Did Tim Cook blow it by not snapping up Nest before Google?

“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

126 Comments

  1. 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.

    1. 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.

            1. 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.”

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              Beauty and brains. <3

            2. 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.

            3. 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.

    2. 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.

      1. 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?

        1. 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.

    3. 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.

  2. 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.

    1. 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.

    2. 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

      1. 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.

    1. 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.

    1. @ 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!

      1. 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!

    2. 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.

  3. 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.

    1. 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?…….

      1. 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.”)

    1. 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.

  4. 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?

    1. 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.

  5. 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.

    1. 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.

      1. 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!)

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