On Monday, Google announced that it is acquiring Nest Labs for $3.2 billion. For those of you who don’t already know, Nest Labs is Tony Fadell’s “Internet of Things” brainchild – connecting everyday households goods into smarter, more efficient, internet-connected tech machines. Currently, Nest focuses on two specific products: thermostats and smoke detectors – both representing an effort to improve energy efficiency and safety in the home. Nest thermostats cost $250 and can be remotely controlled from your smart phone. Super cool stuff.
According to sources close to the deal, Nest was in the process of raising ~$150 million at a ~$2 billion valuation when Google swooped in, adding over $1 billion worth of value to the Company. Based on the fact that Nest wasn’t actually looking for a majority acquisition, it seems that reports signaling that Google was the only serious bidder may in fact be true.
The question that we want to know is, where was Apple? Nest would be a great fit for the cash-rich consumer product and technology giant and would be a great way to diversify its business and create a pipeline for growth for the future at a time when its iPhone product, though still incredibly popular, accounts for a smaller percentage of the Company’s overall revenues. Furthermore, Apple has clearly already set its sight on full-home integration through its Apple TV product.
In addition, Tony Fadell himself is famous for his work at Apple – specifically for his role in the creation and innovation of the iPod along with the late, great Steve Jobs.
According to Fadell, “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.” In another interview Fadell says, “The crux of this is that we thought about what is it going to take to realize our vision and change the world? This is not a typical you-can-add-servers-to-it business, then it scales. There is a ton of infrastructure that needs to be built. We want to differentiate with our products and not spend our time rebuilding stuff other people have. If we did not focus on the products, that is where you get into trouble. But you have to build the infrastructure — it’s not like you go off a shelf and buy it.”
From Google’s side, at a conference for Google clients and stakeholders, Page recently said that Google’s mission is “to create beautiful, intuitive services and technologies that are so incredibly useful for people that people use them twice a day, like you might use a toothbrush. There aren’t many things people use twice a day.” Page doesn’t see Google as a search engine or an advertising company and it seems like Nest fits squarely into Page’s vision.
At the end of the day, two things are clear: first, we may very well soon be living in a world where everything is connected online. And that’s a scary, but almost certain reality. Second, this was a smart acquisition for Google and a very big miss for Apple.