Feuds, funding and a fed up Fadell: Why Apple didn’t buy Nest

“The announcement yesterday that Google is to acquire Nest Labs for $3.2 billion (£1.9 billion) came as a surprise to many, with suggestions that Apple would have been the more obvious choice for the smart learning thermostat company,” Anthony Cuthbertson writes for ITProPortal. “Founded by two former Apple executives and home to many former Apple employees, it might have seemed logical that Nest would get swallowed up by the company it shares such a connection with. However, reported infighting and disillusion with his former company may well have been the reason behind Nest co-founder Tony Fadell going with Google.”

“Fadell’s history with Apple dates back to 2001 when he was hired as a contractor to work on the iPod. Within two months he was brought in by the tech giant to lead the creative design team of the product and by 2006 he was a senior vice president within the company,” Cuthbertson writes. “But somewhere along the line things turned sour between Fadell and Apple. In 2008 the company let him go amid rumours that he was not getting along with Jony Ive, Apple’s lead hardware and software designer. ‘Tony got canned,’ Leander Kanhey writes in his new book, Jony Ive: The Genius Behind Apple’s Greatest Products.”

Read more in the full article here.

MacDailyNews Take: As usual, Google got taken to the cleaners (see: Motorola Mobility).

Related articles:
Did Tim Cook blow it by not snapping up Nest before Google? – January 13, 2014
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

58 Comments

  1. Still a little disappointed about it. I wanted the smoke alarm/CO2 detector… Now I am not even gonna touch it.
    I hope Google loses their rears on this, and Nest loses a lot of customers.

    1. I repeat myself. Thermostats and CO detectors carry a whole lot more liability than phones and tablets. Maybe Tim dodged a FAD bullet for Apple. Sometimes it is just not the products it also what kind of legal and financial landscape does it put you into? Example; Apple owns Nest and a family dies in their sleep due to CO poisoning from their furnace.

    2. Apple has no obligation to make all kinds of products in the world. Even the coolest ones. Apple does not need to buy Leica or Tesla or whatever someone thinks is cool.

      For example, Steven Jobs loved simple classy stylish beauty (let alone the quality and advance) of Mercedes. And, if he really wanted, Apple could buy Mercedes-Benz whole without issue.

        1. Yet, the philosophy of Apple is that they do not make driving cars and creepy robots and fire and temperature sensors.

          On the other hand, Google’s approach is totalitarian.

    1. It detects when you’re at home and when noone is. If you can’t see how useful internet-connected appliances connected to an untrustworthy steward (Google) can be, rest assured the NSA and anyone meaning harm to you or your posessions definitely will.

  2. Seems to me that Ive has a history of not getting along with anyone perceived to threaten his status as Steve’s little wonder boy, Der Wunderkind of Apple. His jousts with Scott Forstall being legendary. Now we’re left with a tepid iOS 7 as a result.

    Getting back on topic, $3.2 billion is obviously over the odds for a thermostat company with limited sales potential in three countries: US, Canada & Britain. I can’t imagine turnover breaking $50 million a year (about 200,000 units of Nest at $250 each) so Google is paying 64 times turnover or 640 times profits, assuming profits of 10% of turnover.

    That’s an ROI of 640 years.

    1. Not sure about your take on Ive, BLN. I have read a couple of things secondhand, but only insiders have a clue on the real situation. Besides, Forstall was also a favorite of SJ’s and he got the boot, not Jony, so the link to SJ is only part of the equation.

      With respect to Google’s $3.2B acquisition of Nest, I agree. Google’s purpose must be to attempt to capture a piece of Apple’s mojo and inject it into its internal efforts. It certainly doesn’t seem to make much sense from a fiscal standpoint. Fancy thermostats and smoke detectors alone won’t provide an ROI in a reasonable amount of time. There just aren’t enough buyers. Perhaps Nest has a more lucrative product in the pipeline? No, the more likely explanation is that Google is just repeating its spending spree on Motorola Mobility. These big acquisitions are a disease – Skype, AOL, etc. The list of failed mega-acquisitions is long.

  3. Last night I heard that Google was already an investor in Nest. It is too bad. I did not know that. I liked the first Nest thermostat I paid way too much for. I was looking to get more and the new smoke detector. I will consider my other options now. I do not want Google involved with information about my house. Consider, if you go on vacation and set your house for it, you are easily flagged off the data. I trusted Apple and Nest. Google, not so much.

    It is too bad. I would have stuck with a good product line. Just really unsure about the new baggage and it’s security with possible government ties to sharing it’s data.

  4. “…may well have been the reason behind Nest co-founder Tony Fadell going with Google.”

    Is there *ANY* evidence that Apple made any kind of offer to Fadell? I haven’t heard of any. Just maybe that is the reason Fadell went with Google…and the $3.2 mil.

    1. Do you know or have any idea how difficult it is for third party vendors to secure shelf space to display their products in an Apple Store? You have to literally jump through a ton of hoops, one of which is integration into the Apple ecosystem, another of which it should be a fairly high value item that occupies little shelf space.

      The fact that Apple allowed them to display the Nest thermostat in an Apple Store is validation of their perceived value to selling Apple products.

  5. Fadell lost the iOS battle for the iPhone to Forstall’s group. In hindsight, that choice was correct. I doubt Fadell still believes he was right, given how successful the iPhone has been.

    The reason why he sold Nest for $3.2B is because, he’d be crazy NOT to sell for that kind of money.

  6. Apple is a technology and a design company. Google is not. It keeps buying and trying to develop “cool” tech gear so that they can maintain the conceit that they are anything but a media and advertising company that litters the landscape with cheap ugly advertising. That’s all they are. Remember they bought Android too. Also, the idea that many analysts thought Apple would buy Nest just shows how absolutely clueless they are about Apple. Why would Apple buy a company and a product they could very well just develop themselves as part of a broader and deeper ecosystem of home entertainment and automation? It would also muddle the Apple brand, which is one of the strongest if not the strongest brand in the world. What would they do, have a Nest sub-brand? Honestly, I’m truly sick of all this bogus tech reporting that instead of being insightful, is simply trying to create a bogus narrative that will garner clicks.

  7. personally, I think Jony Ive might believe his shit doesn’t stink. Clearly he kinda sucks at software design. iTunes has been turned into a train wreck. New iOS looks worse than before.

    1. So carry on using your PoS Android phone then. No-one’s holding a gun to your head to make you use iOS.
      It works fine, my only issue is the colours could be toned down slightly, which the next update should remedy. Faux leather and other attempts to make app icons look like real-world objects is just so tired; this is the 21st century, not the 19th.
      Or maybe you like Steampunk stuff…

  8. At first blush yesterday, I thought Apple had made a big error in not picking up Nest. But sometimes I need to take a deep breath. After reading some very thoughtful post from others and MDN’s point somewhere about it being time to look at Honeywell products, I feel that Apple did the right thing in letting this go to Google. I am still returning the unboxed Nest I bought as i do not trust Google’s intent. And after reading numerous articles and blogs, it seems that the Honeywell offerings may be more reliable while offering almost identical features. Long run, as numerous people have noted, Google will screw this up and the only people who have won are the investors in Nest who now get a nice ROI.

  9. Nest doesn’t sell a billion dollars worth of thermostats. Google has something in their mind about collecting information about what goes on in people’s houses.

    Making gadgets for the house isn’t Apple’s business. Even the Apple TV product would be a stretch if Apple didn’t have the iTunes store. An appropriate iWatch product married to an iPhone would probably be good, but a “stand alone” “smart watch” isn’t Apple’s business.

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