Nest Bug Is a Wakeup Call for Smart Homeowners

Home automation is great, except when a software bug knocks it offline

By Brad Moon, InvestorPlace Contributor

With plateauing smartphone sales, PCs in decline and consumer interest in tablets failing to pick up the slack, home automation is being touted as the next potential goldmine for high-tech companies.

Nest Bug Is a Wakeup Call for Smart Homeowners
Source: Nest

A recent software bug that shut down Nest thermostats should be a wake-up call for both consumers and the companies seeking to dominate the smart home.

There are plenty of reasons to be concerned about the Internet of Things. Devices ranging from refrigerators to IP cameras and door locks are increasingly popular forms of home automation, and security hasn’t always been a top priority.

As scary as the prospect of cyber criminals using your smart toaster as an attack bot might be, there is a more immediate — and potentially larger — issue to worry about.

A software bug.

If there’s a bug in Microsoft (MSFT) Word, the worst outcome is usually having to re-launch the software, recover a document and maybe lose a few minutes worth of work. Annoying, but seldom worse than that. As many home automation fans found out this month, when Alphabet’s (GOOG, GOOGL) Nest thermostat gets hit by a software bug, the results instead could be waking up to a cold house.

The Nest thermostat is one of the most popular home automation devices of all time. It’s now in its third generation, sold through retailers like Home Depot (HD) and it’s the flagship of Alphabet’s Nest smart home division, which also includes the NestCam IP camera and Nest Protect smoke alarm.

Despite its pedigree, a Nest thermostat software update went out that took out the smart thermostats for many people. This led to the thermostat being unable to control the heating or AC in affected homes and while Nest quickly identified the bug and published a fix, it requires hands-on intervention by homeowners.

You can see where this could quickly get ugly. Waking up to a cold (or hot) house is one thing.

If you’re a snowbird in Florida relying on a Nest thermostat to keep your home in Michigan from freezing in the winter, having a software bug take it offline could result in burst pipes and a costly cleanup.

That would be bad, but home automation encompasses other critical devices including smoke and carbon monoxide detectors, as well as home automation systems.

A software bug could have much more serious repercussions. To make things even more worrisome, at this early stage many of the home automation products are being released by startups that may lack the resources for quality assurance that a big player like Nest can dedicate to preventing critical bugs.

The smart home is pegged to be an area of big growth over the next few years, with devices like the Nest thermostat leading connected devices and home automation to becoming a $6 billion-plus industry by 2020. Some of the biggest names in consumer technology including Apple Inc. (AAPL), Google, Amazon (AMZN) and Samsung (SSNLF) have their sights on being at the center of the smart home.

These companies, however, need to recognize that with home automation, they are dealing with an entirely different level of sensitivity to software bugs than they are accustomed to, with higher stakes.

While much of the attention is currently focused on security, a bug like the one that hit nest thermostat owners earlier this month has the potential to turn into the sort of PR disaster that scares consumers off the smart home concept and sets the industry back before it can really take off.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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