Google wants to go beyond the search engine, smartphone, and robotics. It smelled something good and felt something hot with Nest Labs and announced Monday that it plans to acquire the company for $3.2 billion.
Nest Labs was co-founded by Tony Fadell, known as the godfather of Apple iPods, and Matt Rogers in 2010. It is famous for its smart thermostat and its smoke detector products that can be controlled using one's smartphone. The potential purchase that is expected to close in the next few months puts spotlight on the industry of getting things at home connected.
"Nest's founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family. They're already delivering amazing products you can buy right now--thermostats that save energy and smoke/CO alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries and fulfill their dreams," said Google CEO Larry Page in a press release.
"Nest will continue to operate under the leadership of Tony Fadell and with its own distinct brand identity. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US. It is expected to close in the next few months," the statement read.
Aside from the promised autonomy, the deal might come with an assurance that the privacy policies and consumer data of Nest will be untouched. However, there is an easy way out (or in) for Google to make most of the treasure trove of data by connecting Nest products to its services such as Gmail or Google Now.
The purchase of Nest ranks among the biggest spending of Google following its purchase of YouTube in 2006 for $1.2 billion and Motorola in 2012 for $12.5 billion. In December, Google also bought the military robotics firm Boston Dynamics for an undisclosed amount. The purchase has been announced amid the growing interest in the market for Internet of Things that aims to connect everything at home. Nest Labs also comes with a great team that consists mostly of ex-Apple employees that know how to come up with hardware that sells.
With appliances accessible remotely, energy efficiency and savings go up. There are also smart appliances that can adjust its settings depending on the habits of its users. On the business side, this also gives brands a peek of what people love and can target ads or develop new products based on data collected from connected devices.
"Google likes to know everything they can about us, so I suppose devices that are monitoring what's going on in our homes is another excellent way for them to gather that information. The more they're tied into our everyday life, the more they feel they can deliver products we'll like and ads," Search Engine Land editor and Google analyst Danny Sullivan told The New York Times.
Google has been a supporter of Nest Labs through the latter's fund-raising efforts. The acquisition of the young company will allow it to fast track product development and expand its line of offerings faster than it can imagine, with access to the coffers of Google.