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Google Acquires Nest Labs for $3.2B

The battle of "a conscious home" begins
1/14/2014 11:38 AM EST
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DMcCunney
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Re: You must be joking!!!
DMcCunney   1/15/2014 10:04:34 AM
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@KB3001: I agree DMcCunney although I think the price is a little bit excessive.

Google obviously doesn't, and I think I agree.  Deciding what price to pay for an acquisition is complex, and not always a matter of the current state of who you are acquiring.

I think Google sees a potentially enormous market opening up, with nowhere for Nest to go but up.  They aren't buying what Nest is now: they are buying what they think it will become.

Also, Google has had a relationship with them for a while.  Bill Maris of Google Ventures is on Nest's board, so we can assume Google knows exactly what it's buying.

That said, what matters for Google are the opportunities they can capture out of this acquisition, and here I think $3.5bn can be justified, yes.

Exactly.

junko.yoshida
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Re: How can Nest succeed?
junko.yoshida   1/15/2014 9:44:07 AM
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DrQuine, I couldn't agree with you more. You wrote:

Remote access thermostats have existed before but they were better suited to engineers than home users.


We do tend to underestimate the ease of use issue. We always say how important it is and yet, very few actually comes through with that promise.

But beyond that, as many in this forum already suggested, this aquisition isn't just about thermostats. While IoT seems to be still an evolving (and elusive) market concept, there is something to be said about "a conscious home," Fadell is talking about.

KB3001
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Re: You must be joking!!!
KB3001   1/15/2014 9:25:05 AM
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I agree DMcCunney although I think the price is a little bit excessive. That said, what matters for Google are the opportunities they can capture out of this acquisition, and here I think $3.5bn can be justified, yes. It's an opportunity for them to get into the home automation market with all of the rich information they can capture and harness to cross-sell, up-sell and develop new products and services altogether. What Google are buying is not just a connected Thermostat but an existing customer base, patents, know-how etc.

Someone already mentioned the link with Google Mail, Google +, Google online advertising etc. Also do not forget that $3.5bn for Google is not that much money, they are sitting on a lot of cash, and they will get a good return on this investment eventually (one way or another).

PS. Perhaps some people are just jealous of Nest founders and shareholders :-)

any1
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Nest user experience
any1   1/15/2014 9:24:21 AM
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I know a handfull of people who own Nest thermostats.  This is admittedly a very small sample size, but they all seem to like them - a lot.  So Nest founders have taken some of the Apple product design know how with them.  I know one person in particular who has them installed in each of his three family residences.  He especially likes to be able to check on the ones at his beach house from his iphone.  During this last blast of extemely cold weather on the east coast he was able to remotely dial up the temperature there in order to help prevent the pipes from being frozen.

dannie23
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Re: You must be joking!!!
dannie23   1/15/2014 6:03:50 AM
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Hi,

 

Its plesure to find that Google is intervening in home appliences market so we may expect the better quality and durability according to the brand's name.

 

-------------------------------------------------------------------

Ruby on Rails Programmer in USA

DMcCunney
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Re: You must be joking!!!
DMcCunney   1/14/2014 11:11:05 PM
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@Max: With all the talent at Google -- are you seriously telling me they couldn't have developed somrthing like this in-house?

My mind is well and truly boggled.

Could they have?  Probably.

Should they have?  No.

It's the same underlying question any company has when considering a move into a new market.  "Do we build the capability in house, or do we buy someone who is already doing what we are interested in, and add their capability to our portfolio?"

The answer is almost always "Buy someone."

Nest Labs has been around since 2010.  They make hardware as well as software, and have installations in 90 countries.

Google decided it saw opportunities in the business.  How long would it take Google to build a capability equivalent to what Nest has?  What would Nest be doing while they did it?  (Or more likely, what would someone else who bought Nest instead be doing?)  How much would Google have to spend to do it?

$3 billion is not an unreasonable price given the opportunities I suspect Google sees.

KB3001
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Re: You must be joking!!!
KB3001   1/14/2014 10:51:23 PM
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We also do not seem to have them in Europe.

KB3001
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Re: How can Nest succeed?
KB3001   1/14/2014 10:50:40 PM
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I agree. The price tag is perhaps a tad excessive but it signals a direction of travel for Google: connected intelligence. This goes well beyond thermostats guys....

daleste
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Re: You must be joking!!!
daleste   1/14/2014 10:36:51 PM
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I heard there were some issues with power companies that gave away nest thermostats if you would switch.  Seems there were overriding circumstances that caused consumers to pay more and a contract that did not allow them to end the relationship.  Seems like a black eye for Nest.  I haven't used a Nest, but my programmable thermostats are fine for what I need.  I don't ever want to control them from away from home.  Good luck to Google.

DrQuine
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How can Nest succeed?
DrQuine   1/14/2014 10:03:19 PM
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Like the iPhone design and functionality, the Nest creates an engaging intuitive user experience. Remote access thermostats have existed before but they were better suited to engineers than home users. Perhaps Google sees this kind of a user interface as an entry point into the Internet of Things. Maybe in 5 years when our houses finally do have a number of responsive devices, this will be seen as a turning point. I wish them luck - we'll all be the beneficiaries after decades of remote controlled lights and devices that were more trouble to configure and maintain then they were worth.

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