OK, so a $3.2 billion acquisition is nothing to sneeze at! However, when your current stock price on the Nasdaq exchange is trading at $1148 per share, and your coffers are overflowing in excess of $57 billion in cash and marketable securities - $3.2 is more or less chump change for an Internet giant. But exactly what's Google's end game in acquiring a company that few of us knew about?
First you build the Nest
Tony FadellNest, according to Tony Fadell, its founder and CEO was started humbly with one device in 2010 - the lowly unglamorous thermostat. While it seemed like "a crazy idea at the time - it made all the sense in the world to us," Faddell asserted. For him and his fellow co-founder Matt Rogers, they saw a much overlooked game-changer in the making.
"That little device that went unnoticed and unchanged year after year on the walls of our homes was a lost opportunity to save energy and money. We knew we could do better," added Faddell.
That was the nucleus and first step in creating what Fadell termed "a conscious home," an intuitive habitat, that up till now, no one had really cracked the code for. Or had they?
What Came First, the Nest or the IoT egg?
In actuality, Logitech, Cisco, Ericsson, GM, IBM and even countries the size of China have been working diligently to become the front-runner in the race to create "Internet of Things" - the primal core of what Faddell is referring to.
The Internet of Things (IoT, for short) is the technological advancement where everyday objects are connected to the Internet and participate together on a system -- while being accessible vis a vis of conventional connected devices such as smart appliances, TVs, PCs, etc?.
First coined by Kevin Ashton in 1999, today he claims the IoT has the "potential to change the world, just like the Internet did (or "even more so"). In essence, the IoT points to the planet's ecosystem actually growing a central nervous system.
Oranges & Apples
Bingo! - that look's like the reason Google was willing to ante up $3.2 billion for one acquisition and why they chose Nest Labs to further the cause. Home automation is obviously an important building block to construct the next iteration of the Internet, which according to Intel could interface with to some 31 billion web-connected devices by 2020.
But if Google is the orange, how does Apple figure into the equation?
Actually, many in-the-know speculated that Apple would be first to feather Nest's nest. After all, Fadell was the creator of the iPod and the reason he was known in the Silicon Valley as the "PodFather." He was also intimately involved in the development of the iPhone with Steve Jobs. The sleek design of the Nest thermostat with its brushed-metal finish and convex screen display harkens back to the design elements we have all come to expect from Apple's devices.
Based on that history, it was thought that Apple might acquire Nest in advance of Google's offer. Additionally, now that the search giant is the parent company, one would have expected Nest to fold into Google's network of devices which have been testing the IoT waters for the last few years (e.g. Google Glass).
But according to the early reports, this doesn't seem to be the case. Instead, Google is not only allowing Nest to operate as a stand-alone business - it's also agreed to have Nest run it's products on Apple's iOS, which is a rival to Google's Android. Strange bedfellows, eh?
Hey, what's that sound -the planet talking?
On the plus side of the ledger, Google appears to be less concerned about the short-term and more interested in the long-game. It's advancements with 'semantic technology' and Web 3.0 interface solidly with the IoT, and its recent reengineered algorithm Hummingbird and technologically advanced social network G+ are all intrinsic elements.
They are all essential pieces in solidifying Google's control over this space - where they will ascend to Big Brother status with oversight over man's future communications globally. It's only a decade or two away before you'll be able to talk to the planet vis a vis Google-related Internet of Things- and actually receive a response back in return? Might be time to invest in your own pair of Google Glass - just so you can see where you're headed, don't you think?