While the $12.9B anchor that is Motorola purchase is still proving to be a massive drag on it's bottom line, Google has once again made a acquisition in the hardware space, and arena that Google has had a hard time in. Monday, Google announced it was purchasing network thermostat manufacturer Nest for $3.2B. That's right, $3.2B. That is what a company pays for a poplar, up and coming social network with hundreds of millions of users, not a fledgling technology company that makes hardware that is trying to find it's place in the marketplace. But Google's acquisition of Nest buys them a lot more than the coolest devices in home automation ever. It buys them a new data stream. And if anyone can turn small data into big profit, it's Google. They are the Masters.
What Does Google get out of buying Nest? This is a big question, and Marcus Wohlsen over at Wired identified some key gains for Google, not the least of which is product genius CEO Tony Faddell. You can check out the entirety of Wired's article HERE, but I want to focus on some other benefits to the purchase.
First, Fadell. Nest's CEO isn't some fly by night tech guy. Tony is the man that brought the world the iPod. his proven record of bringing a product to market is impressive. As Wohlsen points out, "Fadell is an engineer with demonstrated mastery over all aspects of the hardware process, with a high-design sensibility to boot. From supply chain and components to fit and finish, Fadell has shown he can manage a product for a company with Apple’s global reach.
What’s more, Nest shows he also has the chops to bring a product to market without the support and resources of a massive multinational. He even beat Apple into the so-called “smart home” with a line of products that look and feel like what Apple might have designed if it had gotten there first.
“This allows us to concentrate on the stuff that differentiates us,” Fadell tells WIRED.
It’s almost tempting to think of Google and Nest as what might happen if Apple and the search giant had come together themselves. It’s an impression only furthered by Nest’s apparent poaching of an iPod software director to become its head of new product engineering, as first reported by The Information. Throw in Fadell’s proven record as someone who cannot only design and make tech devices but has the stage presence to sell it, and Google is buying itself near-instant — and much-needed — credibility in the world of hardware."
So Google bought more than a hardware company, they hired a master of the hardware market and his experience, and the hardware that is a labor of his love to boot.
In addition, Google now has a solid foot in the Energy Services market. A market they have a great deal of interest in. In 2009, Google tried their hand in the market with the failed PowerMeter project. Now Google itself will play a role in managing energy efficiency programs across wide swaths of homes and even counties. And then there is all that DATA. Google now has a huge pipeline of data about people's OFFLINE lives at home to now chew on. And again, Google is a master of making data work in a myriad of ways. It will be interesting to see....