News that Google (GOOG) bought Nest Labs caught me off-guard. Nest Labs had been raising funds to extend its connected home products line beyond the highly successful Nest thermostat and new smoke/CO detector, but I didn’t think Tony Fadell’s startup was looking for an outright buyer.
Besides, even if Nest Labs was hoping to be snatched up, I would have pegged Apple (AAPL) as the most likely match. Nest was founded in 2011 by former Apple senior VP and iPod “father” Tony Fadell, along with former lead engineer for the iPod and iPhone Matt Rogers.
And Nest products look like something Apple would design and have been featured prominently on Apple Store shelves. Long-time Apple board director Bill Campbell is a Nest Advisor. Sure, GOOG has been an early investor, but Nest Labs just had more of an Apple vibe to it.
Clearly I was wrong. Nest Labs will be come a division of Google within the next few months, retaining its own brand identity and leadership under Tony Fadell.
So what does Google want with Nest? Well, four potential things that come to mind. Let’s start with three of the less-likely possibilities of why GOOG snagged Nest Labs before tackling the big one.
Google could have bought Nest to:
1. Keep Nest Out of Apple’s Hands
Going back to my initial statement about Nest Labs and Apple, the ties between the two run even deeper, with reports of a stream of Apple staff jumping ship for Nest in recent months. The exodus includes a prominent engineer from Apple’s iWatch team. Buying Nest Labs would not only have netted Apple an entry into home automation with respected hardware and software clearly influenced by its own, but it would have brought valuable engineers back into the Apple fold.
2. Improve Advertising Accuracy
Tony Fadell has already tried to diffuse the rumors, but it’s pretty easy to put two and two together as Wired has. Since the Nest thermostat knows when you’re at home, Google could use that data to sharpen its targeted advertising.
3. Save Money at its Data Centers
Data Centers are huge buildings containing row after row of high-powered servers. The computers eat electricity and throw off massive amounts of heat, requiring more power for cooling. And GOOG data centers are among the biggest. One theory raised by SiliconANGLE is that Nest technology and Nest Energy Services (a partnership between power companies and Nest that rewards customers for automated power savings during peak usage) is something Google wanted to cut operational expenses at those data centers.
4. Make Android@Home Real
The most likely scenario is that Google sees home automation as an area of future growth and bought Nest Labs because it’s already a leader in this area and is a recognized brand. Nest doesn’t run Android but it plays nicely with it. Plus, it’s not tough to imagine a scenario within a few years where the transition is made and those Nest smart devices are the focal point of a robust home automation offering, powered by Android.