm of this mighty machine of cultural transformation could operate openly, without needing to shelter their noble aspirations for the human race from crass skepticism, what wondrous future might we arrive at, what gifts might be conferred, what savings we would enjoy, what little discomfort we’d suffer in the once-laborious activity of making our own decisions!
Hannah, that is one of the most spectacularly subtle displays of sarcasm I’ve ever read! Genius, and well done, you get a zen hug from me. 😊
What do I need to do to insure my Nest thermostat does not send data to Nest Labs?
Google did not pay that much money for Nest’s products. They paid that much money for the talent at Nest – particularly Tony. More inside knowledge of Apple going Google’s way.
That was my thinking as well, the biggest reason to purchase was to buy Tony back, not buy the damn Thermostat.
A step by Google into the emerging home-automation space. Fast forward a few years —
I fear a house where every appliance has eyes and ears, uploading what they experience to a secret location where a suite of analytics integrates the data into an ever-sharpening picture of you, your preferences, your associates, your behaviour and ultimately your intentions. That’s a knowledge bonanza for Google and a lucrative new offering in their advertiser auctions.
They need to be stopped somehow.
An educated consumer is Google’s worst customer.
Start the Google education campaign :
bam·goo·gle
bam·boo·zle
the people
damn·goo·gle
Do no evil?…….
Even Microsoft got this one right, with their “Are You Being Scroogled?” ad campaign.
(To which Google should have countered with “Don’t get sWindow-ed.”)
Excellent! But — please don’t give them any ideas!
First thing I thought of is now Google can track how warm or cool your house is. One more way Google is going to collect data on you.
Expect Google to know when you are home, what room you are in, whether you are moving around or sitting or sleeping, how often you get up in the middle of the night, how often you burn your food, what your routines are, when you check in at home while away, how frugal/wasteful of energy you are, how detailed you are in “programing” your comfort, etc…
Expect this info to be sold to your insurance companies, energy providers, home maintenance and security companies, thieves and villains of both the white and blue collar variety!
I was just starting to shop for a Nest – NO MORE!!!! Dodged that bullet! I will never again trust Google. Tony, you sold out and made the big bucks, congrats, but don’t try to tell use that Google will protect our privacy – get real.
The connected home is the future, but why would Apple spend 3 billion for a thermostat company? They can surely sell connected devices, but I think it’s better for third parties to create them and work with Apple products. What could the margins and thermostats and light-bulbs be?
Nest could have not had to sell out. But guess what – they now have an upset consumer market who will not buy their product now. Maybe some googleheads will, but as we all know, a lot of googlers (android based) users, don’t really spend money on high end products.
Exactly. I was thinking of saving up to get one but not if it’s owned by Screwgle. I’m still majorly pissed about them buying ruining YouTube!
I don’t think Apple was ever interested in Nest because those devices are a pain to support and there’s only so much you can do. Sure the thermostats are a neat ideia, but smoke alarms are already a stretch. What’s next? Nest coffee machines? Nest Microwave?
$3.2 billion is just crazy money for what Nest is, but Google has a history of crazy, silly investments.. I guess as long as Google’s real customers – advertisers – keep footing that bill, all is well… and when in trouble just squeeze more juicy personal data from users.
Apple should keep empowering and encouraging other manufacturers to integrate their devices with Apple’s ecosystem and technologies. That’s already happening with Bluetooth LE, iBeacons, WiFi sharing, Lightning.
Then Apple can sell those devices in their stores and still profit. Yes, even Nest.
I could go for a Siri coffee machine or microwave or blender. Touching is so passé. I want to tell my devices what to do and in some cases have them talk back to me while I’m doing it. Outside the living room, the kitchen is the room that needs the most work to bring it into the future. Imagine cooking with Siri as an assistant or helping you with meal suggestions.
I love your idea. May the day soon arrive when Siri can as reliably guide me to my gustatory destination as she does to my urban appointments! (I’d of course keep a road map on hand, and canned soup in the cupboard, for the occasional off moment when she appears to be daydreaming, silly girl!)
That was once a thrilling dream. Only now with the NSA, future OS X tech would make me a specimen in a jar under constant, perverted surveillance.
The day Siri can actually COOK the dinner, I’ll remortgage my house to afford to buy that gadget.
Save your money Apple. Don’t waste it on junk tech.
Wondering if Tony Fadell didn’t want to be bought out by Apple. In any case, too bad about this – can’t begin to imagine how these kinds of products combined with what Google is all about could enable Google to become even more invasive.
Google has been one of the lead investors in Nest for quite some time. Google led the last round of Nest financing.
As far as I know, the main relationship between Nest & Apple is that Apple sells the thermostat and Protect in their stores. If Apple was interested in Nest as a company, they would have been more involved.
Two things I have always wanted Apple to build…….
1. Car
2. Home Automation
Would have been cool to see Apple buy nest, but not for that much. That is ridiculous price for all the more they make. But having home automation with camera’s, lights, etc I have always wanted to see Apple do and was hoping to finally see it with an Apple TV rumors, etc. With the Car I think Jobs was quoted as saying he always wanted to do a car as well. I have always thought Tesla and Apple was a good match!
Another thing is these devices are still premature, buggy and vulnerable.
We’ve already heard about the Nest 4.0 bugs turning off the heat in the dead of winter and we’ll soon be hearing about hackers changing people’s thermostats and creating havock in people homes.
Can you imagine the headlines if this happened on Apple’s watch? Apple doesn’t need to give another attack vector for the linkbait media. Better leave that to other companies until the technology is stable enough.
Smart move by Timmy. Smoke detectors are like $7.99 at target. Don’t need an text alert that my house is on fire. That is why I have fire insurance. As for the thermostat, electric company may jack up the heat while you are out to run up your bill and lower it before you get home. Besides, I live in Hawaii and don’t have any heat and use aircon maybe 30 days a year. Don’t think Nest has broken into the contractor business as yet. Guess Gog must be paying 100 times revenue. For that PX they would have been better off buying DDD. Guess they needed another investment to obfuscate earnings. They still need to take the write down on the Moto “good will” which is likely negative at this stage.
Except it’s also a CO2 detector.
And those combo units are not cheap to begin with.
So your $8 price, is way off.
Wow, the fast billion-dolllar company. Steve would never have bought Nest because it’s not worth $3.2B. I wonder how much this is a bribe from Google to the VCs that funded Nest, like Kleiner Perkins? Why pay more than you need to, as this is way more than any reasonable company would have paid. The only stupider company when it comes to acquisitions is Microsoft. One reason why I sold my Google shares is when I realized how wasteful Brin and Page were with shareholder money.
actually Twitter should have bought Nest, you know birds….
How many home thermostats in the us? 100 million in homes that can afford a 200 dollar device… How often do you replace a thermostat? Once every 20 years? So Google bought them for more than $30/ thermostat assuming you could sell 100 million of them. Not sure this is best use of APPL capital. Better to design their own? BTW , love my nest…
This is a question of trust. I have a Nest and was contemplating several smoke alarms but with Google owning the company I will be getting rid of my equipment
I do think that Apple missed an opportunity here and I am a longstanding shareholder
Not at all. Not only did Google vastly overpay, but I can see no reason why Apple needs Nest. It would have been an interesting purchase, but hardly a necessary one.
Cook continues with his “fist in a velvet glove approach,” and Google continues to make purchases of dubious value, such as Motorola Mobility. I don’t mean to imply that there’s Nest, though I wonder what is behind Google’s purchase.
I thought the Nest thermostat was a neat idea and the design was cool, but $249 for a thermostat that “learns” what temperature I like? I just set my thermostat on one temperature in the winter and another one in the summer. Not a problem needed to be solved by a device. I also don’t want to fiddle with my thermostat on my iPhone while I’m not at home.
What most houses need is thermostats in different rooms and the ability to alter the heating in those rooms independently. If you don’t have the heating system to do that then an expensive learning thermostat really doesn’t benefit you a great deal. And if you bought a number of them to go in different rooms it gets very expensive.
Let me just say that if Google owns Nest, I don’t want one.
$3.2 billion? Fadell played Google like a fiddle.
Exactly what I thought. Great minds think alike.
I personally don’t subscribe to the idea that Google will be eavesdropping on a thermostat – to all practical purposes what would be the point in that, you can’t sell advertising based thermostat usage patterns – but the underlying thought that Google doesn’t care about ROI because Nest offers it another insight into the consumer market, albeit a tiny sliver of a market.
I suppose the data point that Google is most interested in is an insight into how Apple customers think in that I would presume that there would be a high overlap between Nest and Apple customers given that Nest is sold in Apple Stores.
Maybe that will help them market more effectively to a high income demographic since the overlap between Nest and Apple customers would presumable result in a high income customer base.
I hadn’t thought of the customer analytics angle, because I leaped at the conclusion that Apple was sure to pull Nest from their inventory after the Google acquisition. OK, that was a dumb fangirl reaction. But Apple doesn’t do things out of spite, only for business reasons. The same is true for Google, I suppose.
But that begs the question: what were those reasons?
I think you’re suggesting that Google wants to tap into the minds and wallets of Apple customers, having been little compensated by its appeal to bargain-minded customers. Please correct me if I’m wrong.
And I suggested elsewhere that Google might be striking out into a new domain of home automation, and this was its Fort Sumter. After reading your post I’m less sure about my idea that Google even has long term goals. It just seems more likely that your instinct is true and that Google wants to sample Apple’s waters, just as Microsoft has so transparently done recently, to its inept detriment.
The whole thing may turn out to be simplicity itself — Apple has been playing the long game, all the rest are caught up and reactive.
Google is a data driven company. It wants more data on consumer buying habits. What better way than to tap the brains of the very people who were privy to Steve Jobs’ thinking process designing the iPod. Why did the iPod catch on with consumers when there were existing MP3 players out there that cost less and did the same job. Was it the scroll wheel? Was it the ease of integration with iTunes? What drives Apple customers to buy Apple products? What makes them so loyal to Apple?
These data points will be used to feed the design of the next generation Nexus devices, the next release of Android, the next iteration of data analytics software to specifically mine the habits of high net worth individuals. This should result in better target marketing – a surgical strike as opposed to a diffused approach to marketing to a specific clientele.
These data sets can then be sold to Tiffany’s, Nordstrom and other retailers interested to target advertising to high net worth individuals. What makes them tick? That’s what Google wants to know.
While I agree with your point that Google makes it’s profit from advertising, I don’t think that’s the reason why Google paid so much a smart thermostat company.
Just as when Apple bought P.A. semiconductors, they weren’t interested in the existing products, but bought the company for the expertise of the key individuals within that company. That’s why Google paid so much for Nest. It’s the potential for future products that are quite different their existing products.
Nest isn’t the only game in town, there are many home automation systems starting up. Just like Motorola Mobility, Google has overpaid for something it can’t fully utilize simply to try to slow Apple’s juggernaut.
“… there are many home automation systems …”
I think that we can all see the problem with that. Having multiple home automations systems makes it difficult to make them effectively work together. Apple would be much more comfortable with the concept of one universal protocol that works for everything and I have no doubt that Apple is working towards that ideal.
It always seemed rather odd to me that Apple stores sold Nest products, but also sold Phillips Hue lighting systems. Ideally, the two should talk together and also communicate properly with your Apple devices, so that when you switch your lights off at night, your heating reduces, but when your iPhone alarm goes off in the morning, your heating has already warmed up the house, the hot water is ready for your shower and the bedroom lights come on at partial brightness.
Apple doesn’t like incomplete solutions and existing home automation systems do not work the way that Apple would want them to and don’t play nicely with third party products. What is needed is an approach comparable to iBeacons, whereby Apple creates a versatile system which it supports, but which other manufacturers can adopt and sell hardware to utilise it. If Apple doesn’t release this soon, Google most certainly will.
Bummer. I have Nests in multiple homes and absolutely love them. Nothing else comes close… Those who say there’s competition sound like the people who would compare a plastic notebook to a MacBook Air.
Kevin, would you tell me how I could make sure data from my Nest thermostat stays local. I don’t want anything to do with Google.
Why is this a response to my comment? What part of “Bummer” did you not understand?
I guess 3 billion ain’t what it used to be, for that much money you can’t even buy a few lines of code that makes a picture disappear after you view it. I guess I am going to have to increase my IRA savings.