Google Acquires Nest Labs


Google buys Nest Labs, a producer of connected thermostats and smoke alarms, for $3.2 billion in cash

By Bilal Kamran on Jan 14, 2014 at 5:39 am EST

Google Inc. (GOOG), the search engine giant, has acquired Palo Alto, California-based Nest Labs Inc. for $3.2 billion in cash. The move asserts the tech giant’s foray into the consumer technology market – the company has already invaded the internet through desktops and mobile devices, and now people’s homes as well. Nest Labs will function under its own brand inside Google.

Nest Labs was the brainchild of former Apple (AAPL) employee Tony Fadell, the brains behind the iPod. Fadell has worked closely with Steve Jobs, helping in creating the iPhone and the iPod. In 2008, Fadell stepped down as a senior vice president of the iPod division, and in 2010 he severed ties with the Apple.

After leaving Apple, Fadell started Nest Labs with Matt Rogers, another former engineer at Apple. The idea behind the company was to connect “unloved products which are important” at home with the internet, for ease of use. A trend which has gained more popularity lately, Internet of Things, can be ascribed as the prime concept behind this company’s products.

Nest Labs came into prominence when it introduced the Nest Thermostat, a smart device that users can control over the internet. The device intelligently learns behavioral patterns, and then adjusts temperature levels based on these readings. Another product by the company is a smoke detector called Protect. Protect works like a traditional smoke detector and also gives the household a heads-up if carbon monoxide levels become too high.

Nest is Google’s second-biggest acquisition after Motorola Mobility. The internet search giant is already working on self-driving vehicles, has investments in robotics, a strong foothold in the smartphone market, and now has branched out to smart connected home devices.

Although Nest Labs currently makes thermostats and smoke alarms, moving forward it would not be a surprise if the company rolls out a line of devices for home automation. Fadell said he sees Nest Labs fitting right into Google's vision of a connected world that spans pocket devices to automobiles and homes. Not only that, but Google's financial resources and internal support networks could help Nest expand overseas.

Fadell also asserted that he would focus on home automation products only with the company. He is not keen on building new mobile devices, saying he has already been there, done that.

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