In a rather surprising move, Google purchases Nest for $3.2 billion. Obviously, this is excellent news for Nest CEO, Tony Fadell, but what does it mean for current and future customers of the Nest thermostat or smoke detector, and why did Google deem it worth over four times as much as Instagram?
According to Fadell’s blog, both companies are like-minded, with Google heavily involved in Nest’s B and C series of financing in 2011 and 2012. Fadell promises he’ll continue in his current role as CEO, with founder and VP of Engineering, Matt Rogers, working alongside him.
According to a Q&A FAQ on Nest’s website, Nest devices will continue to be sold through the same retailers carrying them now. Nest product warranties won’t change either, and Nest will continue supporting Apple’s iOS, Android, and modern web browsers. Additionally, Nest promises that it takes customer privacy seriously and will limit information shared with Google to only that which helps improve Nest’s products and services.
From Google’s standpoint, the company has a track record of interest in various aspects of home control and energy savings. As far back as 2009, Google started the PowerMeter initiative, allowing users to track electricity usage and remotely unplug needed devices using hardware built by The Energy Detective. Although Google retired this project on September 16, 2012, another project called EnergySense leaked last month and is clearly the one intended for use with Nest’s products.
Despite the vague assurances of privacy, I think it’s worth questioning the data collection aspect of this acquisition. By anyone’s standards, $3.2 billion is a lot of money to spend, even for a company with two promising and innovative product releases in a row. While Information about individuals’ temperature preferences in their homes may not be worth much, how often their homes are unoccupied each day is likely valuable. This information becomes much more valuable when names or addresses are attached. Now, imagine your insurance company making rate decisions on your homeowners’ policy based partially on the number of times you set off the Nest smoke detector in the last year. Maybe a partnership with Realtor.com is next, so Google can recommend available homes in your price range to purchase as a replacement after a house fire?
I see the potential for cool new capabilities Google can bring to the table with the Nest purchase, but it’s safe to assume that at least some of the existing Nest users would prefer their products communicate solely with dedicated applications on their devices versus going through Google’s servers and filters. Here’s hoping Google will live up to its “Don’t be evil” philosophy with this addition.
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