Google didn't disclose its specific plans for Nest, though
possibilities aren't hard to parse. The company has built a
$50-billion business based on gathering information from
Internet-enabled services like search and email that can then be
packaged to sell and target ads.
In the last several years, Google has expanded into selling
Internet-connected hardware, such as smartphones that surface new
information such as geolocation and give the company a foothold
into people's lives away from their computers. That effort has
broadened into developing connected eyeglasses and cars and even
providing Internet access. The connected home would complete the
Last week's Consumer Electronics Show in Las Vegas was littered
with companies wading into the connected-home market. Brands such
as LG showed off dishwashers and
refrigererators that could link to the companies' other devices,
creating an Internet-connected ecosystem. But the potential revenue
stream for those companies would be likely limited to product
sales. Not so for Google.
A connected home could provide Google new information such as
when people are home, what rooms they frequent and what appliances
they use or need to replace. Google unveiled its smart-home vision
when in 2011 it announced [email protected] "We'd like to think of your
entire home as an accessory, or better yet as a network of
accessories, and think of Android as the operating system for your
[email protected] head Joe Britt said at the time.
Google appears to fancy itself more than simply an operating
system. Projects like Internet access service Google Fiber and
energy consumption monitor Google PowerMeter suggest Google has
ambitions to extend itself into a next-generation infrastructure
provider a la Comcast and Con
Edison. Combined Google's products could create a more efficient,
smart grid that would disrupt those stalwarts and diversify its own
business to ease its reliance on advertising revenue. Of course
Nest Labs would be able to aid that legacy business as well.
However Nest Labs wouldn't immediately fulfill that vision. The
company doesn't yet offer smart devices that canvas the home, like
Internet-connected lightbulbs and dishwashers, but those aren't
likely far off. "Google will help us fully realize our vision of
the conscious home and allow us to change the world faster than we
ever could if we continued to go it alone," Nest founder and CEO
Tony Fadell said in a company blog post
announcing the acquisition. Mr. Fadell had created the original
iPod for Apple.
Assuming post-acqusition Nest asks device owners to connect
their thermostats and smoke detectors to a Google account, Google
would be able to bundle that smart-home information with existing
audience data for improved ad targeting. Imagine the day when you
receive a display ad notifying you that your dishwasher is low on
rinse aid and carrying a coupon for Cascade. Google's acquisition
of Nest Labs brings the day closer to reality.
Google's startup-investment arm Google Ventures had previously
invested in Nest Labs.