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Google raises the stakes on the home automation and monitoring market with its huge cash buy of startup Nest.

Google to Buy Nest for $3.2B

Dan Jones
1/13/2014
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Google could be coming to a home near you soon with its $3.2 billion buyout of smart sensor startup Nest Labs.

Google (Nasdaq: GOOG) revealed Monday afternoon that it will pay $3.2 billion in cash for Nest, a Californian startup that sells a $249 WiFi-enabled "smart thermostat" and has just introduced a smoke detector. The deal is expected to close within a few months.

Nest already has ties to the search giant: Google's venture arm has been a key investor in the startup. Nest has raised $230 million in funding since its foundation in 2010. (See The Best-Funded Mobile Startups of 2013.)

Nest was founded by CEO Tony Fadell and VP of engineering Matt Rodgers. These Apple Inc. (Nasdaq: AAPL) alumni led the team that created earlier generations of iPhones and iPods and developed the iPod software, respectively.

The Nest buyout -- along with Google's efforts on driverless cars -- appears to indicate that the company isn't ready to cede the home automation and monitoring market to carriers like AT&T Inc. (NYSE: T) or the cable MSOs yet. In fact, the dashboard and the breakfast bar are becoming the new frontiers for a slew of mobile and technology companies. (See AT&T Clinches M2M Market Lead With GE Deal, Betting on Smart Homes, and CTIA: Digital Life Pays Off for AT&T.)

— Dan Jones, Mobile Editor, Light Reading

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DanJones
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DanJones,
User Rank: Blogger
1/14/2014 | 2:48:57 PM
Re: Start of a home monitoring M&A charge?
We'll see won't we?
SarahReedy
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SarahReedy,
User Rank: Blogger
1/14/2014 | 12:52:13 PM
Re: Start of a home monitoring M&A charge?
That's true, Gabriel. Nest does a lot with the data in terms of analyzing it for customers to help them adjust their usage, but in terms of who owns it for commercial purposes, Nest says: Our privacy policy clearly limits the use of customer information to providing and improving Nest's products and services. We've always taken privacy seriously and this will not change.
Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
1/14/2014 | 1:42:20 AM
Re: Start of a home monitoring M&A charge?
@Sarah Re: "Nest will own the customer data alone." I can see why Google called that out.... but, even so, presumably if it's your gadget, and your house, you would own the customer data, no?
DOShea
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DOShea,
User Rank: Blogger
1/13/2014 | 9:47:21 PM
Re: Start of a home monitoring M&A charge?
Re: M&A, there has been a little before driven by iControl, but there are still start-ups coming into this space, as demonstrated by our recent story on GreenWave: http://www.lightreading.com/broadband/networked-home/greenwave-crashes-smart-homes/d/d-id/707161

There's also Alarm.com, Frontpoint, Vivint, among others, who could be targets, or could drive consolidation.
DanJones
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DanJones,
User Rank: Blogger
1/13/2014 | 7:40:40 PM
Nest sez
Here's Nest on the deal:

This decision wasn't made on a whim – Google has been in the mix in some way or another for about three years of our almost four-year history. In fact, my first meeting with Google as a Nester was before we'd launched. At the 2011 TED Conference, Erik Charlton and I huddled in a corner with Sergey Brin to show him a video and an early model of the Nest Learning Thermostat – he instantly got what we were doing and so did the rest of the Google team when we showed them. In May 2011, Google Ventures led our Series B round of financing, and in 2012, Series C. Time and time again, Googlers have shown themselves to be incredibly like-minded, supportive and as big of dreamers as we are. I know that joining Google will be an easy transition because we're partnering with a company that gets what we do and who we are at Nest –and wants us to stay that way.

 

Useful blog:

 

https://nest.com/blog/2014/01/13/welcome-home/

 

 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
1/13/2014 | 7:37:38 PM
Can Google make the home smart?
The whole Smart Home movement has been on the verge of breaking out for five years now but broadband service providers haven't figured out how to make it simple, scalable and low-cost.  I'll be curious to see what Google plans to bring to the mix. 
DanJones
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DanJones,
User Rank: Blogger
1/13/2014 | 7:01:44 PM
Re: I am pessimistic this will work long term
Maybe that's why they want to keep the Nest team independent? Nest has already shown it can develop products.
David Dines
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David Dines,
User Rank: Blogger
1/13/2014 | 6:58:22 PM
I am pessimistic this will work long term
I am pessimistic based on Google's history with devices, they just can't seem to get things right.  Also, even in software they can deep six decent products, remember Bump (who knows, maybe that was on purpose)?  I do not see anything new that would indicate that they could make this work.
SarahReedy
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SarahReedy,
User Rank: Blogger
1/13/2014 | 6:13:40 PM
Re: Start of a home monitoring M&A charge?
Ah yes, that makes sense. Google also used to have a dashboard for monitoring your energy use in the home, Google Power Meter. It was announced in 2010, but never took off. I'm not really sure what its smart grid/smart home ambitions are now.
DanJones
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DanJones,
User Rank: Blogger
1/13/2014 | 6:08:20 PM
Re: Start of a home monitoring M&A charge?
Pure guesswork on my part but buying to prevent another large rival getting them? Lotsa ex-Apple people at Nest for instance...
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