The Nest Step: Episode 2

So a year after the latest investment round at the lofty valuation of $800M, Nest Labs has been acquired at 4x the price, for cash. WOW! Not too many predictions I made about Nest in 2013 have literally happened, but in general Nest has been moving in the expected direction.

They did not release an European thermostat, but I believe they are making lots of research on Home Automation in general. And the rationale behind the Google's move? Well, I think there are two stories behind the acquisition.

#1 is the preemptive action to leave Apple with empty hands. Home Automation is hard. Nest has always been the leader. Only followed by a bunch of startups, far behind. There are no other important players today. The old league of established Smart Home players is in a different galaxy. They require professional installation and will never grab the DIY market. The startups, with one exception, are just toys that disappoint after one afternoon. My Revolv hub started collecting dust after I spent only a few hours with it and hit the wall. It shares a box with a number of Belkin WeMos and some Z-Wave stuff. I have not been able to set up a decent, complete scenarios with these devices. So Apple is left in the dust, wondering what to do. It could reach for the Ninja Sphere, which seems to be the only really well architected Smart Home platform (MQTT powered by Node.JS), but Pete Moore has always been the advocate of open source platforms, which is generally not the way Apple likes going. But taking Ninja under the umbrella of Google Ventures, might be yet another smart preemptive move by Google, which Apple might like to preempt.

#2 is Smart Home is really important for Google. Tony Fadell reports now directly to Larry Page. Meaning Nest is a fully fledged division of Google. Equal to Android. I believe we will see a simple cross - connected automated scenarios powered by Nest pretty soon (like turning off Philips Hue bulbs when Nest enters the Auto-Away state - both devices have ZigBee inside, so it is just a matter of a firmware upgrade). Longer term we will see a complete Android - based Smart Home platform from Google, connected to the Cloud, connected to the Play Store, Connected to Google TV, Chromecast, Youtube and all sorts of other services. Google aims to power the Digital Smart Home. Up till now homes have been analog and dumb. Probably the last area not ruled by computers and software. Google understands this opportunity and its huge market potential.

In my opinion the acquisition of Nest is as important as the premiere presentation of the iPhone back in 2007. It opens an entirely new chapter.