The Nest Step

On January 29th, 2013 Nest announced the $80M financing round at $800M valuation. The GigaOM article mentions two growth vectors for the company.

The first is Europe:

A considerable amount of that growth is happening in Europe, in addition to its shipments in the U.S.

The second is broadening the reach: not only controlling the temperature but controlling the entire house:

Nest also plans to use the funds to offer a more comprehensive smart home service along with its product, which could include lighting and alarm systems, too, we’ve heard.

The statement about European growth is a bit cryptic. As far as I know (owning two Nest thermostats), there is currently no growth, as Nest does not sell or otherwise support European installations. But the rumors are they will have a model for the UK market soon.

What about the other European countries? Let me speculate a bit.

USA has been fortunate to have the thermostat controllers more or less standardized. This is why Nest has been possible at all. Remove your old thermostat from the wall. Plug in the Nest. You are done. Not so fast in Europe. Every system down here is proprietary and different. A few years ago Honeywell tried to create the opentherm standard, but the initiative seems to have died. There is no standard way to control the heating systems in Europe.

Or may be there is?

If you go to the hobby web shop Conrad (the site is in German), you will see a plethora of electronic thermostats. What are they? Well, most of the heating systems in the continental Europe are hot water radiators powered by a central boiler. And it is enough to throttle the flow of water to the radiators, using the ordinary valves, to control the entire heating system. This is what Danfoss has been doing successfully for years with their Living Connect Z-Wave radiator valves.

And this is what - I think - Nest will do. Only better. The generation 2 Nest thermostats have ZigBee chips inside. Today the ZigBee is not enabled. But to get into European homes, Nest has to make radiator valves. The radiator valves have to be battery - powered. So they cannot use WiFi (if somebody tells you they are able to run WiFi on batteries, they lie!). Danfoss has been using Z-Wave. Nest may opt for ZigBee, which is a better choice from technology standpoint. It is also much more open, although much less standardized. But Nest may use ZigBee just as a transport layer (which is fine) for their own proprietary application protocol. Anyway, I think for Europe they will introduce a master - slave type of system. The round Nest we all know and love will be placed on a wall or will be sitting on a table or a shelf. It will have a power supply (for the WiFi and the display) and will command a network of slave radiator valves via ZigBee. Time will tell if I'm right.

I hope Nest will bring the much needed shakeout of the heating industry in Europe. We need a standard and we need open applications platform to monitor and control heating.  To cover such basic needs as home / away signalling and an option to remotely control the system. Today (it is 2013!) I cannot tell my heating system, I will be out for a couple of days (to save energy) and when coming back from a skiing escape, I cannot trigger it to start heating again to welcome me in a warm home. It is time to shake this stagnant market. Nest, welcome to Europe!